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How Fair Housing Practices Feed the Economy

By Tanya Svoboda
April 2021

It’s clear that home sales are good for the nation’s financial health. We saw this first-hand as our nation recovered from the economic downturn caused by COVID-19. The housing market has held strong and, in turn, our economy has begun to spring back to life.

The National Association of REALTORS® (NAR) estimates that “each home sale at the median added $88,500 to the economy in 2019.” This amount includes income generated through real estate transactions, expenditures related to new home purchases, a multiplier of housing-related expenditures, and new home construction.

We also know that homeownership is one of the best ways to build wealth that spans generations. The Fair Housing Act was passed into law over 50 years ago to ensure people of color had equal access to housing and the correlating increase in generational wealth. Over the years, the Act has been expanded to make sure all Americans – regardless of race, gender, religion, or ability – have the same rights.

Adhering to Fair Housing Practices Bring Long-Term Benefits to Individuals and the Country

The Fair Housing Act has been instrumental in ensuring all American’s have access to homeownership and the long-term benefits that go along with it. When real estate professionals and lending agencies adhere to fair housing practices individuals and the country’s economy thrive.

In Perspectives on Fair Housing, Vincent J. Reina and Raphael Bostic note, “When housing markets are fair, individuals have access to better economic opportunity and the ability to build more wealth.” When minorities have access to fair housing, their rates of entrepreneurship and their local investments increase which stimulates the economy.



On the flip side, when fair housing practices are ignored, our economy suffers, as do the individuals who are facing discrimination. “Inequality compounds in exactly the same way as interest — small, nearly negligible differences accrue into significant gaps over time,” Morgan Stanley analysts said in a recent report. “Racial inequality in access to homeownership is real, is compounding existing inequality, and is contributing to a rental affordability crisis that’s especially acute among lower-income earners.”

The Morgan Stanley report estimates that when those disparities are corrected, 784,000 jobs are created and $400 billion in tax revenue is collected

The Fair Housing Act and the Equal Credit Opportunity Act are in place to make sure there are no discriminatory practices in real estate-related transactions and credit transactions. Yet, in spite of these protections, lending discrimination still occurs.

“Disproportionately high rates of home loan application denials for Black and Hispanic applicants are a key factor contributing to the homeownership gap,” the Morgan Stanley report said. The report noted that 16% of Black households and 12% of Hispanics were refused a mortgage in 2019, compared to just 8% of White households.

The Community Reinvestment Act (CRA) is one way to combat discriminatory lending practices. The CRA was enacted in 1977 to encourage banks and lenders to meet the credit needs of the communities they operate in. The intent is to make sure low- and moderate-income communities have equal access to loans.

Organizations like NAR are committed to fighting the unfair practices that continue to persist. NAR notes, “Our economy, our communities, and the American people suffer when discrimination and segregation artificially constrain homeownership and limit the intergenerational wealth it builds.” They continue, “NAR is firmly committed to the enforcement of fair housing laws and to policies that remove historic and systemic barriers to homeownership for all qualified buyers.

As lawmakers and real estate leaders like NAR continue to expand the protections and crackdown on discriminatory practices, homeownership opportunities should continue to increase for marginalized groups. And that’s good news not just for homeowners, but for the nation as a whole.


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