City investing $940,000 to close racial disparity gap in homeownership rates

By Brianna DeVore

On May 25, the Minneapolis City Council approved $940,000 of its 2015 budget to support housing affordability assistance through the newly created Homeownership Opportunity Minneapolis (HOM) program.

HOM is scheduled to supply up to 125 families with startup capital needed to make homeownership viable. Program participants are chosen based solely on income, but proponents of the program anticipate minority families reaping the greatest advantage.

Mayor Betsy Hodges emphasized the importance of the program for families. “Having a stable place to live and raise a family is a goal that every Minneapolis resident should have the opportunity to achieve. The City’s new Homeownership Opportunity Minneapolis program will help make that possible, especially for diverse households.”

HOM is a much-needed resource for the state of Minnesota. According to government-funded survey data spanning 2010–2012, there are 38 percent more white homeowners than non-white homeowners in the state. That makes Minnesota 48th worst in the nation when it comes to racial disparities among homeownership. The disparity between white and non-white homeowners in the city of Minneapolis is also alarmingly high at 36 percent.

To bolster participation among communities of color, HOM set aside $100,000 of its budget to conduct outreach in partnership with minority assistance programs. In North Minneapolis, Lao Assistance Center of Minnesota, EMERGE and the Greater Metropolitan Housing Corporation were all tapped to take part.

The HOM program will provide qualified homebuyers with up to $7,500 toward the down payment and closing costs on any single-family home, duplex, townhouse or condo purchase within Minneapolis city limits. Families must have a combined income of less than $99,500 per year to be considered.

Qualifying applicants receive free consultation from a homeownership advisor, a service offered through a partnership with the Minnesota Homeownership Center. After consultation with an advisor, applicants take part in free homebuyer education courses, available online or in person. These courses are required for any first-time homebuyers participating in the HOM program.

The reasons for racial disparities in homeownership are varied. Some research points to the legacy of racially biased housing restrictions, which are thought to discourage many minorities from applying for mortgages. Blacks are thought to be most impacted by discriminatory housing practices.

Other factors contributing to disparities include low credit scores and an increase in debt among households. Many Millennials in particular have difficulty attaining homeownership due to higher levels of student loan debt and the lower wages that come with being newcomers to the job market.

In North Minneapolis, home prices have consistently fallen in the past few years. The Star Tribune reports that Northside homeowners who purchased in 2006 need to see an increase of 85 percent in order to return to their purchase price today. By comparison, the housing market in southwest Minneapolis has already risen back to pre-crash levels.

Falling prices have encouraged Northside homeowners to rent instead of sell. While renting is a sound option for many homeowners and renters, research shows that moving from renting to homeownership is linked to improved neighborhood conditions throughout the U.S.

The HOM program is one new tool available to help renters interested in making the transition to homeownership. HOM Principal Project Coordinator, Cherie Shoquist, says that there are 10,000 renters in Minnesota who have the financial resources to own. For this group, a lack of understanding of the home buying process and insufficient visibility to viable resources may explain low homeownership rates.

HOM loans are zero-percent interest loans that are completely forgiven after participants spend five consecutive years in their purchased home. If homeowners decide to leave their residence before the five-year deadline, then they are required to pay back their HOM funds in total.

In addition to HOM, the City of Minneapolis also provides mortgage loans with affordable interest rates through Minnesota Housing, the State’s Housing Finance Agency. HOM loan participants are made aware of these, and many more opportunities, through the free consultation and homebuyer education courses HOM offers.

For more info, and to get started on the HOM loan application process, visit

One thought on “City investing $940,000 to close racial disparity gap in homeownership rates

  1. Barbara Murray

    Some people should not own a home for many reasons. For instance: poor credit, zero mechanical ability, low initiative, inability to get to a library to Google ‘homeownership resources’. I have had many tenants over the years who didn’t /couldn’t manage a plunger in a toilet or sink. Respectfully, there are legitimate reasons some should NOT ever own a home. Tossing money at most of our social problems does NOT solve a thing, it does however enrich the poverty pimps bottom line.

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