Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, gave the following statement at a full Committee hearing entitled, “Boom and Bust: Inequality, Homeownership, and the Long-Term Impacts of the Hot Housing Market.”
As we celebrate National Homeownership Month, we must recognize that homeownership is the primary driver of wealth for most families in the United States. It’s a source of stability and opportunity for families, who can leverage their home equity to put their kids through college, start a business, and support them in retirement.
However, not everyone has been able to realize the dream of homeownership, and the pandemic housing boom has made these disparities worse. In fact, while millions of people were able to take advantage of historically low interest rates to purchase homes or refinance their mortgages, skyrocketing home prices and other ongoing challenges made it harder for millennials and Gen Z, people of color, and individuals without intergenerational wealth to compete and access homeownership. So, while the Federal Reserve estimates that home equity reached a record $27.8 trillion by early 2022, many qualified would-be homebuyers could not partake in this wealth building event.
These trends threaten to further widen the already wide racial wealth and homeownership gaps. Nationwide, Black borrowers were the only group to experience a decline in home purchase lending among borrowers of color. For example, in my city of Los Angeles, the Black homeownership rate was 34% in 2021—lower than it was in 1910. After experiencing a substantial loss of wealth during the post-2008 foreclosure crisis, households of color continue to be locked out of opportunities to build wealth. It’s unconscionable that despite historically low interest rates, this nation was still unable to ensure that historically underserved and excluded borrowers could make homeownership gains.
We have heard stories of Black homeowners being disproportionately denied refinance loans through appraisal bias and other kinds of discrimination, including reports that Wells Fargo denied nearly 50% of Black refinance applicants. We have heard stories of borrowers relying on mortgage financing being outcompeted by all-cash buyers, including Wall Street-backed investors and iBuyers. In a hearing chaired by Mr. Green yesterday, this Committee heard about how these sales and conversions of homes into single family rentals have harmed tenants, would-be homebuyers, and neighborhoods.
So, rising home prices are directly contributing to inflation, accounting for 40% of the price hikes in the last CPI core inflation numbers. And with recent interest rate hikes, we can expect that for many, the dream of homeownership will remain just that—a dream.
Congress must pass this Committee’s Housing Title of the Build Back Better Act, legislation I drafted that would create and preserve over one million homes. This $150 billion investment would ensure the long-term health of our economy by significantly increasing the supply of affordable housing, thereby reducing housing costs and corresponding inflationary pressures.
Additionally, last week, my Committee passed my bill the Downpayment Toward Equity Act to provide downpayment and lend assistance to first-time, first-generation homebuyers.
I thank our witnesses, and I yield back.