Emerging Markets Homeownership Initiative Advisory Group Meeting Orientation & Homeownership Barriers August 17, 2004

2 Advisory Group Meeting Agenda 1. Initiative Overview Tim Marx, MHFA Commissioner9:30 to 10:00 a.m. 2. Homeownership Barrier Assessment Mike Haley, MHFA Assistant Commissioner10:00 to 11:15 a.m. 3. Advisory Group Operations Mirja Hanson, Advisory Group Facilitator11:15 to 11:50 a.m. 4. Preview Next Steps Mirja Hanson, Advisory Group Facilitator11:50 a.m. to Noon

3 EMHI Overview Agenda Need for the Initiative Initiative Fundamentals Collaborative Approach Initiative Framework Guiding principles Analytic approach

4 EMHI Background Governor Pawlenty’s Charge: Increase the Homeownership Rate Among Racial and Ethnic Groups in Minnesota

5 Why is the Initiative Needed? MN population is becoming more diverse Between 1990 and 2000, the white population grew by 6.5% while communities of color grew by 112% In 2000, nearly 12% of Minnesotans identified themselves as persons of color compared to 6% in 1990

6 Why is the Initiative Needed? (Continued ) A gap exists in MN’s homeownership rate In 2002, MN had a homeownership rate of 77.3% Communities of color in Minnesota have a 41% homeownership rate  compared to a national rate of 46% for communities of color, and  compared to a rate of 78% among white population

7 Source: MHFA staff tabulations of 1990 Census, 2000 Census and 2002 American Community Survey Homeownership Rate by Race for Minnesota and the United States,

8 Source: MHFA staff tabulations of the 2000 Census Homeownership Rate by Race for Minnesota,

9 The gap is unacceptable Broad economic and social benefits of homeownership  wealth creation  stability  independence  civic involvement Business opportunity for housing/real estate industry Why is the Initiative Needed? (Continued )

10 Initiative Fundamentals Collaboration guided by respect Business plan must embody a sound, analytical approach that leads to actionable and achievable goals and benchmarks Successful, sustainable homeownership by informed choice

11 Initiative Fundamentals (Continued ) Focus is on expanding homeownership for emerging markets utilizing resources and skill sets of those involved

12 MN analysis (and literature) informs us: Review undertaken by co-conveners: MHFA, Fannie Mae, Mpls Federal Reserve Bank  ~ 30 percent of homeownership decision is determined by: Income, age, marital status, race/ethnicity  ~ 70 percent is determined by other factors: Wealth, credit quality, cultural factors and preferences, discrimination, housing prices (land use factors, etc.) Initiative Fundamentals (Continued )

13 Qualitative interview results inform us: Top 2 most frequently cited barriers  Mindset/cultural factors  Information gaps/sophistication of the homebuying process Initiative Fundamentals (Continued )

14 Focus will be on factors that lead to actionable and achievable strategies 30 percent  Generally not actionable and achievable  Potential exceptions e.g. EITC strategies (income) 70 percent  Impact on housing prices not actionable or achievable  Impact on wealth may be actionable and achievable  Impact on credit, cultural barriers, financial literacy are actionable and achievable Initiative Fundamentals (Continued )

15 Collaborative Approach Conveners Honorary Conveners Committee: 10 members Advisory Group: 40 members EMHI Stakeholders ( )

16 Collaborative Approach— Roles and Responsibilities Attend meetings and participate actively Liaison to the wider community Information conduit Inform the community about the initiative Gather additional data from the community Advise the development of the business plan Participate in joint decision making Support and implement the business plan

17 Initiative Framework Barriers to homeownership faced by EM groups Best practices in efforts to address homeownership barriers Implementation of best practices Develop actionable and achievable goals and benchmarks—short-term and long-term Financial and resource allocation Accountability and measurement

18 Initiative Framework— Guiding Principles Business Plan, March 2005 Builds on Research and Analysis Nationally and in MN Inclusive and Responsive Greater MN and Metro Racial and Ethnic Groups

19 Initiative Framework— Guiding Principles (cont.) Actionable/Achievable Goals Impact on homeownership rates Focus on action items relevant to the skills and resources of initiative participants Impact analysis (EMHI participants/other housing market agents) Timeline analysis (short-term/long-term goals) Sustainable homeownership

20 Recognize Fiscal Realities Analytical framework suggests significant “non-money” opportunities Opportunities to re-align existing resources Opportunity to make a “business case” for new resources Initiative Framework— Guiding Principles (cont.)

21 Let’s Get To It