Home ownership is the key to New Orleans’s problems.  Homeowners have better lives.  Homeowners create generational wealth. Also, homeowners commit fewer crimes. Plus, homeowners create stable neighborhoods.  And stable neighborhoods make great cities.  Fixing New Orleans woes starts with creating more homeowners in the city.

Ownership denied

For decades government financial policies and correlating bank discrimination prevented most African Americans from owning their homes.  Redlining was the way the government identified African American neighborhoods.  Redlined neighborhoods were denied government backed loans and insurance.  Thus, African Americans were denied access to generational wealth.  Simultaneously, white neighborhoods accessed loans at fast and furious rates. The wealth gap was codified in legal American financial policy.  Besides the financial gains over time from home equity growth, there are many other benefits from owning a home.

Benefits of Home Ownership

Families benefit from homeownership.  Partners who combine their incomes to purchase a home tend to stay together longer.  Intact families earn and save much more money over time. But intact families don’t just have more money.  They keep and improve their homes over time. Bathroom and kitchen renovations.  Adding on another room.  Better windows.  All these investments increase the property value over time.  And for most Americans, the biggest asset they own is their home.  Families build generational wealth over time. 

Children who grow up in a home owned by their parents do much better than children who do not. According to a FHA study. Compared to rental households, ownership children do better –

  • They stay in school longer
  • They graduate high school
  • They attend college or acquire a high wage life skill
  • Improved math and reading scores
  • They have a 2.9% lower dropout rate
  • The teen birth rate was 5% lower than rental children
  • School expulsions are 90 % lower than rental children
  • Criminal arrests are 92% lower than rental children

Ownership families are also healthier.  The parents report fewer health problems.  And the children report very good or excellent health.  School absences are significantly lower.  Participation in extracurricular activities is increased.  Remarkably parent and child bonding increases as support their children’s extracurricular activities.  Picking up or dropping off for practices and attending events give parents more time to engage their children.  Families with close ties report happier lives and healthier lifestyles.

New Orleans must create more home ownership opportunities for her citizens.  The issues – poor educational outcomes, high dropout rate, high teenage pregnancy, carjackings, burglaries, and other crimes – are directly related to the lack of home ownership.  This is hard for people to understand.  But housing is  just a structure.  Home ownership is  a mental, financial, physical, mature committed approach to life.  Your identity is connected to your house.  Home ownership is transcendent.  Especially for African Americans.  Owning a piece of the American pie transforms your approach to life. You own a piece of the city.  You are committed.

How to Transform Renter New Orleanians into Homeowners

New Orleans is a poor city.  The economy is based on tourism.  Tourism jobs tend to be low wage jobs. How can we make this remake this city?  Currently the city is a city of renters.  Low wages.  No family history of home ownership. There are not that many mortgage wage jobs in our city. 

There is a federal mechanism that can help.  Individual Development Accounts are a mechanism for low income asset building and homeownership.  Developed in the 1990’s by famed sociologist Michael Sherraden, the IDA typically matches or even increases the savings of people.  Sherraden says, “Unlike traditional welfare programs, IDA accounts would introduce real assets into the lives of many poor people who would otherwise be without them. IDAs would be a different approach to welfare policy, an approach that emphasizes individual development and combines social provision with individual responsibility and individual control. IDAs would enable the poor to bring their own cards to the table and make their own deal.”

Some IDA’s in Louisiana have a 4 to 1 match ratio.  For every dollar saved by an individual 4 dollars are added.  We will examine how these programs can be a key factor in transforming our city in next weeks article.

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