According to Federal Reserve Chairman Ben Bernanke, lower-income and minority communities have been disproportionately affected by the housing bust. In his November 15, 2012 keynote speech at the Operation HOPE Global Financial Dignity Summit in Atlanta, Georgia, Bernanke addressed challenges in the housing and mortgage markets. The Federal Reserve Chief said that “as a result of the crisis, most or all of the hard-won gains in homeownership made by low-income and minority communities in the past 15 years or so have been reversed.”
In his speech on the housing market, Bernanke remarked upon the comparative decline in African-American homeownership:
For example, among all income groups, between 2007 and 2010, homeownership rates fell the most for households with income of $20,000 or less, according to the Federal Reserve’s Survey of Consumer Finances. Data from the Census Bureau show that, over the period from 2004 to 2012, the homeownership rate fell about 5 percentage points for African Americans, compared with about 2 percentage points for other groups.
Bernanke also noted that with fewer U.S. households willing or able to purchase new homes in recent years, the pace of mortgage lending has declined on a nationwide basis. However, mortgage origination contraction has been considerably severe for lower-income and minority groups. According to Bernanke:
Since the peak in mortgage lending in 2006, the number of home-purchase loans extended to African Americans and Hispanics has fallen more than 65 percent, whereas lending to non-Hispanic whites has fallen less than 50 percent. Home-purchase originations in lower-income neighborhoods have fallen about 75 percent, compared with around 50 percent for middle- and upper-income neighborhoods.
Bernanke highlighted signs of an improving housing market. Yet, he cautioned that in order for the recuperation to be complete, all communities must be present in the recovery. Bernanke vowed that the Federal Reserve would use its monetary and regulatory power to support the housing recovery, but invited participation from households, the financial services industry and the nonprofit sector as well. Ending with a quote from Dr. Martin Luther King, Bernanke proclaimed: “We may have all come on different ships, but we’re in the same boat now.”