Affordable housing shortage, wealth gap hold back Black families - Crain's Chicago Business

NASA announced last night it’s going to try to launch its Artemis I mission on Saturday after Monday’s attempt was scrubbed. But you don’t have to wait that long for all the news you need. Here’s what’s on tap today:
• Orphe Divounguy on how housing disparities widened during the pandemic, affecting the wealth gap.
• Yet another alderman announces they’ll depart City Hall next May.
• The fall of Roe has been followed by a surge in women registering to vote.
Orphe Divounguy On the Economy: Housing disparities widened during the pandemic. And that expanded the wealth gap, too.

Nationally, fewer than half of all Blacks own their home compared to more than 70% of white households. The racial and ethnic gaps in homeownership were wide even before COVID-19 and the pandemic surge in house prices and rents only expanded the gulf. According to research published by the National Association of Realtors, the Black homeownership rate in the United States is lower today than it was a decade ago.
Unfortunately, the pandemic buying frenzy meant that prospective Black buyers—who earn less on average than other Americans and have less access to credit—struggled to keep up with bidding wars associated with quickly rising house prices. All told, homeownership increased for all races during the pandemic, but Black homeownership grew more slowly than it did for white households.
There are many reasons Black renters face huge obstacles on the road to homeownership. First, Blacks disproportionately live closer to cities, where rents tend to be higher. What’s more, research from Zillow shows that minority renters also face higher upfront costs—from submitting a higher number of applications and being rejected more often to paying higher security deposits. The disproportionately higher costs associated with renting lengthen the time it takes to save for a down payment. Perhaps as a result, Black mortgage applicants also tend to make smaller down payments when applying for a loan—a median of 3.5%, less than half the overall median down payment of 8.9%.
Related: Naturally occurring affordable housing occupies ‘the space between’
Then, there’s access to credit. More than 50% of white households have a FICO credit score above 700 compared to only 21% of Black households, according to research by the Urban Institute. Finally, Black mortgage applicants are denied 84% more often than white borrowers are, according to data from the Home Mortgage Disclosure Act, with poor or nonexistent credit history being the most commonly cited reason for the denial. Mortgage denial rates among Black applicants increased by 10 percentage points during the pandemic.
Research also shows that even after accounting for income, credit, and loan-to-value and debt-to-income ratios associated with a mortgage application, Black mortgage applicants experience different processing times and worse outcomes than similar whites. Black applicants are 2.9 percentage points more likely to have their mortgage application denied relative to similar white applicants.
Related: Chicago’s generational opportunity in affordable housing
Rising housing costs disproportionately affect low-income households and minorities contributing to higher wealth inequality. And the resulting increase in the wealth gap drags down U.S. economic growth. That means lower living standards for everyone, not just those who are left behind. This is because stable housing is linked to better health, more private and public investments, higher labor supply and local employment.
New research published by the Federal Reserve Bank of San Francisco reveals that children whose parents extract equity from their home are 60% more likely to become a homeowner than children whose homeowner parents are not able to extract equity from their home. Unfortunately, a history of discriminatory housing practices led to land loss and lower housing values for Blacks, and that often means less home equity for those who still managed to get on the homeownership ladder, limiting the opportunities for their children as well.
Related: A new study explores the history of redlining and resulting housing inequity in Cook County
From paying higher rent costs, having less access to credit or being less likely to get parental help for a down payment, the odds are stacked up against Black families. However, when comparing U.S. metropolitan statistical areas, Black households tend to have a higher homeownership rate in areas that build more housing. This makes sense. House prices tend to grow faster and affordability can more easily get out of reach in areas where building new housing is constrained by nature—such as lakes and mountains—or by land use and building regulations.
While not much can be done about a lack of developable land in some areas, loosening single-family zoning restrictions—which prevent homes from being built—could yield millions of additional homes and go a long way to lower housing costs, reduce race and ethnic wealth inequality and boost U.S. economic prospects.
Crain’s contributor Orphe Divounguy is a senior economist at ZillowGroup and former chief economist at the Illinois Policy Institute. The views presented here do not necessarily reflect the views of his employers.
More City Council moving and shaking, by Marcus Gilmer

Another day, another alderman stepping down. Fresh on the heels of 5th Ward Ald. Leslie Hairston’s Friday announcement she wouldn’t run for re-election, Ald. Tom Tunney, 44th, said on Tuesday he also would not seek re-election, bringing his time as Lakeview alderman to a close after 20 years.
With Tunney, the number of aldermen who have either already vacated their seat or announced their intended departure in the last year is at 12, nearly 25% of the City Council. It can be hard to keep track of the comings and goings–Mayor Lori Lightfoot will soon appoint a replacement for former Ald. Michele Smith in the 43rd Ward–so we’ve created this resource to track of who’s gone and who’s going.
And, finally, you know things are weird when an alderman announces they ARE seeking re-election–as Pat Dowell, 3rd, did today–and it’s a change of pace, but here we are.
In other news, by Marcus Gilmer
• More funds to fight gun violence: Gov. J.B. Pritzker announced a new round of grants, totaling $100 million, up for grabs for organizations dedicated to fighting gun violence around the state.
• CPD to give more time off: The day after the city’s watchdog reported that over 1,200 CPD officers had to work for at least 11 straight days, Supt. David Brown said there would be a change in canceling days off.
• More power for some McDonald’s workers: Fast food workers are on the cusp of getting more power in California, where proposed legislation would create a state council to establish minimum pay and safety conditions at fast-food restaurants.
• Biden heads to Milwaukee: As part of a pre-midterm blitz, President Joe Biden is hitting the road with three stops in Pennsylvania and one in Milwaukee, Wisconsin which, coincidentally, will host the 2024 Republican National Convention.
• Another water crisis: Jackson, Mississippi, the state’s capital and largest city (pop: 150,000), is without running water after pumps at the city’s water-treatment plant failed.
One more thing: After the fall of Roe, a surge in new women voters, by Marcus Gilmer

It’s looking more and more like the fall of Roe v Wade will have a big impact on the midterm elections even as inflation has ruled recent headlines. In early August, voters in traditionally conservative Kansas voted down an amendment that would have placed tighter restrictions on abortion. Since then, Democrats have made reproductive rights a centerpiece of their midterm campaigns–a move Gov. J.B. Pritzker went to as soon as all of the June primary votes were counted.
And, now, women are outpacing men in voter registration in several key states.

From Bloomberg:
Women have outpaced men in new voter registrations by 11 percentage points in Ohio, 12 points in Pennsylvania and 15 points in Wisconsin since the court’s June 24 ruling. In Georgia, the margin was 6 points and in North Carolina 7 points.
The new voters are overwhelmingly young and Democratic, according to TargetSmart, a Democratic data analytics firm that compiled the numbers from state voter files.
Of course, there’s still two months and change to go until Election Day and that’s an eternity in political time. But this voter surge is sure to be more good news for Democrats who are suddenly feeling much more optimistic about the midterms than they were a few months ago.
In case you’re curious, FiveThirtyEight currently predicts Republicans to take the House, the Democrats to hold the Senate and Pritzker as “very likely” to win the governor’s race.
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