The Case for a New Paradigm

A root cause of the widespread protests we saw this year is the century of redlining and mortgage discrimination which created the huge and growing racial wealth gap in the United States and is aggravating long, simmering racial tensions.

In spite of many laws prohibiting discrimination in housing, education, employment, and health access, schools remain heavily segregated1, the racial wealth gap is close to that of 19682, and there are huge disparities in almost every health outcome.3 In 2019, the median White family in the United States had $188,200 in accumulated wealth, while a Black family had only $24,100, and Hispanic families had only $36,100— meaning Black and Hispanic families have only 13-20% of the wealth of White families.4 Those identifying as Asian, American Indian, Alaska Native, Native Hawaiian, Pacific Islander, other race, and all respondents reporting more than one racial identification also have significantly lower wealth than White families.

Solutions to this crisis will require bold, daring and non-traditional partnerships with diverse perspectives to help solve and thus create positive, effective change. California must explicitly tackle poverty and promote wealth creation, recognizing the immense need for stable housing as a linchpin. There is no silver bullet that will cure decades of discrimination and despair, but there is a tried and true system that helped America overcome the social and economic crisis of the 1929 Great Depression and created a White middle class that was the envy of the world‒ homeownership, and it can do so again.

Unfortunately, the United States government has a history of acknowledging racial tension and discrimination only after widespread protests and often responds by putting together a commission to investigate the causes of the protests. At first glance, commissions appear very democratic and raise hopes that things will change, but time after time we have seen outcomes held back by insufficient funding, lack of time dedicated to the project, disagreements among the team of commissioners, and shifting state and federal budget priorities. Even worse is when commissioners condemn rioters and their methods of protests instead of the underlying causes motivating people to come to the streets and fight, which has increasingly been the case throughout history.

Solutions to California’s housing crisis, on the other hand, typically fall into two broad strategies: help lower-income families pay for housing through subsidies and many forms of charity, or the classic economic argument to increase supply and lower costs by making it easier and cheaper for developers to build new homes. Both strategies are critical parts of the solution, but alone they have proven insufficient or politically infeasible over the years. These strategies alone will not get us to California’s goal of 3.5 million new housing units built by 2025.5

This is why California Community Builders and The Two Hundred coalition members are calling for a new approach: an unlikely alliance consisting of entities that have a vested interest in home building and community building: financial institutions, insurance companies, developers, building material suppliers, realtors and mortgage brokers, title companies, labor unions, and building trades. In addition to the private sector with an economic interest in promoting homeownership, the alliance would also include public sector institutions such as government planning agencies and non-profit groups focused on developing positive long-term health and economic outcomes. Bringing together groups that have “skin in the game” either with economic or social incentives binds stakeholders together into an alliance that can move public policy initiatives in unique ways. The alliance would have the potential to have substantial political influence to address controversial impediments to homebuilding and alternate homeownership formations— it will work within the capitalist system by utilizing private capital to build capital in formerly capital-denied redlined communities.