Hoping to close the racial gap in Seattle homeownership, nonprofit lender HomeSight Washington launched a financial relief program in November to give a boost to black residents looking to buy their first home.
Called the Sam Smith “Hi Neighbor” Fund, named after the Washington state representative who championed an end to racial discrimination in housing, the program gives homeowners access to a low-interest loan. interest of $12,000 to help them make a down payment.
Payment of the Sam Smith loan, which bears interest at a rate of 3% per annum, is not due for 30 years unless the property is sold or refinanced, although owners can pay off the loan sooner without penalty. The money refunded to HomeSight goes back to the fund for future buyers. HomeSight also operates a separate down payment assistance program that provides Black, Indigenous, and Homebuyers of Color with a $10,000 zero interest loan.
But since its launch last winter, few families have been able to take advantage of this support, according to the nonprofit lender. Only seven families have bought a home using Sam Smith’s assistance program, chief executive Darryl Smith said, with about $211,000 of financing still available to potential buyers.
“What we’re having is a really tough real estate market,” Smith said. “We would like to be able to help more people, but we need the market to provide affordable housing.
Even with a declining real estate market, already struggling individuals and families in the Seattle and Puget Sound area simply cannot afford rising home prices, Smith said.
Last month, the median single-family home in King County sold for $899,999, according to recent data from the Northwest Multiple Listing Service. The median single-family home in Snohomish County sold for $749,999, in Pierce County for $555,000 and in Kitsap County for $550,000.
It’s a situation that prompted HomeSight officials this month to increase the down payment assistance loan program through the Sam Smith Fund to $20,000 to make families more competitive in the housing market. , Smith said.
“What we’ve seen is staggering: rising house prices, the gap between what people can earn and afford, and prices,” Smith said.
Black homeownership in Washington is lower today than it was in 1968, when the Fair Housing Act was passed, prohibiting housing discrimination based on race, color, religion and national origin.
According to recent US Census Bureau data, about 1 in 3 blacks in the state own a home, compared to about 2 in 3 whites. In Seattle, about 26% of black residents own a home; Asian, Latino, and Native American American residents also own homes at lower rates than white residents.
Discriminatory housing policies and decades of racial redlining have barred residents of color from home ownership, a fundamental method of creating wealth in the United States.
Today, the persistent racial disparity in homeownership is forcing people to “stay in the cycle of poverty,” said Rosa Berhe, who received help from the Sam Smith Fund to buy a home this year.
Berhe grew up in West Seattle with six siblings in public housing; his mother immigrated from Eritrea in the 1980s. While his mother had always dreamed of owning a home, it never seemed “in the realm of possibility,” Berhe said.
In 2016, Berhe and her mother began house hunting together when it became clear that her mother would not be able to buy a house on her own. Even so, the majority of homes were out of their price range. At the time, Berhe was working part-time at a gymnasium while attending college, and her mother was a janitor and paid caregiver.
So they kept saving. Berhe’s family has weathered job changes and pandemic-related financial problems. It wasn’t until June 2021, once Berhe began working closely with HomeSight advisors, that home ownership was within reach, she said.
After racking up just over $74,000 for a down payment, she and her mom were pre-approved in March. They began the hunt, equipped with additional funding from HomeSight.
“We kept bidding; we managed a lot. These houses were going so fast that you put yourself in a desperate state of mind,” Berhe said.
Eventually, they closed a $600,000 home in Des Moines in May, moving in with three of Berhe’s siblings.
Becoming a landlord was life-changing, Berhe said. Her family no longer fears being evicted from rental accommodation and Berhe sees herself opening a small business using the equity in her home. Without additional help from HomeSight, Berhe said she didn’t know if she would have been able to buy a home.
“Maybe in a few years, but who knows what it will be like when the houses soar even more,” Berhe said.
Recently, a host of housing advocacy groups, lenders and real estate companies in Washington have launched efforts to close the homeownership gap among black residents. In March, JPMorgan Chase announced it would dedicate nearly $2 million to a Black homeownership initiative organized by the Seattle Foundation’s Civic Commons.
The Washington Department of Commerce is expected to release a report in the coming weeks evaluating state-funded down payment assistance programs, as well as investigating barriers preventing people of color from accessing credit and services. loans to buy a house.