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Homeownership: The American Dream in Rhode Island

April 21st, 2016 by acola

Anna Cano Morales, Director, Latino Policy Institute at RWU

In February 2014, United States Housing Secretary Julián Castro came to Rhode Island through the office of Senator Jack Reed, to tour Central Falls and other communities to see first-hand how federal investments are improving neighborhoods and helping low-income families. During the Secretary’s time in Rhode Island, HousingWorks RI and Latino Policy Institute at RWU hosted a lunch with prominent community leaders and policy experts in attendance. The two policy groups shared findings on housing and housing affordability.

Housing Secretary Castro and the community at large were surprised and concerned to learn that the income needed to afford the median priced single-family home in Rhode Island far outpaced the household incomes of both Latino and non-Latino renters. In addition, the median renter household income for Latinos declined 16 percent within the same time frame, while the median renter household income for non-Latinos remained the same. Home Mortgage Delinquency Act data showed that home mortgage applications for Latinos in Rhode Island decreased 53 percent (2007 – 2013) compared to 26 percent for non-Latinos. This was a major takeaway; Latinos were not in the position to purchase homes in Rhode Island. This is especially concerning due to projections that state by 2040, the Rhode Island Latino labor population will double to 24 percent.

Twenty-six percent of Latino households are homeowners, compared to 64 percent of non-Latino households. The majority of Latinos have had their mortgage less than 10 years, and 90 percent of Latino homeowners have a mortgage compared to 68 percent of non-Latino homeowners. With the high rate of Latinos who hold mortgages, more than half (56 percent) of Latino mortgaged households are housing cost burdened.  

Fast forward to 2016, Rhode Island has not ignored the evidence. Renewed Homes, a recently launched program by Rhode Island Housing provides $20,000 towards qualified first-time homebuyers purchasing a previously foreclosed property or eligible alternative. Funded through the U.S. Department of Treasury’s Hardest Hit Fund, this program is applicable to 10 of Rhode Island’s 39 municipalities to include: Central Falls, Pawtucket, Providence, and Woonsocket. With the RI Latino population residing heavily throughout the urban core, this program will provide potential Latino homebuyers with an added incentive to enter the homebuyer market and plant longstanding roots, something that is essential to propel our economy forward.

Along with Renewed Homes, making housing affordable for the newest members of our workforce is important. Rhode Island Housing’s Ocean State Grad Grant program encourages young professionals to put down roots in Rhode Island and contribute their talents to the local economy as active members of our communities. Since the program’s inception in September 2015, Rhode Island Housing has issued 133 grants. With a Latino median age of 26 in Rhode Island, this program can appeal directly to the young professional Latino population.

As the fastest growing demographic in Rhode Island continues to grow, it is imperative to think strategically about how best to encourage Latinos to stay. Programs outfitted to incorporate and build off of these demographic shifts, such as Renewed Homes and the Ocean State Grad Grant program is a start. In order to ensure Latinos participate in these innovative programs, they need to access educational and job training opportunities that will yield them higher paying jobs and a livable wage.

Housing Secretary Castro would have enjoyed witnessing a recent ribbon cutting where Joaquin Ortiz and Trudy Crespo, recent graduates of the Central Falls Housing Authority’s Family Self Sufficiency Program, celebrated their new home. A portion of their FSS funds were used to make improvements to the house in order to suit all of their family’s needs. This home will be the first sale under the newly created Pawtucket Central Falls Development Homeownership Program. This program provides direct one-on-one credit counseling, financial literacy, and the delivery of homebuyer education classes in both English and Spanish in Pawtucket and Central Falls. This comprehensive approach is key to successful homeownership and retention.

Rhode Island needs data driven solutions and smart policies. We know that housing is a big economic development driver for states, and the two, demographics and housing, must come together for the American Dream to become a reality for all.

By: Anna Cano Morales, Director, Latino Policy Institute at Roger Williams University