Report: People of color disproportionately underrepresented in Cedar Rapids metro homeownership

CEDAR RAPIDS — Black residents and other racial and ethnic minorities living in the Cedar Rapids metro are disproportionately underrepresented in homeownership, a recently unveiled Linn County analysis of housing inequities found.

As solutions to address systemic housing issues that were highlighted in the study, local officials are looking at efforts to develop financial literacy and prevent housing discrimination, develop funding partnerships, preserve existing housing stock and create new tenant protections.

The analysis unveiled this week, which Linn County commissioned using federal American Rescue Plan Act dollars, gives baseline information for local officials to identify solutions to housing inequities within Cedar Rapids, Hiawatha and Marion.

“We heard so much from the community that housing was an issue,” Community Outreach and Assistance Director Ashley Balius said. “ … Inequities with our housing system were central to everything we were talking about.”

Community conversations identified key equity issues in housing, including:

Deanna Robinson, housing planner with the East Central Iowa Council of Governments, said affordable housing is a piece of the puzzle needed to make a vibrant community.

But housing affordability increasingly has become a challenge, Robinson said, as wage growth is outpaced by inflation and monthly rents continue to rise. Affordability nationwide has plummeted in the last four years since the pandemic struck, she said.

Pandemic protections that helped people stay housed already have been committed or expired, resulting in eviction and foreclosure rates returning to pre-pandemic levels.

For housing to be considered affordable, an individual should spend 30 percent or less of their income on housing.

In the study area encompassing the three Cedar Rapids metro communities, the analysis used the Census Bureau’s American Community Survey data and found 16,207 people spend between 30 and 50 percent of their earnings on housing.

Another 6,573 people said they spend more than half their income on housing, Robinson said. These households experienced the highest rate of job loss because of the pandemic, and were more likely to spend savings faster and accumulate more debt to try to stay housed, according to a Congressional Report on the Pandemic Response.

“The data really does tell a powerful and undeniable story of inequality,” Linn County Supervisor Ben Rogers said.

The report shows there have been “undeniable” systemic failures fueling housing issues in Linn County, he said, but can guide conversations about re-imagining the system.

“Homeownership is part of the American dream and it’s apparent that is not attainable for a lot of people,” Rogers said.

Racial gaps persist

Inequities persist in Cedar Rapids from redlining, a discriminatory practice where residents systemically were denied financial services such as mortgages based on their race or ethnicity, the study found.

It looked at the census tracts where previously there was redlining in the neighborhoods that now include the Northwest Neighborhood, Kingston Village, Taylor, the area around Mount Trashmore, Oak Hill Jackson, downtown, Wellington Heights and Mound View.

Compared with the rest of the study area, the study found these previously redlined neighborhoods in Cedar Rapids’ core have:

Pockets of southwest Cedar Rapids, the Northwest Neighborhood, the edge of Cedar Rapids bordering Hiawatha and eastern Hiawatha also were found to be at risk of modern-day redlining. Home loan application rates were the lowest in these areas while the minority population was higher than the area average.

Moreover, the Urban Land Institute’s 2021 assessment of homeownership gaps nationwide found the Cedar Rapids metro statistical area — which also includes Benton and Jones counties in addition to Linn County — found the area had the second-largest white-Black homeownership gap at 53.24 percent, falling behind only Scranton, Pa.

Housing market woes

Based on the local housing market in June 2023, the analysis found only 16 percent of homes for sale in Cedar Rapids, Marion and Hiawatha were considered affordable to households earning below $75,000, less than the national average of 23 percent.

In a balanced market, the National Association of Realtors considers 51 percent of homes to be affordable to those at that income level. To reach that balance, the study found the Cedar Rapids metro needs another 187 home listings below $256,110.

It also is taking Americans longer to save for a down payment. In 1981, the median age of a homebuyer was 31. It was 47 as of 2020.

Supervisor Louie Zumbach said, anecdotally, it also seemed young people were less interested in owning a home and having to assume responsibility for tasks such as calling a plumber when something breaks down.

The analysis found it can take 10.6 to 11.3 years for a typical worker to save for a down payment and closing costs in Linn County. While saving for a down payment, Robinson said people also must hope no other costly emergencies come up.

“As homeownership becomes increasingly out of reach, it contributes to economic inequality,” Robinson said.

Potential solutions

Among possible solutions outlined in the report were improving financial literacy and developing a discrimination prevention campaign. These efforts would hold lenders accountable for practices that are a barrier for residents of racial or ethnic minorities.

Funding partnerships could either keep people housed or help them access homeownership. Revolving loan funds could support home rehabilitation projects or down payment assistance. Nonprofit housing development corporations could focus on housing for populations typically underserved by the private sector.

A program could be modeled after Iowa City’s Housing Fellowship partnership with Hills Bank and Trust to offer no-interest loans for rental deposits, then helping tenants build credit history, the report said.

To preserve existing affordable housing stock, the analysis recommended funding key home repairs or using nonprofit partnerships to buy and rehab properties, then sell them with covenants guaranteeing affordability.

Finally, renter protections the study recommends exploring include a tenant protection ordinance providing more municipal oversight of evictions so city officials can target resources. And though controversial, a rent stabilization ordinance could “modestly” cap rent increases so they don’t disproportionately spike while wages stagnate.

Supervisor Chair Kirsten Running-Marquardt said she hopes these findings advance conversation on solving housing inequities with communities across Linn County.

“Moving forward, we’re going to have to be a part of the solution,” she said.

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