It’s hard to think of a more urgent, vexing, and bigger challenge in Massachusetts than the lack of housing. To solve it, the state needs all the help it can get.
But there are key stakeholders who seem to be constantly underutilized in the real estate industry: builders of color. An eye-opening report released in March underscores the stark representation crisis that the development industry faces nationally. “Breaking the Glass Bottleneck,” prepared by the nonprofits Initiative for a Competitive Inner City (based in Roxbury) and Grove Impact, found that “Black developers represent 0.40 percent of the industry, while Hispanic developers represent 0.16 percent of the industry.” Those are not typos.
Despite those dismal underrepresentation numbers, small Black- and Latino-owned development companies generate more revenue on average than white-owned development companies of similar size, according to the report. The authors note that it all starts with — you guessed it — money. A recent survey prepared by MassHousing focused on emerging developers in the affordable housing market confirms that finding. Participants reported that finance ”institutions often reward a 40-year veteran company over an emerging developer. There is a lot of money ‘burned’ waiting for updates in the process,” read the survey.
“Sometimes I’m in rooms where people wonder, ‘well, do [developers of color] exist?’ And I always say, they absolutely do,” Juana Matias, a former state representative who is regional administrator for New England at the US Department of Housing and Urban Development, said in an interview. “They’re building luxury and affordable housing, they’re building commercial and mixed-use development, you name it.” They just need to be brought to the table, and that often means opening the doors for more financing options available to them.
One of those builders is Wendy Estrella of Methuen. Along with her husband and business partner, Jose Estrella, she has developed and owns over 300 units of residential housing in Lawrence. The couple, both immigrants from the Dominican Republic, have been in business for three decades.
“It’s been a long learning curve for us,” Estrella told me. “I never knew all the types of financing that exist, like non-recourse financing or FHA loans.” And that’s the biggest barrier that emerging builders of color face, she said: The lack of knowledge and exposure to the myriad resources to access capital.
The good news is that Matias’s agency is helping organize a first-of-its-kind summit for developers of color on Wednesday to increase equitable opportunities in New England’s housing and real estate development industries, she said. The summit is sold out, which reflects a strong demand from emerging developers to learn about the industry, Matias said.
The Healey administration is trying to kick down some doors for builders of color. In an interview, Lieutenant Governor Kim Driscoll said that the administration’s new $4 billion housing bond bill will unlock more housing potential, but “if we don’t ensure that we’ve got more Black and brown builders, and more Black and brown homeowners as a result [of the bill], then shame on us.”
“We know Latinos have higher rates of entrepreneurship, but we’re not seeing that as much when we look at the construction industry,” Driscoll said. The state is looking at ways “we can break down barriers to include more individuals,” such as opportunities to connect developers of color with flexible financing options and including “equity metrics into request for proposals” processes, she said.
Colleen Fonseca, executive director of the Builders of Color Coalition, a Boston-based nonprofit founded in 2017 to increase access and diversity in Greater Boston’s real estate industry, said that another big issue builders of colors face is that the real estate industry across the state is very siloed. “It relies so heavily on the professional network that you have,” she said.
To fix that, Fonseca’s organization offers fellowship programs to mobilize and connect developers of color to resources. For instance, to get a project started and completed, including all the steps and necessary permits, requires having many different relationships with government entities. She said that institutions that have been historically siloed from developers of color “are going to be slow to change without some serious intervention.”
Massachusetts is at an important inflection point. For Driscoll, the fact that there is a summit is a game changer. She said the housing bill is as much about jobs as it is about building housing. “For us, it’s critical to unlock the full potential — and that means who’s building it, where are we building it, and who’s benefiting from it.”
Indeed, the public and private sectors must ensure that more people are benefiting from the big and bold opportunities that will come out of Healey’s housing bond bill, but that’s not going to happen if Black and brown builders continue to face barriers.