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-Editorial
Homeownership is often the primary step for most families to build a true financial legacy and create generational wealth. Owning a home goes beyond the creation of a financial future, however–it offers families stability and an environment that results in better health and educational outcomes.
To support more families in their pursuit of building generational wealth, the California Housing Finance Agency (CalHFA) is rolling out the California Dream for All Shared Appreciation Loan Program for qualified Californians with a specific focus on making sure first-generation homebuyers in traditionally underserved communities know about this opportunity.
A recent Ethnic Media Services panel discussed the program benefits and details, including eligibility, and how to apply for a chance to receive a program voucher.
Ria Cotton-Landry, Real Estate Broker & Owner, Ria Cotton Realty said that Black/White homeownership disparity was 23.8 percentage points in 1970 and had climbed to nearly 30 percentage points in 2022.
Equally important, she said, the current Black homeownership rate remains far below its peak in 2004, when Black homeownership was nearly 50 percent. Citing the most recent information available, including from the 2022 Home Mortgage Disclosure Act, the SHIBA report noted the Black homeownership rate was 45% in 2022, nearly 30% lower than White households, with a wider gap than 50 years ago. SHIBA also determined that the Black-White wealth gap is so expansive that the 400 wealthiest Americans control the same amount of wealth as the 48 million Blacks living in the United States.
In 1947, African Americans faced barriers in becoming realtors, prompting the establishment of the Realists through NAYRAP. This initiative aimed to define professional standards and support communities by setting their own standards of professionalism.
As part of NAYRAP’s efforts, they have developed the “State of Housing in Black America” report, celebrating its 10th anniversary. This comprehensive report evaluates the wealth, ownership, and credit status of the African American community, providing insights to guide community outreach efforts.
Examining homeownership rates reveals a concerning trend of decline. The report highlights factors contributing to this, such as the expanding wealth gap, inhibiting even non-first-generation home buyers from tapping into generational wealth. Credit scores, particularly for African Americans, present challenges in accessing down payment assistance programs like California’s Dream for All.
With a median credit score of approximately 695 for African Americans, efforts within NAYRAP include collaborating with lenders and credit counseling agencies to enhance credit readiness, a critical factor in qualifying for mortgage assistance programs.
The challenges faced by first-time home buyers include saving for down payments and addressing debt-to-income ratios. The Dream for All program’s equity share component addresses these issues, offering a pathway for leveraging generational wealth and increasing affordability.
One noteworthy aspect is the program’s potential to open avenues for homeowners to leverage their position for further development. This creates a unique approach to building generational wealth beyond equity sharing, addressing challenges faced by buyers in a dynamic housing market.
The report also sheds light on challenges such as high home prices, the need for reserves for unforeseen expenses, and a lack of understanding about the homeownership process. NAYRAP aims to address these challenges through education and post-purchase support, ensuring that buyers not only acquire homes but also thrive as homeowners.
“Finally, the emphasis on educating the younger generation about the benefits of generational wealth is crucial. NAYRAP recognizes the need to instill a mindset of financial responsibility and patience to reap the long-term rewards of homeownership and equity,” Cotton-Landry said.
Eric Johnson, Information Officer, Marketing and Communications Division, California Housing Finance Agency spoke about how in bid to fulfill the dream of home ownership for many Californians, the state has launched the “Dream for All” program, now in its second round. Since its initiation in April, the program has already assisted around 2,000 first-time home buyers, prompting the legislature to allocate an additional $250 million for this phase.
The heart of this initiative lies in supporting first-generation home buyers who, despite having stable incomes and good credit, struggle to accumulate funds for a down payment. This particularly impacts individuals in the black, Asian American, Latino, and Native communities who lack the advantage of intergenerational wealth.
The program offers loans of up to 20% of the home’s purchase price or $150,000, whichever is less. This financial boost aims to reduce the burden of the first mortgage amount, potentially eliminating the need for mortgage insurance, which can significantly impact monthly payments.
While participants are required to pay back the loan upon selling or refinancing their homes, the funds returned will be reinvested to assist the next wave of home buyers, ensuring a continuous cycle of support for future generations.
To be eligible for the program, applicants must meet certain criteria, including being first-time home buyers, California residents, and, in some cases, first-generation home buyers. The program emphasizes inclusivity, reaching out to individuals who were in foster care, expanding opportunities for those who have historically been excluded from generational wealth.
With an income cap based on county-specific limits, the Dream for All program strives to make homeownership accessible to low to moderate-income individuals. The current round involves a lottery system, open from April 3rd to April 29th, providing everyone with a fair chance to secure the financial assistance needed for their home purchase.
Prospective participants are encouraged to engage with approved lenders, ensuring their financial documentation is in order, and submit their applications during the lottery period. The emphasis is on fairness, and the digital lottery process ensures an equitable distribution of opportunities for all eligible applicants. For more details, interested parties can visit the program’s website at Calhfa.com/dream.
As the program looks toward the future, it aims to create a lasting impact by sowing the seeds of generational wealth through the initial injection of funds. With the lottery approaching, Californians have ample time to prepare their applications and navigate the process, taking a step closer to realizing their dream of owning a home.