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Earnings season is in full swing this week with big names set to report including Netflix, Tesla, Verizon, and several major banks.

There’s a good chance that your employees are clamoring for housing assistance benefits. The sharp rise in housing prices over the past decade and a lack of homes for sale have made it harder for homebuyers, especially first-time buyers, to achieve the ever more elusive American dream. Employees have responded with a clear desire for help from their employers.

According to SoFi at Work’s The Future of Workplace Financial Well-being 2022 survey (which included 1,600 employees and HR leaders), 60% of workers want their employers to add, improve, or expand homeownership assistance. This need for help with homeownership will likely increase with the current environment of rising interest rates and the continued shortage of new home construction.

As you look at housing assistance for your employees, consider that these benefits can have far-reaching effects. They not only address a vital and current challenge among your workforce, but can also help fight housing discrimination and close the generational wealth gap that decades of unfair treatment may have caused among your workforce.

The situation is dire. The divide in homeownership rates between Black and white Americans is now nearly 30% — that’s higher than what it was in 1960, when racial discrimination in housing was legal. In the first quarter of 2022, 44.7% of Black Americans owned their homes, compared with 74% of white Americans, according to the U.S. Census. A person’s home is often their largest financial asset, the benefits of which are usually passed on to the next generation. Low homeownership rates may contribute significantly to the widening generational wealth gap between Black and white Americans.

This imbalance doesn’t have to continue. Your firm can help by providing equitable homeownership benefits for all of your employees.

Barriers to Minority Homeownership

The first step toward providing equitable homeownership benefits is to understand exactly what stands in the way of minority employees owning their own homes. Here’s a look at some of the major obstacles they face.

Recommended: Are Your Employees’ Efforts to Make Ends Meet Affecting Performance?

Disproportionate Amounts of Student Debt

According to the October 2021 Education Trust report, “Jim Crow Debt: How Black Borrowers Experience Student Loans,” 67% of Blacks earning $75,000 to $100,000 delayed buying a home because of student loan debt. Black households are also more than twice as likely to have student debt, and their median student loan balance is $10,000 higher than white households, according to the National Association of Realtors.

Lack of Credit History

More than two million Black employees meet income requirements but do not have enough credit history to qualify for a mortgage, especially one with favorable interest rates.

Down payment and Closing Costs

Because minority families are less likely to have accumulated wealth or access to generational wealth, down payment and closing costs often become the greatest obstacle to Black homeownership.

Persistent Housing Discrimination

Despite decades of anti-discrimination legislation and other efforts to fight redlining, create fair lending, and ban racial and other biases, housing discrimination still exists in many markets throughout the country. Whether it’s subtle or overt, housing discrimination holds people of color, immigrants, and LGBTQ+ people back by denying them access to safe and secure neighborhoods, good schools, and the generational wealth that comes with homeownership.

Recommended: Understanding Financial Well-being for LGBTQ+ Employees

What Employers Can Do

Employer-sponsored housing assistance can help break down these barriers to homeownership and provide a much-needed and desired benefit to all of your employees. Consider these four steps to help fight discrimination and provide a path to homeownership for all employees in your diverse workforce.

Recommended: First-time Homebuyer Support for Black Employees

Step 1: Understand Your Black Employees’ Financial Well-being

Conduct a financial health assessment to analyze the overall financial wellness of your workers, as well as specific challenges Black employees may face. This data will help determine how your current and potential programs can be tailored to fit the needs of your Black and minority employees.

In addition, utilize your employee resource groups to understand the specific challenges Black employees may face when it comes to buying a home.

Step 2: Help Eliminate Barriers to Homeownership

We saw above the obstacles Black employees may face when trying to qualify for and afford a home. Fortunately, there are targeted benefits you can offer to help employees overcome these barriers.

Student loan repayment benefits, for example, can help reduce the disproportionate amount of student debt your Black employees likely carry, freeing up funds for home-buying costs. Now is a particularly good time to offer student debt repayment programs or enhance your programs. New government rules allow employers to provide $5,250 tax-exempt annually for an employee’s student loan repayment through 2025. Employees will also have no tax liability for the contributions.

Automatic savings programs, especially with an employer match, can help employees build emergency savings to provide the cushion they need to handle unexpected expenses. With an emergency fund in place, employees can then divert any extra funds toward saving for a down payment on a home.

Employer-sponsored credit counseling can help employees check their scores and, if necessary, take steps to improve them. This can help them qualify for the best-rate, lowest-cost mortgages and the many government-sponsored first-time home buying programs available in each state.

Recommended: How to Support the Financial Well-being of Newly Hired Recent Grads

Step 3: Help Make Home Buying More Affordable

Many employers are offering direct down payment assistance (such as paying a percentage of an employee’s down payment up to a maximum) to employees looking for homes in targeted areas, often when trying to incentivize working in the office.

Another way to help is to offer prospective home buyers counseling on accessing government-sponsored grants and low-interest loans designed to help first-time homebuyers cover down payments and closing costs.

Also, consider teaming up with local mortgage experts, financial counselors, and real estate pros in your area. They may be willing to offer free seminars and reduced fees and commissions for their services in return for a large pool of potential clients.

Recommended: Relocation Packages for Work-From-Home (WFH) Employees Looking to Move

Step 4: Address Housing Discrimination Directly

As we mentioned above, housing discrimination still exists in various forms, and many of your employees may be facing it. When you implement any housing assistance programs or financial education programs dedicated to housing, it’s important to ensure these programs are accessible to all employees regardless of the salary level, job title, location, or any other circumstance.

In addition, if you work with any outside vendors for real estate services, mortgage lending, credit counseling, or other financial counseling services, you may want to ensure that they have proven track records and expertise with minority homeownership and housing advocacy.

SoFi at Work Can Help

Our suite of benefits, tools, and resources are designed to help you help employees improve their financial well-being and break down any barriers they may face in achieving their goals, including homeownership. Backed by our contribution programs, workforce financial health assessments, credit score monitoring, financial counseling, and budgeting tools, HR leaders can level the playing field and help make the American dream accessible for all workers.

FAQ

Can Employers Help Fight Housing Discrimination?

Yes. HR leaders can help fight discrimination by understanding the special challenges Black and other minority employees face when it comes to homeownership and offering equitable home-buying assistance programs.

What Steps Can Employers Take to Help Black Employees Become Homeowners?

They can start by doing a financial assessment of their workforce. This can reveal barriers to homeownership Black workers face, which may include high levels of student debt, a poor or limited credit history, and a lack of savings for a downpayment. They can then tailor their financial wellness benefits to help address these issues. This might include student loan repayment assistance, credit counseling, seminars for first-time home buyers, down payment assistance, and automatic savings programs.

Do Employees Want Homeownership Benefits from Employers?

Yes. SoFi at Work data shows that a majority of workers are looking for homeownership help from employers. Offering these benefits can result in a more productive, loyal, and financially secure workforce.

Photo credit: iStock/Patrick Chu

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Inflation and the Fed

This week’s inflation report indicated prices continue to march upward, despite the Fed’s efforts to rein them in. Some industries will be more affected than others. Banks, in particular, are feeling the pain as recession fears mount and, in some cases, the appetite for risk decreases. Diminished interest in IPOs and mergers could result in lower revenue for the banks who execute these transactions.

Another factor affecting bank performance is the need to hold reserves that serve as a kind of insurance policy in the event of defaults on outstanding loans. The number of nonperforming loans tend to increase during recessionary times, causing reserve requirements to go up.

Banks Under Pressure

JP Morgan Chase’s (JPM) earnings release this week reveals how current economic conditions are affecting the sector’s bottom line. Shares fell after the largest US bank by assets missed expectations on earnings. The company has shifted to a more cautious strategy in preparation for future global economic distress, which last month CEO Jamie Dimon predicted could be an economic “hurricane.” To that end, JP Morgan fortified reserves for bad loans with a $428 million capital infusion.

Likewise, Morgan Stanley (MS) posted results that came in below analyst estimates. The company’s bottom line has been negatively impacted by what CEO James Gorman referred to as “weaker investment banking activity.”

Deposit Insurance

With many bank stocks now trading near 52-week lows amid increasing concerns over recession risk, some may be wondering if their deposits are safe.

It is important to note that the FDIC, established by the Banking Act of 1933, provides protection to consumers’ bank accounts through deposit insurance. The government will cover up to $250,000 in an individual account and $250,000 each for joint owners. Plus, the FDIC has historically facilitated the transfer of accounts from troubled banks to healthier counterparts.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
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By offering home-buying assistance programs, HR leaders can help narrow the widening homeownership gap between white and Black employees.

As the Fed’s attempts to tame inflation fall flat, banks prepare for leaner times.