The nation’s homeownership rate has reached a record high—67.4 percent in 2000. "Homeownership rates have risen for all income, racial, and ethnic groups, with minorities experiencing the fastest growth," reports the 2001 edition of The State of the Nation’s Housing, published annually by Harvard University’s Joint Center for Housing Studies. Yet as housing prices remain high and the economy cools, homeownership rates of low-income, minority, and immigrant households continue to lag behind. In 2000 the white homeownership rate reached 73.8 percent, but the overall minority homeownership rate was 48.1 percent.

This lag highlights the continuing barriers to homeownership faced by traditionally underserved segments of the population. One successful model for addressing these barriers is analyzed by David and Barbara Listokin in "Asian Americans for Equality: A Case Study of Strategies for Expanding Immigrant Homeownership," recently published in the Fannie Mae Foundation’s research journal, Housing Policy Debate. The Listokins focus on the complex, comprehensive web of strategies and activities developed by the nonprofit group Asian Americans for Equality (AAFE) to help households buy homes.

Encouraging Trends, Persistent Challenges

According to The State of the Nation’s Housing, recent trends in the U.S. housing market have generally been encouraging, even for disadvantaged people. Although both home prices and rents have risen faster than general inflation, the homeownership rate has risen for all income, racial, and ethnic groups, with minorities experiencing the fastest growth. A 24-percent net increase in black owners and a 39-percent gain in Hispanic owners far exceed the 9-percent growth in white owners. The black homeownership rate now stands at 47.6 percent, the Hispanic rate at 46.3 percent, and the Asian rate at 53.9 percent. There also has been impressive growth in lending to low-income households, which shot up 97 percent between 1993 to 1999. Suburban home purchases by minority and low-income families are also increasing.

Yet in the midst of these encouraging trends, the Harvard report notes that challenges for traditionally disadvantaged groups persist. "While special and subprime lending programs have boosted ownership," it states, "they also leave marginal buyers at risk of default if the economy contracts sharply. With affordability eroding, sustaining the homeownership boom depends even more on continued employment growth, interest rate reductions, transaction cost cutting, and mortgage product innovation." But along with these macroeconomic and financial approaches, traditionally underserved people especially need the kinds of direct help modeled by AAFE.

Surmounting Barriers to Homeownership

In their paper on AAFE, the Listokins note that, in the next decade, immigrants and other underserved minority groups likely will account for almost two-thirds of household growth. Thus strategies to help these people overcome barriers to homeownership are extremely important, and the Listokins’ paper analyzes a range of readily applicable findings.

AAFE serves Asian Americans in New York City. During the past 25 years, the Listokins explain, "Asian Americans have been the fastest-growing segment of the U.S. population." Although, in general, Asian Americans—often portrayed as the "model minority"—tend to be well educated and have good incomes, they are very diverse and from many countries, and a sizable proportion of them do face poverty and discrimination. In New York City in 1990, for example, 21.4 percent of families in Asian enclaves lived below the poverty line, relative to 17.4 percent citywide. Their homeownership rates also are below average.

Why do some Asian Americans suffer these disparities? Many, the Listokins explain, face "interrelated" barriers to homeownership that "stem from constrained economic resources and from language and cultural differences, as well as from overt discrimination and exploitation." For example, even though they may have good incomes, for those who are self-employed, it is harder to provide the income documentation required by mortgage lenders. And regarding the large factors of language and culture, the Listokins quote one researcher’s finding: "Language and cultural barriers are the most overwhelming obstacles confronting the Asian community.… The terms and concepts in the mortgage process can be daunting…then layer on top of that the impediments of language, the cultural differences."

In response to these challenges, AAFE has mounted a multipronged strategy of homeownership assistance. As the organization—founded in 1974 to fight hiring discrimination—has battled for the employment and housing rights of those it serves, it has evolved to become a housing developer. AAFE now has three main functions: counseling and community services, housing development and management, and homeownership initiatives.

AAFE provides decentralized services from its offices throughout the city. Prospective Asian-American homeowners can join its workshops, seminars, conferences, and information sessions, all offered in various Asian languages. The organization’s development efforts grew out of tenants’ asso-ciations it formed. "Since 1985," the Listokins state, it "has raised more than $17.5 million in private and public capital to develop…185 affordable apartments in 14 buildings for senior citizens, homeless people, and low-income families." And its homeownership initiatives have included forming a coalition with lenders and other community organizations to make it easier for its clients to get mortgages. Moreover, to maximize its efforts to help Asian Americans become homeowners, AAFE uses a wide range of strategies to attract clients: regular print publications, radio and television broadcasts, homeownership fairs, and outreach to tenants in local private and public rental housing.

The Listokins illustrate how the process works: "The applicant was a woman who had been a registered nurse in Hong Kong for 20 years and had recently moved to the United States. Although she had been living in New York City for only 12 months, she wanted to purchase a home. Standard underwriting guidelines call for applicants to have been working in the United States for at least two years. However, given her profession, the counseling from AAFE, and a substantial downpayment, [the lender partner in the mortgage coalition, Chase Manhattan Bank] approved and closed her loan."

Looking Toward the Future: Adapting the Model

With the number of underserved households growing, efforts like AAFE’s are needed even more. As The State of the Nation’s Housing notes, "The homeownership gap between whites and minorities is unlikely to close any time soon given persistent differences in their education levels, wealth, and labor market returns. Progress in narrowing this disparity thus depends on devising new nontraditional measures of credit risk and helping minorities overcome income and wealth constraints."

Certainly, other organizations can adapt the following AAFE strategies to expand homeownership for low income, minority, and other immigrant households:

• Aggressive outreach through neighborhood fairs and publications.

• Homeownership education and counseling in a variety of settings and languages.

• Educating lenders on the employment and credit practices of the target population.

As a model for such progress, AAFE’s comprehensive web of strategies and activities thus merits being widely adapted to the particular conditions of various population segments and localities. Indeed, the Listokins report that AAFE has transplanted its model in new places: "In early 1999, it launched its National Homeownership Mentoring Program (NHMP),…which…works with community-based groups.…Through NHMP, AAFE is working with groups…in Atlanta; Cambridge, MA; Chicago; San Diego; and Orange County, CA." Given this demand for strategic methods to fight barriers to homeownership, the question is how to disseminate them even more widely.