A home is a principal asset for economic security, wealth creation and opportunities such as higher education and business formation. For half of American households, home equity represents at least half of net wealth. An abundance of evidence demonstrates that homeownership stabilizes neighborhoods, increases civic involvement and improves educational outcomes.
In Minnesota, most households have a share in the benefits of homeownership. The state is a national leader in the overall homeownership rate. However, Minnesota is a national laggard in minority homeownership, with a rate of 42 percent. In 2003, the gap between white and minority homeownership rates in Minnesota was the eighth-largest in the nation, at 32 percent.
An initiative takes shape
To address this gap, Minnesota Housing, Fannie Mae Minnesota Community Business Center and the Federal Reserve Bank of Minneapolis convened the State of Minnesota Emerging Markets Homeownership Initiative (EMHI) in early 2004. The conveners invited a diverse group of more than 50 stakeholders, including real estate professionals, lenders, builders, housing organizations, government entities, nonprofits, faith-based organizations and community groups, to focus on the gap and discuss possible solutions.
The stakeholders divided into two groups: the Committee, which includes organizations that have a principal role in the home purchase process, such as lenders and realtors; and the Advisory Group, which includes about 40 organizations involved in the homebuying industry, such as insurers and community development corporations. Since their formation, the groups have met regularly to discuss strategies for reducing Minnesota's homeownership gap.
In June 2004, Governor Tim Pawlenty challenged EMHI participants to develop a business plan to increase homeownership in emerging markets. In response, they conducted an extensive review of research literature on homeownership and emerging markets. To encourage participation from the broader community, EMHI sponsored numerous focus groups and listening sessions around the state. The various discussions helped identify six main barriers to homeownership for emerging markets in Minnesota: wealth and downpayment; credit and lending practices; cultural factors, preferences and immigration; information, marketing and outreach; discrimination; and limited access to homebuyer counseling and financial education.
EMHI participants then drafted a business plan based on their literature review, strategy discussions and barrier identification. Their plan is intended to be "actionable, achievable, and impactful," with an emphasis on three objectives:
- Establishing tangible, specific goals and an accountable, inclusive organizational structure.
- Recognizing that one size doesn't fit all. Effective strategies for various emerging markets must be identified and implemented based on approaches that are sensitive to specific cultures and ethnicities.
- Establishing an implementation approach that employs statewide initiatives for building an infrastructure to address specific barriers and, simultaneously, creates local pilot programs to identify and test approaches that are germane to various emerging markets or geographic areas.
The resulting plan, titled The Emerging Markets Homeownership Initiative: A Business Plan to Increase Homeownership in Minnesota's Emerging Markets, was formally presented at a June 2005 ceremony in St. Paul.
A plan to erase the gap
EMHI's long-term vision is to erase the gap in Minnesota's homeownership rate. The business plan sets forth an intermediate goal of creating 40,000 new emerging market homeowners by 2012. It also identifies twelve best-practice strategies for achieving EMHI's objectives. The strategies fall under three fundamental goals:
Provide trusted guidance. Establish a transitional, "trusted advisor" emerging market outreach network and institutionalize a homeownership industry network that is friendly and accessible to emerging market consumers.
Expand and tailor outreach. Develop and promote culturally sensitive emerging market consumer education to demystify the homebuying process and disseminate homeownership resource information in a manner that is accessible to emerging markets.
Innovate structural support. Provide additional homebuying options for emerging market homeowners.
Five of the twelve best practices were designated as high-priority "starting points" or strategies to pursue while EMHI builds its organizational structure. These five strategies are:
- Enhance and increase the diversity of mortgage and real estate industry professionals.
- Create an industry certification program targeted at mortgage and real estate professionals. Key characteristics of this program include cultural competency and affordable lending resources.
- Create a culturally sensitive marketing campaign.
- Create culturally sensitive homebuyer education courses.
- Develop a postpurchase services network to help create successful homeowners who can continue to make payments on a timely basis.
Building a structure
Following the release of the business plan, EMHI's conveners recognized the need to formalize the initiative's existence. They incorporated it as a stand-alone entity in November 2005. Incorporation required the establishment of a board of directors, which includes representatives from the convening organizations, Advisory Group and Committee.
The new board created a director position, with responsibility for overseeing the initiative's implementation and serving as its key coordinator, contact and spokesperson. After a thorough search, Shawn Huckleby was named the first EMHI director in early 2006. Huckleby, who previously served as a senior specialist with the U.S. Department of Housing and Urban Development, has extensive experience in the statewide and national housing and community development industries.
Once the director was in place, EMHI took steps to build its structure and capacity in other ways. In May 2006, the initiative applied for designation as a 501(c)3 nonprofit organization. The application is currently pending, with a determination expected by late 2006 or early 2007. EMHI's online presence, originally part of Minnesota Housing's Web site, moved to a new, dedicated site at www.emhimn.org in August, 2006. The site currently features meeting schedules, membership directories and the full EMHI business plan. One potential enhancement is a member blog that EMHI stakeholders could use to share information about best practices.
Progress and next steps
Implementation of the business plan is currently under way, led by Huckleby and supported by the board of directors, Advisory Group and Committee. To help guide and shape the implementation process, EMHI established four Community Councils in late 2005—one for each of Minnesota's major emerging market communities: African Americans and African immigrants, Latinos, Asians and Pacific Islanders, and American Indians. The councils include leaders from the business, nonprofit and government sectors and serve as EMHI's liaisons to Minnesota's emerging market groups. (For a list of organizations represented on the four Community Councils, see the sidebar below.) Under Huckleby's direction, the councils are working to identify which business plan strategies are of highest priority for their respective communities.
While the Community Councils continue their discussions, a subcommittee of EMHI participants is developing criteria for use in designating planned or existing homebuying initiatives around Minnesota as EMHI pilots. The pilot program will provide opportunities to test approaches for pursuing specific EMHI strategies. Pilot initiatives will benefit from EMHI's broad base of expertise, and EMHI will benefit from any lessons learned by the pilots' sponsors and clients.
Next steps for EMHI include spreading the word about the initiative and taking stock of its achievements. Director Huckleby is scheduled to deliver a presentation on EMHI at the Northwest Area Foundation's "Grassroots and Groundwork" conference, to be held in St. Paul this September. The conference is expected to draw a national audience of policymakers, community developers and business leaders. Huckleby and EMHI's board, Advisory Group, Committee and Community Councils will gather at the first annual EMHI Summit in early 2007 to assess their progress and revisit the demographic and market trends that underlie Minnesota's homeownership gap. Summit participants will adjust elements of EMHI's business plan, as needed, to ensure the initiative can provide flexible responses to the state's ever-changing mortgage and homebuying environment.
For more information on EMHI, contact Shawn Huckleby at 651-894-2260 or shawn@emhimn.org, or visit www.emhimn.org.
Emerging markets' buying power growsIncreasing Minnesota's emerging market homeownership rate will not only strengthen communities and help families build wealth, it will also provide business opportunities. Minnesota's emerging market population is growing faster than its white population, doubling to 12 percent between 1990 and 2000, and its buying power is growing at an amazing pace. For example, the buying power of Minnesota's black population tripled from 1990 to 2004, an increase unmatched by any other state. Nationally, Minnesota ranks as the fourth fastest-growing consumer market in Asian buying power, and sixth in the growth of Hispanic buying power. This increased buying power presents an opportunity for the homeownership industry and other businesses. Currently, emerging markets make up 40 percent of first-time homebuyers, according to the National Association of Realtors. |
Community Councils include a spectrum of partnersMembers of the Emerging Markets Homeownership Initiative's four Community Councils represent a diverse group of organizations with interests in the housing and community development fields. Community Council partner organizations are listed below. Pan African Community CouncilAfrican Development Center Latino Community CouncilAmherst Wilder Foundation Asian American and Pacific Islander Community CouncilAdvisor's Mortgage American Indian Community CouncilBois Forte Reservation Tribal Council |
