Amazon announced this month its $21 million commitment to pilot a program combining professional training, mentorship, and capital funding to help promote real estate developers of color.
This initiative is part of the $2 billion Amazon Housing Equity Fund to create and preserve 20,000 affordable homes for individuals and families earning moderate to low incomes in select regions.
Rampant Discrimination, Widening Disparity
People of color continue to face rampant discrimination in the housing market: 17 percent of Native Americans, 25 percent of Asian Americans, 31 percent of Latinos, and 45 percent of African Americans report experiencing discrimination when trying to rent or buy housing. In comparison, just 5 percent of white Americans report experiencing housing discrimination.
Research nonprofit, the Urban Institute first measured real-estate discrimination against racial and ethnic minorities in 1989, revealing high levels of discriminatory treatment toward Hispanics and African Americans.
In its 2019 report, the Institute said that 5% of its U.S. members are Black and 82% are white, though Blacks represent more than 13% of the U.S. population. Such disparity translates into a lack of diversity at the project development level that can subsequently exclude developers of color from working on meaningful and lucrative housing deals as cities expand.
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Housing Issues Undermine Wealth-Building
“Homeownership and high-quality affordable rental housing are critical tools for wealth building and financial well-being in the United States,” a Center for American Progress article said.
CAP suggests that long-standing displacement has destabilized Black communities and undermined their access to opportunity.
Effects snowball to missed economic opportunities on a national scale. A Brookings Institute study investigating the devaluation of assets in Black neighborhoods found that homes in Black neighborhoods were undervalued by an average of $48,000 due to racial bias, resulting in $156 billion in cumulative losses nationwide.
Metropolitan areas with greater devaluation of Black neighborhoods are more segregated and produce less upward mobility for the Black children who grow up in those communities, the report concludes.
Amazon’s $21 Million Response
Discriminatory practices in the real estate industry against both, tenants and developers of color is doubtless a systemic issue.
“The Housing Equity Fund is our answer to this challenge,” Catherine Buell, director of the Amazon Housing Equity Fund said. “For real inclusion, you have to make concerted efforts for diverse players to be on the table,” she added.
Amazon’s $21 million commitment will fulfill this ambition. It will fund a two-year, part-time professional development program, which is free for participants and aims to teach real estate developers of color how to advance their careers.
This is increasingly valuable for young real estate developers from minority backgrounds who may use this training and mentorship for strategic capacity building.
Ultimately, the vision is to increase the number of professional real estate developers of color who are focused on affordable housing and inclusive community building. Overtime, this will diminish the barriers these developers can face when bidding for affordable housing developments.
A Bespoke Accelerator Program
Amazon has also partnered with local social impact and economic justice organizations — the Local Initiative Support Corporation (LISC), Capital Impact Partners, and the Urban League of Middle Tennessee in Nashville — to develop curriculums and networking opportunities that reflect the specific issues facing their communities.
The accelerator program will initially support up to 30 total participants by providing:
- Virtual and in-person classroom instruction on real estate fundamentals, affordable housing trends, public policy, and financing best practices
- Small group mentoring
- Professional networking opportunities with industry leaders, researchers, and established real estate developers
- Access to capital for pre-development expenses, such as architectural and engineering costs; permitting, survey and site-planning fees; and market and feasibility studies
Poetic Reconciliation With The “Amazon Effect”
In Fall 2018, Amazon announced that one half of its second headquarters will be based in Arlington, Virginia. Touted initially as good news for the local economy, backlash from select groups followed, warning that taking in an influx of tens of thousands of high-paid tech workers may have repercussions on the community’s economic landscape.
Labeled as the “Amazon effect,” fears of rising rent, gentrification and burden on public resources, including transit for example, persisted.
Precedent fueled such anxieties. Vox quotes a Zillow analysis that found that rents in Seattle, Amazon’s main headquarters increased by 31% between 2013 and 2018, and home values increased by nearly 73% within the same period. Rising housing costs have led to the displacement of low-income families in the Seattle area and has contributed to the city’s homelessness crisis, the study suggests.
This discourse isn’t exclusive to Amazon — it is bigger than that and is symptomatic of the larger conversation on the effects of corporate presence in implicating equity and inclusion in local communities.
It makes sense then that Amazon’s pilot program is launching in Washington state’s Puget Sound region; Nashville, Tennessee; and Arlington, Virginia — all three being focal points of the firm’s prior business presence.
This is a poetic, encouraging, felicitous, perhaps even reconciliatory effort to give back to the communities that have supported the firm’s growth. To good effect, Amazon’s Housing Equity Fund is self-aware and conscious. Of its corporate responsibility, of its surroundings and of the legacy of impact it intends to create.