Assets & Opportunity Scorecard: Housing and Homeownership
June 7th, 2016
June is National Homeownership Month – a time that reaffirms the value of homeownership, particularly as a tool for homeowners to save and build wealth. Homeownership is an essential part of the “American Dream,” and plays an important role in how low-income and minority households attain and build long-term financial security. The Corporation for Enterprise Development’s (CFED) 2016 Assets & Opportunity Scorecard explores access to stable and affordable housing in the United States.
This blog takes a closer look at Housing and Homeownership in the Mid South states of Arkansas, Louisiana, Mississippi, and Tennessee.
The homeownership rate illustrates the number of families that have the opportunity to build wealth through home equity. Sixty-six percent (66%) of Mid South households are homeowners, nearly 3 percentage points higher than the national rate. However, homeownership is at a national historic low – from 67.3 percent in 2006 to 63.1percent.
Further, there is a large homeownership gap between white households and households of color. In the Mid South, 73.8 percent of white households are homeowners compared to 47.5 percent of households of color (on par with national rates). In other words, 1.6 times as many white households are homeowners compared to households of color. This is in part due to the foreclosure crisis that exhausted the wealth holdings of many African American and Latino homeowners.
High-Cost Mortgage Loans
High-cost mortgage loans have a significantly higher-than-average annual percentage rate (APR). Lenders typically target the elderly, minority, and low-income families with these products, which put them at a greater risk of foreclosure and loss of home equity. These products contributed to the housing crisis during the Great Recession and are still a problem today. Louisiana has the 9th highest rate in the nation, followed closely by Tennessee and Mississippi (10th and 12th highest, respectively). See Chart. For instance, in Louisiana, 9.3 percent of mortgage loans issued are high cost compared to 7.1 percent of mortgage loans issued in the U.S. (its highest level since the housing market crash).
Homeownership is the primary means through which most Americans build wealth and provides not only long-term physical stability but financial stability as well. In order to move forward, states must create affordable and sustainable housing options to help all families have an opportunity to climb the economic ladder and become financially secure.
Corporation for Enterprise Development. (2016). Assets and Opportunity Scorecard, 2016. Retrieved from http://assetsandopportunity.org/scorecard/