As the effects of racial discrimination and segregation linger in Washington’s housing market, state lawmakers are considering a new approach to boosting Black homeownership: financial assistance for people once excluded by racial covenants.
A proposal in the state Legislature, House Bill 1474, would create new down-payment and closing-cost assistance for first-time homebuyers in Washington who either were themselves excluded by the covenants in the state before the Fair Housing Act or are the descendants of those affected. The act, passed in 1968, outlawed housing discrimination.
Racially restrictive covenants were common in the 1920s, ’30s and ’40s, often limiting neighborhoods to only white owners and specifically excluding Black, Asian and Jewish residents. The U.S. Supreme Court ruled the covenants unenforceable in 1948, but they remained on the books and continued to shape segregation patterns. Researchers at the University of Washington and Eastern Washington University have discovered thousands of racially restrictive covenants across Washington.
“The results of these intentional policies, practices and laws have had a multigenerational impact on our Washington communities,” the bill’s sponsor, Rep. Jamila Taylor, D-Federal Way, said at a recent hearing.
Taylor said her proposal “addresses the decades of direct harms inflicted by our state on Washington residents.”
The inability to buy homes in prosperous neighborhoods in turn limited the ability of Black people and other people of color to accumulate wealth. In Washington, 34% of Black families own homes, compared with 68% of white families, according to an analysis of 2020 census data.
Median income for white households in King County is nearly twice that of Black households, according to a Public Health – Seattle & King County analysis. A city-commissioned report about Seattle’s housing supply found Black renters are more likely to be cost-burdened, making it harder to save up to buy a house.
West Seattle renter LeChelle Lucas hopes the proposal would help people like her.
Lucas, who is Black, always wanted to own a home, but “I just didn’t think homeownership, honestly, was on my horizon,” she said.
She didn’t have the funds for a down payment and couldn’t turn to her family for help.
A down payment felt like the way to “get in the game,” she said. “Not being able to put money down immediately takes me out.”
To be eligible for the assistance under the new proposal, first-time homebuyers would be required to make at or below 100% of area median income (roughly $107,000 for a family of three in King County). The assistance would be in the form of loans, which recipients would repay when they sold their homes.
A new $100 fee on documents recorded with county auditors, such as new mortgages, would fund the program. The fee would take effect in January, and assistance would be available starting in July 2024. It’s not yet clear how much an individual homebuyer would receive from the program.
Lucas, 37, said she and her family feel the effects of discrimination, even decades after racially restrictive covenants were enforceable.
When her parents hoped to buy a house in the 1990s, they couldn’t rely on financial assistance from their parents. “There was no generational wealth to be distributed,” Lucas said. “So when my mom and dad were on their quest to homeownership, they basically were doing it alone.”
The family moved into a home on a corner in Rainier Beach that “looked abandoned” with grass so tall it covered up the windows, she said. “And they made it to the nicest house on the block.”
Yet even as homeowners, Lucas said her parents struggled to build enough wealth to pass on. Add to that high home prices, and the area where she grew up now feels out of reach.
“If I wanted to purchase a house on that block, I wouldn’t be able to afford to do it,” Lucas said.
Lucas eventually found help buying a home in Delridge through Habitat for Humanity. But she hopes state lawmakers will approve what she sees as a step toward addressing the legacy of redlining and covenants.
“I wasn’t even there, but that pain still is real to me,” she said. “I’m affected by that. I’m a product of that.”
A fee on recorded documents is a common source of funding for state housing and homelessness programs, but it has proved volatile as the housing market cools. Revenue from existing fees on recorded documents fell 37% short of projections between July and October, the first four months of the state’s fiscal year and the latest data available from the state department of commerce.
The state has not yet produced a formal estimate for how much HB 1474 would raise. Rep. Frank Chopp, a Seattle Democrat and co-sponsor of the bill, estimated it would raise about $100 million a year.
The state expects about 1.2 million documents subject to the fee will be recorded each year once “the economy returns to a more stable trajectory,” said Tedd Kelleher, policy director for the housing division of the state Department of Commerce, in an email. That would result in about $120 million for the new program. But “the outstanding question,” Kelleher added, “is when the economy will return to the historically more stable and predictable trajectory.”
Affordable housing advocates, Black real estate agents, Zillow, Washington Realtors and others testified in favor of the bill this past week.
In testimony, broker Nicole Bascomb-Green urged lawmakers to embrace specificity in the new program. Descendants of enslaved people “have a specific stake in this and have been harmed specifically,” said Bascomb-Green, president of the local chapter of the National Association of Real Estate Brokers, the trade group formed by Black real estate agents in 1947, when they were excluded from other industry associations.
“The government was clear about who they wanted to shut out,” she said. “So now we need to be clear about who we need to include.”
Sean Holland, representing the Washington Land Title Association, argued the fee increase would create a “regressive burden” on people filing documents. Money should instead be raised through an excise tax charged as a percentage of sale price, he said.
A committee vote on the bill split along party lines Thursday. Republicans voted no, citing concerns about increasing the fee. The bill now heads to more discussion in legislative committees before a possible vote in the House.