Creating a Clear Path to Native American Homeownership

Thank you for the kind introduction. I am happy to be back in Anchorage. I’m especially grateful to Craig Nolte, my new colleague at the Federal Reserve Bank, and Jim Nordlund, my former colleague at USDA Rural Development, for including me in this important discussion about homeownership in the heartland of America.

We all know that adequate and stable housing is fundamental to good health and childhood education outcomes, employment stability, and many other basic needs. For American Indians and Alaska Natives, it is that and so much more; a house on ancestral lands evokes a special place of heritage and culture.

While I’ve been invited to share some thoughts about the opportunities and challenges around homeownership in Indian Country, I’m here mainly to learn, listen, explore new ideas, and forge new partnerships with this work. My comments today reflect my own thoughts and perspectives.

Let me start by offering that all of us have a personal housing story—how and where we grew up profoundly impacts us, and largely defines the many opportunities and challenges we will face in our lives. My own story begins in a drafty old house in a small rural town, where my dozen sisters and brothers shared everything and were free to explore the woods and creeks along the Mississippi River. It then shifts to a shabby and noisy public housing unit in Colorado. I eventually found a place of my own where I could make a home for my children, close to good schools and nice parks. I’ve also been on a three-decade quest to build a house on my mother’s allotted lands on the Standing Rock Reservation in South Dakota. It’s been a challenge of a lifetime to establish a real and permanent place to dwell.

The role of the Fed in Indian Country

The Federal Reserve, and the Federal Reserve Bank of Minneapolis in particular, has a long history of working with tribal communities to support access to capital, financial education, and economic research. The Minneapolis Fed intends to expand the scope and scale of this work through its new Center for Indian Country Development (CICD). With an admittedly broad mission—to help tribes attain their economic development goals—the Center will focus initially on four areas: land, business and entrepreneurship, education, and homeownership.

These four focus areas, pillars to dynamic economic growth, fit well with the Fed’s Community Reinvestment Act responsibilities and related community development mission of fostering economic growth by promoting fair, impartial, and efficient access to credit and capital in low- and moderate-income areas. They also support developing communities rich in resources for their children and creating inheritance for the future.

Divergent views of homeownership

To begin, we must first recognize that the homeownership experience is very different for Native communities. Even within regions, housing patterns and homeownership rates differ significantly.

How often have we heard that owning a home is the cornerstone of the “American Dream”? And how has that dream been extended to Native peoples?

From an economic perspective, evidence shows that greater access to homeownership yields positive economic and social advantages for households and communities. For most Americans, a home represents the family’s most significant asset and serves as its primary wealth-building vehicle. For the community, studies have shown that higher levels of homeownership improve the stability of neighborhoods, resulting in higher levels of educational achievement, civic engagement, and lower crime rates. Homeownership thus is a major economic driver and a significant socialization contributor.

Since the 1960s, homeownership rates in the United States have been consistently above 60 percent. During the recent housing crisis and flagging economy, homeownership rates dipped slightly, from 66.2 percent in 2000 to 65.1 percent in 2010. The homeownership rate in rural communities and small towns is generally higher. In 2010, the rural homeownership rate was 71 percent.

In Indian Country, however, the overall homeownership rate of 56 percent significantly lags behind the national rate. The myriad challenges of providing affordable housing are rooted in a complex legal history and land-tenure system incomparable elsewhere in the United States. These challenges require a multi-tiered approach made up, in equal parts, of ready access to capital, appropriate financing options, synced-up political and legal infrastructures, and champions who will persevere through a maze of tangled red tape and a profusion of housing programs.

Land is Indian Country’s most valuable asset: 56 million acres from coast to coast. Those areas tend to be rural and remote, burdened with regulations and scarcity of services.

While the federal government is central to any effort to improve housing and homeownership opportunities in Indian Country, some of the best work is being done through coalitions between private and public organizations that work in close collaboration with tribal leaders and use innovative mortgage and lending tools.

Demographic pressure points in Indian Country

One of the biggest issues facing Indian Country today is its rapidly growing and very mobile population. Today, 5.2 million people identify as American Indian and Alaska Native (AIAN). This number, from the 2010 Census, breaks down as follows:

• 2.9 million people identify as AIAN alone—up 18 percent since 2000 (almost twice as much as the national growth rate); and
• 2.3 million identify as AIAN multi-racial, typically in combination with Hispanic ethnicity—up 39 percent since 2000 (AIAN Hispanics are the largest and fastest-growing segment of this population).

The Native population is generally younger.

• Almost one-third, or 32 percent, are under the age of 18, compared to only 24 percent of the total U.S. population; and
• The median age is 26, compared to 37 for the entire nation.

The Native population is much more mobile than in previous decades.

• 6 out of 10 Native households live in tribal areas (on or near reservations), which means that 40 percent live outside of tribal areas. It also means that a significant segment lives near, but not on, a reservation.
• The urban Indian population is rapidly expanding.

Examining homeownership rates throughout Indian Country

Amidst these shifting demographic trends, a little over half the population in Indian Country, 56 percent own their own homes. While a significant percentage, it is considerably lower than the national rate of 65 percent and the rural rate of 71 percent, as I mentioned a moment ago.

Several income and non-income factors impact homeownership opportunities for Native households. Financial insecurity has beset Native peoples for generations. As reported in the 2010 Census, upwards of 27 percent of Native Americans and Alaska Natives live in persistent poverty.

Of the non-income influences, lenders have had to grapple with the restrictions on reservation trust lands, which drive up the cost of building and maintaining a house. The existing housing stock often is insufficient to meet the current need for housing, much less the future needs of the growing population. While the existing home stock tends to be older and in need of repair, new construction is expensive and time-consuming. In addition, many communities still lack adequate infrastructure, such as sewer and water lines. Numerous reservations still do not have broadband capacity, which for many communities is a lifeline to community well-being through telemedicine, distance learning, and ecommerce.

Several federal programs and state agencies, represented by many of you, are committing their energies to improving housing and increasing homeownership opportunities for American Indians and Alaska Natives across the country by providing much-needed capital and technical assistance. Each of them also presents a distinct institutional structure and lending requirements that, collectively, are cumbersome to coordinate. A few of the major federal housing programs that assist Native American home buyers include:

• The Housing and Urban Development Office of Native American Programs (HUD ONAP) offers Indian housing block grants and the Indian Home Loan Guarantee Program (Section 184).
• The Department of the Interior Bureau of Indian Affairs Housing Improvement Program (HIP) provides grants for home repairs and new homes.
• Veterans Affairs offers the Native American Direct Loan (NADL) program to 93 tribes that have signed a memorandum of agreement concerning securitization of the loans.
• The Rural Development agency (RD) of the Department of Agriculture offers both direct and guaranteed home loans; housing preservation and weatherization grants; and programs for water and sewer, broadband, and community facilities such as schools, libraries, health clinics, and mobile groceries.
• The Indian Health Service (IHS) of the Department of Health and Human Services provides support for water and sewer connections to tribal homes and facilities.

Native households in two particular regions experience much worse housing conditions and show the highest rates of overcrowding and inadequate housing. The first is New Mexico and Arizona, whose poverty rates have spiked in the past few years. Alaska regions are second and the Great Plains is a very close third.

It also interesting to note that both New Mexico and Alaska have the highest and third-highest proportions of American Indians and Alaska Natives, respectively: Alaska at 19 percent and New Mexico at almost 11 percent (Oklahoma has almost 13 percent).

The most recent housing data on Alaska AIAN regions indicate that:

• 18 percent of houses have incomplete plumbing; and
• 15 percent have inadequate kitchens.

I saw this dire situation myself two years ago in the village of Kwethluk during a visit to inspect a Rural Development water project. Following a community meeting, an elderly woman had kindly invited us into her home. As we entered the house, we were met by the sharp, acrid smells of an overflowing honey pot. When she tearfully apologized to me, I made a promise to her that her house would be connected to the village sewer system the following summer. Thankfully, RD made good on that promise and the next summer, for the first time in her long life, this gentle woman had a flushing toilet and running water. She also had newfound pride in her home and community.

Creating a clear path toward Native homeownership

Generally, the most successful programs, programs that create and sustain homeownership, recognize three basic principles:

• That housing and finance are interdependent considerations;
• That strategic networks and partnerships are needed at every level, and consist of tribal leaders, federal and state agencies, community organizations, and mortgage lenders; and
• That we need strong advocates who innovate and persevere across all spectrums of institutions, programs, and services.

At a programmatic level, we need a laser focus on accessing and using all of the federal and state governments’ considerable resources, especially for the neediest population groups. This is labor-intensive work and requires persistence and patience. It can take years to show success, but the ultimate, long-term payoff is nothing less than phenomenal in the lives and communities of new homeowners.

Access to capital is at the top of everyone’s list of concerns. Yet every year, federal funding available to Indian Country is not fully utilized. This means that millions of dollars are left unspent—some not even accessed—and, therefore, not invested in Indian Country. These funds are challenging to process efficiently, and combining and leveraging funds among the different federal agencies is especially daunting within the recent erratic congressional budget cycles.

Remarkably, there are several stunning examples of housing and finance programs that have expanded opportunities in the Indian Country housing market and have germinated the seeds of homeownership aspirations. They have effectively dealt with government regulations and found innovative ways to facilitate partnerships between the public and private sectors.

Examples:

• The South Dakota Native Homeownership Coalition and Lakota Funds (a Native Community Development Financial Institution, or CDFI, certified loan packager and intermediary with USDA Rural Development), with the Sisseton Wahpeton Oyate community.

• Thunder Valley Development Corporation at Pine Ridge, a Promise Zone working directly in the community to create jobs and build houses.

• The Makah Tribe of Washington, building integrative housing complexes for veterans, elderly, young families, and young people in rehab.

• The Santo Domingo Pueblo outside of Sante Fe, also using the multi-family townhouse-style housing units to provide better community support.

• A NeighborWorks America collaboration with the Navajo Housing Authority.

• Here in Alaska, the Tlinget Tribe, which has adapted its home designs for high energy efficiency.

The most important strategy for creating a clear path to homeownership in Indian Country is leadership—and that means all of you in this room today. You are best suited and best equipped to meet the challenges of homeownership in your communities and throughout Indian Country. You are here today because you are determined to: 

• Find innovative and responsive solutions;
• See new ways of supporting affordable housing;
• Generate new financing structures to leverage funding; and
• Devise programs to prevent delinquencies and foreclosures.

I salute you and commend your efforts. Through this incredibly important work, we are gaining a better understanding of American Indian homeownership challenges and establishing more effective practices and policies to make owning a home in Indian Country a real American dream.

Thank you for your time and attention today.

Note: All population and homeownership figures are from the U.S. Census Bureau.