DeOndra Parker, a single mother who lived on the North Side, did not originally plan to move from her two-bedroom apartment to a new house last year.
But with a 2-year-old and another child on the way, Parker said she was concerned about the safety of living in a third-floor apartment. When she started to look for other rentals nearby, she realized that the costs were “just insane.”
She decided that buying a house made more sense than renting a different apartment.
Parker knew the journey to homeownership was going to be difficult. But until she started her search, she didn’t realize how many barriers she’d have to overcome, from rising prices to lack of options nearby to credit requirements that knock potential buyers out of the running.
In Pittsburgh, those challenges have contributed to a widening racial disparity in homeownership, according to a recent report by the Pittsburgh Community Reinvestment Group [PCRG].
While housing disparities have a deep history tied to overt discrimination such as redlining, the report notes that modern-day barriers continue to limit the ability of people of color to own homes.
“It doesn’t seem like we’ve changed the needle on the meter,” said PCRG executive director Ernie Hogan. “We think it’s a much more complicated issue of just banks not lending to Blacks.”
As a possible solution, PCRG and other community organizations are pushing for statewide Community Reinvestment Act [CRA] legislation to increase racial equity in loans made to homebuyers.
A report published last summer by the Lower Marshall-Shadeland Development Initiative [LMSDI] and Parents Against Violence found that one neighborhood – Shadyside – received more bank loan dollars ($1.054 billion) than 17 minority neighborhoods combined ($807 million) between 2007 to 2019.
“If we can identify the problem, what’s the solution? What’s the opportunity?” said Dan Holland, LMSDI director of research. “In working in this field over the last 25 years, unless you engage financial institutions to identify the opportunities in the neighborhood, then you won’t make any progress.”
What housing barriers exist for Pittsburghers of color?
Financial institutions use a borrower’s credit score history to assess their ability to manage financial obligations and pay bills on time. But according to the PCRG report, Black applicants are more likely to be denied because of credit score history compared to white applicants.
Catapult Greater Pittsburgh is a nonprofit organization that provides financial counseling and services with a focus on economic justice. In addition to technical help, they help residents see that owning a home is a possibility.
“In a lot of cases, fear is what’s keeping people from taking that very first step into homeownership,” executive director Tammy Thompson said. “We try to get people as comfortable with the idea as possible of becoming a homeowner. And it’s scary. It is the biggest financial transaction that most people will make in their entire lives.”
Before Parker went to Catapult, she went to a different community organization to apply for a grant to help with financing. She spent weeks filling out paperwork before submitting her application, she said, only to hear back that she was denied because of her credit history.
But her credit score was not the biggest obstacle.
She’d hoped to stay near family and friends on North Side, especially because she’d have two young children. ”There wasn’t anything over there for me that was move-in ready and that was just realistic in price,” she said.
She eventually found a house in the Penn Hills area.
Reflecting on her journey to become a homeowner, Parker said, “It helps me show growth in myself … especially when you come from certain backgrounds that you don’t ever expect these things to happen for you. For me, it’s just a big accomplishment to be able to purchase my own home and to be financially fit and actually be able to afford to live here and really managing.”
Thompson said another key challenge often faced by Black homeowners is saving enough money for a down payment and closing costs.
“I’m sure it’s an obstacle for all people … most people at least,” Thompson said. “But for Black families, it’s been, particularly in this region and this city, where the wages are so low in comparison to other parts of the country. People are just barely making it with their regular living expenses.”
In August, Catapult launched a new program called Next Steps Fund to assist families in this step of the homebuying process. Since then, Thompson said they have helped 12 people through the program and five people are in the pipeline.
Parker participated in the Catapult’s Developing Ownership Opportunities for Residents [DOOR] program, a pre-purchase program to address specific needs of prospective buyers through monthly workshops and one-on-one counseling.
How are community groups addressing housing disparities?
On his route to work at PCRG in the Hill District, John Boyle said it’s difficult for him not to notice the vacant lots and unequal land investment.
Boyle led the analysis of more than a decade of housing data to produce the PCRG report.
“What might have been affordable a decade ago still may have been unaffordable for Pittsburgh’s Black and [low-to-moderate-income] communities,” Boyle said. “Now, what we’re seeing is an even greater gap in that affordability and how that’s driving homeownership rates in the city down for everyone, but still particularly for the Black and LMI communities.”
The PCRG report emphasizes that short-term solutions such as increasing existing down payment and closing cost assistance programs are “not enough to remedy centuries of racial discrimination and disinvestment.”
PCRG is pushing for the statewide CRA to target banks, credit unions and mortgage companies “with an enhanced focus on racial equity.” The nationwide Community Reinvestment Act was passed in 1977 and mandates that federal bank regulators promote equity in lending.
Some critics contend that the CRA provides too little benefit at a high cost. A 2019 analysis from the libertarian Cato Institute criticizes the federal law for having “ill-defined” objectives and for promoting banks to make riskier loans to serve lower-income borrowers.
Only a handful of states in the country have implemented a statewide CRA, including Connecticut and New York. New York lawmakers last year voted to require nonbank lenders like mortgage companies to follow the state’s CRA. Some critics in the mortgage industry argue that the expansion creates new regulatory burdens and that nonbank lenders are already investing funds from global markets locally.
Boyle said including mortgage companies in CRA legislation in Pennsylvania is important because they have become an increasingly common way to borrow for home loans in recent years.
Currently, PCRG is working with banks to reduce barriers and penalize less harshly for borrowers with student or medical loans.
“If you have student loan debt that is lowering the amount that you can borrow, yet home prices are steadily going up, up, up, up, up, it continues to close that gap, that window of opportunity, for people who want to purchase from lower- to moderate- income demographics, ” Thompson at Catapult said.
The National Community Reinvestment Coalition [NCRC] has published several reports highlighting the long-lasting impacts of redlining and housing discriminatory practices, including how the COVID-19 pandemic has worsened racial disparities in homeownership.
“There are statistically significant associations between greater redlining and pre-existing conditions for heightened risk of morbidity in COVID-19 patients like asthma, COPD, diabetes, hypertension, high cholesterol, kidney disease, obesity and stroke,” according to the NCRC report.
In early March, NCRC published an article on CRA reforms, stressing the importance of using more robust data to rate equity efforts by banks and to identify community needs.
“The lenders have a responsibility,” Thompson said, noting that “regular working-class, hard-working people” haven’t benefited from policies such as the federal bailout of banks during the 2008 financial crisis, which had roots in predatory lending.
‘Something that is your own’
This month marks Shanel Woodruff’s eight-year anniversary working in housekeeping at the University of Pittsburgh. On March 15, Woodruff closed on her first house with Catapult’s help.
When the pandemic hit, Woodruff said she moved into a basement apartment in Friendship. She lived there for two years but was unhappy with pests and the condition of the apartment’s walls. Because her apartment lease was ending in February, she wanted to move.
But similarly to Parker, finding an affordable rental was a nightmare. “It’s a depressing thing looking for apartments,” Woodruff said.
So Woodruff started to look into buying a house.
Before the search, she did not have credit cards or a credit history. She said Catapult helped her build up credit history and apply for grants to put toward buying a house.
Now, she said her current mortgage monthly payment is $743, which is only a dollar more than what she’d paid in monthly rent. Without help, she might not have been able to find housing that met her needs.
“I know it seemed like a while for me, I’ve probably been looking for a place for over a year,” Woodruff said. “But it takes people years to find a place because it’s very difficult. But in the end, it’s definitely worth it, just to have something that is your own.”
Katelyn Vue is a PublicSource editorial intern. She can be reached at katelyn@publicsource.org.
This story was fact-checked by Abigail Nemec-Merwede.
