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Habitat for Humanity International CEO on addressing the affordable housing crisis

Habitat for Humanity International CEO Jonathan Reckford joined Yahoo Finance Live to break down the affordable housing crisis and investigating the homeownership gap.

Video Transcript

ALEXIS CHRISTOFOROUS: Hello, everyone, and welcome to "A Time for Change." I'm Alexis Christoforous here with Sibile Marcellus. Kristin Myers is off this week. It's no secret that the housing market is on fire right now. That may be very good news for investors, developers, and anybody looking to sell a house, but it can be very bad news for the potential millions of people looking to buy a home right now. There simply aren't enough homes to meet demand, especially at lower price points.

And that threatens to make things even tougher for Black Americans who are already left out of the housing market in large numbers. At last count, 74% of white families owned their homes compared to just 41% of Black families. For the next half hour, we'll be talking about the US housing crisis, what's driving it, and what can be done for those who need help.

SIBILE MARCELLUS: Our first guest is the CEO of Habitat for Humanity. That's the nonprofit that has been working for 45 years to create what it calls decent affordable housing. Jonathan Reckford, welcome.

JONATHAN RECKFORD: Thanks. Great to be with you.

SIBILE MARCELLUS: So what's standing in the way of affordable housing?

JONATHAN RECKFORD: Fundamentally, we have a supply problem. And there's many more parts we can talk about, but I just saw data this week that just in the single-family market for people who'd like to buy a home, we're four million units short in the United States right now. And actually on the affordable end of that, it's even worse.

So we are losing housing that is affordable for low and moderate income families faster than we're creating it. And so right now, as people have been called to shelter in place this year, I think it's really put a spotlight on the fact that for so many people, they have no adequate place in which to shelter.

ALEXIS CHRISTOFOROUS: And I'm sure affordability is a big part of this equation, Jonathan. We found out this week that the median home price is now at a record high, $329,000-- out of reach for so many people. What would you like to see done to help bring that median price down?

JONATHAN RECKFORD: I think it's going to take a multi-sector effort to solve this, because it starts with, how do we build more housing across the entire spectrum? Habitat for Humanity's niche is affordable home ownership, but we need more rental housing, we need more of every kind of housing that is affordable. And the math doesn't work right now.

If you're a family making even two minimum wages, there are almost nowhere in the country where you can afford an apartment on the usual benchmark of paying no more than 30% of your income on housing. And we've got over 17 million families in America paying over half their income on housing. And it's one of the reasons we created our first ever US housing advocacy campaign called Cost of Home, really focused on this issue of affordability. The reality is, regardless of your income, you want housing that you can afford on a reasonable percentage of your income.

SIBILE MARCELLUS: Jonathan, why does the racial gap in homeownership persist?

JONATHAN RECKFORD: This has deep, historical precedents that it's really important to understand. For almost a century now, there were federal, state, and local policies that mandated segregated housing. And that created a long-term deficit that has made it harder. So what happened is, first, federal public housing, and then the FHA was told to lend to high quality neighborhoods, which was code for neighborhoods that were white.

And therefore, that's where the term redlining came from. And so it became harder to get capital, harder to get access, and harder to purchase a home if you were a Black family. And then families in white neighborhoods got appreciation that was far higher. So what happened is a whole generation of white Americans created that nest egg over time through forced savings that allowed them to have down payments for their children or put their children through college.

So it created this wealth gap as well as that homeownership gap. And it's been exacerbated by local zoning rules that have created, first, racial segregation, but now economic segregation, which correlates with that that keeps that gap high.

ALEXIS CHRISTOFOROUS: Jonathan, what would you like to see happen from a policy standpoint? We actually have somebody coming on later from the Housing and Urban Development division within the Biden administration. What would your, I guess, message be to them when it comes to low income and affordable housing?

JONATHAN RECKFORD: Well, the first message, and we're certainly partnered with HUD in many ways, is that not everyone should be a homeowner, but homeownership is the way long-term, through that forced savings of paying a mortgage, that families have been able to create an intergenerational asset over time. And especially that's true for low income and minority families.

And so we would say, first, is, let's focus on specifically increasing opportunities for Black homeownership. That's going to require a number of things-- increasing down payment assistance, because if you're a lower or moderate income family, it's very difficult, when you are already paying high rents and trying to pay for all the other expenses of life, to be able to save up that down payment. And you've probably seen the data about how little savings about 40% of our country has in terms of that margin.

Second is increasing access to affordable credit. And what we see are black families pay higher rates. And right now, it's very difficult to qualify for mortgages. So even if you can find a house you could afford, it's not easy to qualify for financing. And then we need to invest in affordable homeownership.

And Habitat for Humanity has demonstrated over decades now-- and we're technically a sub subprime borrower. But even the worst period of 10 years ago, we saw our habitat families be able to stay in and afford their homes even when we saw very high foreclosure rates at high income levels in the last downturn. So it's not that homeownership is a bad idea, the way it was done where people were being lent money they couldn't afford to pay back under terms they didn't understand didn't make sense.

And so we would focus on investing, both through financing, and land, and down payment assistance on the one side. The other side is tackling zoning, and that's where the local side has to come in, which is right now, so much of our metro areas are zoned for single family only. And I think we've got to open up more opportunities for low and moderate income housing in the high opportunity areas, and invest more in historically distressed areas.

Because the goal is to get to mixed income, mixed use communities where more people can live near where they work and where they've got access to good schools and good opportunities. And we know, if we don't solve the housing piece, we don't get the health piece, the education piece, or the livelihoods that we want for every citizen.

ALEXIS CHRISTOFOROUS: Yeah, it all works together, for sure. OK, Jonathan Reckford, CEO of Habitat for Humanity, thanks for joining us. And thanks for the work you're doing. Coming up next here on "A Time for Change," why is American housing still so segregated? We'll talk about it after this short break.