THE HOUSING INEQUALITY QUESTION:
for down payment assistance. Fortunately, there are plans to introduce a new, refundable and advanceable down payment tax credit of up $15,000, which would be offered to targeted first-time homebuyers at the closing table. The Biden-Harris campaigns were mostly centered around improving racial equality and addressing the homeownership issues. As the new administration, the team needs to address significant operational and design challenges that exist before tabling the tax credit plan in Congress. The best way to do this is by determining how to operationalize the advanceable feature of the credit, which is similar to asking the IRS to deliver individual tax refund checks to tax payers on a date of their choosing, while relying on an obsolete technology and insufficient staff resources.
TO REDUCE RACIAL WEALTH INEQUALITY, WE NEED TO EXPAND THE DOWN PAYMENT ASSISTANCE PROGRAMS
A
compelling argument has emerged that the housing sector, and specifically on the down payment assistance should be used at the forefront to end the historic economic and racial equality gap. On a keen observation, this argument is very sensible. Let’s face it, home equity accounts for a quarter of the total US household net worth. This means that policies that significantly reduce the 30-percentage point Black-White homeownership gap could also help diminish a large part of the racial wealth gap. Consequently, extending sustainable homeownership opportunities to more people of color is not only a way to improve racial equity, but also a good means of increasing economic growth. According to recent study by Morgan Stanley, equalizing Black-White homeownership levels over the next 10 years would produce more than 5 million more homeowners of color, create nearly 800,000 new longterm jobs, and generate up to $400 million in additional tax revenues relative to current trends. Heightening need for down payment assistance. More than twice as many African-American families (19%) as White families (9%) have zero or negative net worth. This makes it extremely difficult for many African-American families to afford a down payment for a first home and demonstrates the growing need 116
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THE POWER IS NOW MAGAZINE | FEBRUARY 2021
