A series of homeownership assistance programs in Massachusetts have made significant strides in helping families buy their first home, but the state has a ways to go to fully address persistent racial gaps in homeownership, according to a report released Wednesday.
The report found that while many of the state’s assistance programs have provided needed help when used properly, including to many households of color, eligible residents often have inadequate access to the information. Also, the state’s booming housing costs have priced out too many families, even when the support is offered.
“There’s a lot of work to do to … really make a dent in the homeownership gap,” said Luc Schuster, executive director of Boston Indicators, The Boston Foundation research center that wrote the report, “A Long Road Home: A Racial Equity Analysis of Homeownership Support Programs in Massachusetts.”
The report’s findings show that Massachusetts has one of the largest racial gaps in homeownership in the country.
Some of the state’s leading housing advocates say, however, that the report also helps showcase the wide array of choices available to prospective home buyers, and that homeownership is an option for everyone.
“Becoming a homeowner can be a long, arduous task, but the journey of a thousand miles starts at one step,” said Chrystal Kornegay, executive director of MassHousing. “Hopefully, this report can help them determine what that first step is.”
In addition to the analysis of current programs, the report spotlights a long history of what the authors call “exclusion, false promises, and wealth extraction” from Black families.
Such housing discrimination created racial homeownership gaps that persist at all income brackets, the report states. White households in Greater Boston have the highest homeownership rates at low, moderate, and high income levels. Asian families finish in a close second. The share of Black and Latino families, who finish in a respective third and fourth in homeownership, drops significantly.
Overall, about three in four white households headed by an adult 35 or older in Greater Boston own homes. Sixty-eight percent of Asian households are homeowners. Homeowners make up 40 percent of Greater Boston’s Black families, and more than a third of Latino families own homes.
The report also analyzes some of the state’s homeownership support programs, namely, the affordable mortgages offered by ONE Mortgage and MassHousing; down payment assistance programs such as MassDREAMS; asset-building programs like Saving Toward Affordable Sustainable Homeownership (STASH); and informational resources like MyMassHome.org.
Schuster said it can be difficult to fully compare how the assistance programs have supported different demographic groups, because each organization describes multiracial households in different ways.
But in general, the data show, the state’s homeownership support programs have largely served households of color.
Since 2013, the majority of ONE Mortgage loans have gone to home buyers of color. While white families still make up most of MassHousing mortgage recipients, the share of Black and Latino families served has steadily increased. Almost 90 percent of STASH recipients are Black or Latino.
The array of opportunities for first-time homebuyers, and the persisting racial gaps in homeownership, Kornegay said, prove “there’s no one way to get at this one issue.”
The report also found that the success of some initiatives relies largely on the participation of large banks.
In 2009, during a substantial financial crisis, Bank of America closed 56 percent of ONE Mortgage’s loans. But by the time Bank of America stopped participating in 2015, ONE Mortgage’s overall loan volume had been cut almost in half.
Similarly, in 2007, Santander Bank closed 29 percent of ONE Mortgage’s loans. But when Santander discontinued all mortgage lending services in 2022, the bank had already stopped issuing nearly any ONE Mortgage loans.
Schuster said the drop in loans handed out under the assistance programs points to the massive footprint large banks have in providing affordable homeownership support, and also in getting information about the programs to residents. When people start their home-buying journey, their first stop is often at the bank to see what aid is available.
The influence of large banks shows the need to disseminate information about the assistance programs in other ways, for instance through real estate brokers and open houses, or on the internet, where families often start their housing searches, he said.
Clark Ziegler, executive director of the Massachusetts Housing Partnership, which hosts the ONE Mortgage option, said the data show the importance of community-based nonprofits in passing on resources to potential home buyers.
“If we were only relying on banks and lending institutions to provide this information, our results would be a lot weaker,” he said.
The report also recognizes efforts to build more affordable housing for homeownership, including by the CommonWealth Builder, a state fund that subsidizes the construction of affordable housing units for low- to moderate-income families.
Changes to zoning have also helped with the housing supply, the report found. The 50-year-old housing law known as Chapter 40B, which allows developers to bypass zoning in communities whose affordable housing is less than 10 percent of the total housing stock, has ushered in at least 6,000 affordable homeownership units throughout Boston’s suburbs.
The report also mentions conflicts with what it sees as well-intended policy efforts to address the state’s racial homeownership gap.
For instance, the report notes that deed restrictions on affordable homeownership units often limit how much the property can be resold for, as a way to stretch public funding and keep communities affordable. But the restrictions also limit each property’s investment potential, which could hinder efforts to build family wealth.
In addition, focusing development subsidies in low-income areas could help preserve the communities that already exist. But neglecting to offer subsidies in other areas could also reinforce segregation, or displace long-term residents as housing costs rise.
Some advocates suggest introducing more homeownership policies that explicitly target applicants by race. One example is Homes for Equity, a pilot program in Roxbury that aims to make affordable homeownership units available to multigenerational Black families in the neighborhood that were directly harmed by redlining and urban renewal.
But fair housing laws restrict the legality of such efforts, and other communities that are also in need could be left out.
Symone Crawford, executive director of the Massachusetts Affordable Housing Alliance, said that it’s important that policy makers weigh all available options, because “the housing crisis will have a negative effect on everyone in this Commonwealth.”
“We all have to make sure we’re putting in the work to change the status quo,” Crawford said. “That means more money and openness to new ideas and opportunities for others.”