To solve the fair housing problem, we need both supply and demand strategies.

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In the United States, where you live matters and influences every aspect of your life, including your child’s ability to attend a well-equipped, high-performing school; breathe clean air; drink unpolluted water; receive quality medical care; avoid food deserts; access to quality credit; and much more. Now that the nation fair and affordable housing the crisis is getting the attention it deserves, let’s not forget how housing discrimination distorts the market, and how lenders and policymakers can achieve fair home ownership opportunities.

We have lost trillions of dollars in economic growth because of systemic racial inequality. One study estimates that homes in predominantly black neighborhoods are valued at 21–23% of their value in non-black neighborhoods, resulting in a cumulative loss of $162 billion in 113 metropolitan areas across the United States. Other studies suggest that improving access to home credit could lead to additional 770,000 black homeowners, generated billions in local tax revenue And created thousands of jobs. These studies demonstrate the need for a national, comprehensive supply and demand strategy to address the nation’s skyrocketing housing costs and its ongoing role in driving inflation so that everyday people can get the fair housing opportunities they deserve.

Fortunately, innovative solutions exist that will create opportunities for communities of color as well as consumers in low-income rural areas and ultimately grow the economy for everyone. This is where lenders and policymakers can play a critical role.

First Generation Down Payment Assistance (DPA) for Home Buyers could create 5 million new home buyers and has been adopted in a number of states, including Maine, Massachusetts, Minnesota, North Carolina, New Jersey and Vermont. Consumers typically receive up to $25,000 in down payment assistance. First-generation home buyers remain in communities as owner-occupiers. And unlike investors-buyersHome buyers are not contributing to the overall increase in home values ​​in communities. The first generation DPA allows eligible home buyers to use grant funds for down payments such as a down payment, mortgage closing costs or securing a lower mortgage interest rate, allowing consumers to enter homeownership fairly. For comparison: tax credit available after home purchase will not remove major barrier to homeownershipwhich is the original cost.

Harmonizing Definitions of First-Generation Home Buyers used by Fannie Mae, Freddie Mac and Federal Home Loan Banks with Law on initial contribution to share capital will provide liquidity and ease of implementation for millions of potential home buyers. Fannie and Freddie should also include first-generation home buyer eligibility in their affordable lending programs. add 1.2 million prime home buying age households (25-54) to the pool of potential participants, the majority of which are Black or Hispanic households..

The Federal Housing Finance Agency should require federal home loan banks to create equity plans to support first-generation homebuyers. Congress should also pass legislation that substantially increases the amount that home loan banks allocate to housing and community development in exchange for huge taxpayer subsidies.

If mortgage lenders with existing programs for first-time homebuyers added first-generation DPAs to their programs, they could close the racial gap in homeownership. Often, existing programs for first-time homebuyers provide insufficient funding and lack flexibility in eligibility requirements, making them less effective.

Passing the Neighborhood Investment Act, with the addition of fair housing principles to minimize the displacement of current residents of distressed neighborhoods, would provide a tax credit to cover the shortfall in the cost of building and rehabilitating owner-occupied homes and add 500,000 new and/or new homes. rehabilitated affordable homes in urban, suburban and rural communities hardest hit by the Great Recession. This tax relief proposal has broad bipartisan support in Congress.

Ensuring full compliance with our nation’s fair housing and lending laws should also be a top priority. According to National Fair Housing Alliance 2024 Report on Fair Housing TrendsIn 2024, the upward trend in housing discrimination complaints continued. Private, nonprofit fair housing organizations have processed more than 75% of housing discrimination complaints and need $125 million to provide critical assistance to victims of housing discrimination.

Focusing only on supply-side strategies will not produce the sustained economic growth needed to support a housing market that accounts for nearly 20% of the country’s total GDP. Communities of color will be 70% of all future household growthwith the largest share being Hispanic. Thus, a housing strategy that does not focus on these consumers and their enormous influence on the housing market can lead to market instability.

Combining supply and demand strategies will address the nation’s fair and affordable housing crisis. Together, they could ensure all communities have more equitable access to homeownership and wealth benefits.