FY23 HUDRD - Closing the Homeownership Gap and Preserving Homeownership During Economic Decline

and (b) how homeownership can be preserved during economic decline including the effects of related public policies and other initiatives (including private or philanthropic efforts on achieving preservation goals). Proposals may address either or both these topics. The research funded under this NOFO will advance scientific knowledge and produce policy-relevant evidence on homeownership gaps and may inform the development of future approaches to help communities of color and other underserved communities achieve more equitable homeownership rates.                                                           BackgroundHomeownership is often viewed as the entry to the American dream and the gateway to intergenerational wealth. However, this pathway is often less achievable for underserved groups who post a lower homeownership rate than non-underserved families (Ray, et al. 2021). These homeownership gaps have contributed to lower median family wealth for disadvantaged groups. Because wealth (as measured by the total amount of assets a person owns minus debts) is a critical predictor of education, health, employment, and other quality of life metrics, a strategy to address the homeownership gap can have positive effects beyond just housing itself.This NOFO is focused on providing greater analysis and research on critical aspects of the homeownership gap, including residential patterns of undeserved groups/communities and the causes of ethnic/racial/gender/age/other disparities and obstacles to homeownership among these groups. The neighborhoods where homebuyers purchase their homes contribute to their home’s worth and its chance of appreciation over time, which has important implications for the long-term financial returns associated with homeownership. Despite some progress in achieving integration, weaknesses in fair housing enforcement have undermined the ability of the Fair Housing Act to dismantle segregation and combat discrimination. The forms of discrimination that were common in the past such as segregation by design or edict, including redlining, have shifted over time, and housing discrimination—along with persisting residential segregation—continue to hamper disadvantaged homebuyers’ ability to build equity. Home mortgage borrowers in underserved groups and communities remain concentrated in residentially segregated areas where homes have failed to appreciate at the same pace as those in neighborhoods where non-disadvantaged borrowers predominantly buy their homes.A common measure of the extent to which disadvantaged residents are segregated from other groups in cities is the index of dissimilarity. The dissimilarity index represents the percentage of one of the two groups included in the analysis that would have to move in order to achieve more equitable distribution within smaller geographic units that match the composition of the entire city. Minority residents are extremely segregated from the rest of the population in many major cities, e.g., Detroit, Baltimore, Cleveland, and Atlanta. In Atlanta, the city with the highest levels of segregation, almost 70% of minority residents would have to move to new Census tracts to produce a uniform geographic distribution.Racial economic inequality in the United States is primarily the result of unequal investments among communities. Estimates showing the percentage of unbanked or underbanked populations in the U.S. for different racial and ethnic groups often highlight inequalities in the financial health of their neighborhoods (FDIC, 2021). The percentage of blacks (46%) who are unbanked or underbanked alone is over three times the percentage of whites (14%) who experience the same struggle. Thirty-two percent of Hispanics are also either un- or under- banked.This overview provides a general overall look at the role of segregation, discrimination, and racism in the housing market, as well as the consequences for educational attainment and wealth accumulation for persons of color and others in underserved communities, and points to the need for further research and assessment of potential policy responses. Research Objectives and PrioritiesThe objective of this NOFO is to fund research projects that can assess the extent of the homeownership gaps between minorities and majority homeowners; to evaluate the barriers to homeownership facing minorities; and to assess the threats that economic decline pose for homeownership preservation, including public and private responses to these threats. Research could include renters seeking or considering homeownership, new homebuyers, or existing homeowners. Barriers can include mortgage lending discrimination by lenders, disparate outcomes from lending to different applicant demographic groups as well as credit history and collateral requirements that can disadvantage nonwhite applicants. Furthermore, many minority renters could be homeowners if they were not facing financial and discriminatory barriers to acquiring a home. Closing the homeownership gaps requires identifying the factors that prevent renters of color and others in underserved groups from becoming homeowners.The study may be longitudinal or a cross-sectional at borrower level. It could also focus on specific areas or cities where the problem is especially acute or localities that have taken steps toward ameliorating the homeownership gap. Evaluating the effect of various policies and programs, local or national, public or private in addressing the issue is an important topic for this NOFO.The emphasis would be on a quantitative study, but a qualitative approach could be a useful supplement. Data could be loan- or home-level as well as locality-level. Multiple sources of data could be employed. Additional Research ConsiderationsHUD intends to fund proposals that use rigorous methods to measure the extent, causes, and impact of homeownership gaps and explore the effect of economic decline on homeownership preservation. The proposal should discuss how the applicants plan to control other factors that affect homeownership rates, such as federal and local regulations, access to financing and policies, and familiarity of customers with mortgage shopping and other aspects of home acquisition. The proposal may need to identify a plan to control applicant bias (self-selection), regional housing costs, and household demographics. Proposals can be limited to a set of jurisdictions, but the applicant must demonstrate that the proposed jurisdictions are sufficient for a robust analysis, with sufficient data points to allow for robust statistical power, and for the establishment of a counterfactual. The study should describe the method and design specification for estimating the relevant counterfactual outcomes. Applicants are expected to demonstrate that they have or will likely have access to homeownership rates data and other relevant data points included in the study. Applicants should discuss their experience using the proposed data and matching it to other data sources. Applicants should discuss any additional data sources that will be included in the study and the feasibility of obtaining the data. Applicants shall identify major methodological issues and data limitations and ways the study will address them.HUD will not prescribe specific information collection approaches, protocols, or instruments. Any information collection efforts conducted by a grantee to address the NOFO objectives will not be subject to the Paperwork Reduction Act.Eligible ActivitiesEligible activities include all research and project management activities that contribute to meeting the NOFO objectives and research needs at a high-quality level, and specifically to complete the funded research. Eligible activities include, but are not necessarily limited to the following:Defining the research steps from the articulation of research questions (including literature review) through the development of research design, data collection and analysis plans, to the analysis of data, and finally including the writing of publication-quality research reports and formal presentations and briefings on findings.Regular communication with HUD staff on all project deliverables, as required by HUD’s substantial involvement under the cooperative agreement.Consulting with experts on any aspect of the research as needed to bring expertise to enhance the research team’s knowledge in critical areas.Project management activities, including required project management tools (Opening Meeting, Management and Work Plan and Budget, Quality Control Plan, and Quarterly Progress Reports) and regular communication with HUD staff for monitoring purposes.Data acquisition costs.Dissemination of research findings through seminars, presentations, worships, etc.Project DeliverablesHUD’s Cooperative Agreements require certain deliverables as part of the project management system, including the following: (1) an Opening meeting with HUD; (2) a Management and Work Plan providing a detailed outline of specific tasks, a project timeline, staffing and management responsibilities, and the allocation of resources; (3) a Quality Control Plan that documents all necessary measures taken by the Awardee to assure that the quality of end products of service shall meet the requirements outlined in the Cooperative Agreement; and (4) Quarterly Progress Reports. Please note that the Management and Work Plan is the document that will govern HUD’s monitoring of project activities.Project deliverables shall also include the following documents, each of which shall be approved by the Government Technical Representative assigned to the project:Research Design, Data Collection and Analysis Plan (RD/DCAP): The Research Design will serve as a technical blueprint for all research activities undertaken to address research objectives. The Data Collection and Analysis Plan will provide details on the data sources, the types of analytic methods that will be used, and the schedule for accomplishing these tasks. The RD/DCAP must demonstrate how the analysis plan will address the research questions and hypotheses proposed.Interim Report: The Interim Report will be released near the midpoint of the project and provide a summary of the project up to that point. The Interim Report should be considered an opportunity to evaluate the state of the project.Draft and Final Report: The Final Report must summarize the work conducted over the course of the project, and present the study objectives, data sources, analysis methods, and results. The Final Report is the key deliverable of the study and must serve as a stand-alone document that meets the overall objective of this project. The Final Report should be edited and prepared for publication in accordance with HUD’s Guidelines for Preparing a Report for Publication.Briefings to HUD: Awardees will be asked to provide briefings to HUD near the midpoint of their project and after the Final Report is submitted.Data Files. Awardees must submit individual or aggregate data files and documentation, including code and syntax, such that HUD or HUD contractors would be able to conduct a meta-analysis integrating the findings from different impact studies.HUD staff will work closely with grantees to define deliverables. Final work products shall be well-written, and the final research report must be of publishable quality and shall conform to HUD’s formatting requirements.  HUD intends to publish the final research report on HUD’s website, HUD USER, at https://www.huduser.gov/portal/home.html.ReferencesBrown, Dorothy. (2021). “Your Home’s Value is Based on Racism.” The New York Times.Dettling, Lisa J., Joanne W. Hsu, Lindsay Jacobs, Kevin B. Moore, and Jeffrey P. Thompson (2017). “Recent Trends in Wealth-Holding by Race and Ethnicity: Evidence from the Survey of Consumer Finances,” The Federal Reserve.Edbuild (2019). “$23 Billion Report.”Fairlie, Robert (2020). “The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey.” Stanford Institute for Economic Policy Research.Federal Deposit Insurance Commission (2021). “National Survey of Unbanked and Underbanked Households.”Grotto, Jason, Zachary R. Mider, and Cedric Sam (2020). “White America Got a Head Start on Small-Business Virus Relief” Bloomberg,Haythorn, Russell (2020). “An Unconscious Bias? Biracial Denver Couple Says They Faced Discrimination on Home Appraisal.” The Denver Channel.Henry-Nickie, Makada, Tim Lucas, Radha Seshagiri, and Samantha Elizondo (2021). “Low to Moderate-Income Families Are Losing Ground: How to Save Their Homeownership Dreams.” The Brookings Institution.Kamin, Debra. 2020.” Black Homeowners Face Discrimination in Appraisals.” The New York Times, August 27, 2021.Klein, Aaron (2019). “Credit Denial in the Age of AI.” The Brookings Institution.Massey, Douglas, and Nancy Denton (1993). American Apartheid: Segregation and the Making of the Underclass. 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Brookings Press: Washington DC.Perry, Andre M (2020). “A Revolution of Values for Black American Families.” The Brookings Institution.Perry, Andre M., Jonathan Rothwell, and David Harshbarger (2021). “The Devaluation of Assets in Black Neighborhoods.” The Brookings Institution.Ray, Rashawn, and Andre M. Perry (2021). “Why We Need Reparations for Black Americans.” The Brookings Institution.Ray, Rashawn, Jane Fran Morgan, Lydia Wileden, Samantha Elizondo, and Destiny Wiley-Yancy (2021). “Examining and Addressing COVID-19 Racial Disparities in Detroit.” The Brookings Institution.Ray, Rashawn, Andre Perry, David Harshbarger and Samantha Elizondo (2021). “Homeownership, Racial Segregation and Policy Solution to Racial Wealth Equity.” Brookings Institution.Saporito, Salvatore, and Daniel Casey (2015). “Are There Relationships Among Racial Segregation, Economic Isolation, and Proximity to Green Space?” Human Ecology Review 21, no. 2): pp. 113-32.Sheridan, Jill (2021). “A Black Woman Says She Had to Hide Her Race to Get a Fair Home Appraisal.” NPR, May 21, 2021.U.S. Census Bureau (2021). “Quarterly Residential Vacancies and Homeownership, First Quarter 2021.”, April 27, 2021.U.S. Census Bureau (2019). American Community Survey 2019 (5-Year Estimates). Retrieved from Social Explorer.Williams, Claire (2020). “’It’s What We Call Reverse Redlining’: Measuring the Proximity of Payday Lenders, Pawn Shops to Black Adults.” Morning Consult.