Homeownership can be a ticket out of poverty — or at least, that’s a popular perception. It’s why the goal of increasing homeownership remains the bedrock of housing policy across the country, including from our own City Hall.

Earlier this month, Mayor Parker unveiled more details of a plan that would fulfill her promise to build or preserve 30,000 homes during her first term. In her budget address, the mayor reaffirmed her commitment while making her proposal. “I want to help more Philadelphians to become homeowners,” she said.

But that age-old, all-American narrative of homeownership as a solid pathway to financial stability is not so straightforward in Philly. In fact, Philadelphia has the highest homeownership rate of the 10 largest U.S. cities: 52 percent of residents. At the same time, for decades, we have had the highest poverty rate among the same population.

In other words, the financial benefits of owning a home in Philly are not as pronounced, nor as widespread, as what you’d expect. Why is that? According to research by the Economy League of Greater Philadelphia and others, a major culprit is the devastating racial wealth gap that’s tied to housing in Philadelphia. The Economy’s League’s 2023 report “Know Your Price, Philly” put a number to the property value disparity between White and non-White neighborhoods in Philly as $57 billion.

As Economy League Executive Director Jeff Hornstein puts it, “If properties in non-White neighborhoods had grown in value as quickly and as steadily as properties in majority White neighborhoods, Black and Brown Philadelphians would be $57 billion richer.”

Now, the nonprofit has launched an initiative to work on solutions to that problem. The housing racial wealth gap is the focus of this year’s Fair City Challenge, a competition hosted by the Economy League with a grand prize of $50,000 going to the winner.

The fourth installment of the challenge (which is accepting applications until March 28) is looking for innovative ideas from individuals or teams of community-focused entrepreneurs who are in tune with the needs of their neighborhoods. The nonprofit wants applicants to have a vision for a business or a project that would benefit from funds, as well as “stress-testing” and mentorship.

The Economy League’s 2023 report was inspired by research from Brookings Institution scholar Andre Perry. At the 2024 Ideas We Should Steal Festival, Perry touched on the repercussions of this racial wealth gap for the entire City — a sentiment that Hornstein concurs with.

“That’s tax revenue we’re losing, the ability for people to leverage their homes, to start businesses, to send kids to college or trade school,” says Hornstein. “It’s a huge amount of lost potential.”

Uncovering the issue

Homeownership is part and parcel of the American Dream. Many of those impacted by the racial housing wealth gap, according to Hornstein, “did what they were supposed to do” and purchased houses several decades ago, often on union wages, to raise their kids and grandkids. But in about 70 percent of Philly neighborhoods, property values have fallen or remained stagnant. Homeowners who purchased their home in 1980 for $50,000, he says, may well find that their house is still worth only $50,000.

While other high-profile organizations in the city like Project Home and Habitat for Humanity Philadelphia focus on the issue of affordable housing, Hornstein and the Economy League saw a gap in the market: “No one was focusing on the value of homes owned by people,” he says.

“If properties in non-White neighborhoods had grown in value as quickly and as steadily as properties in majority White neighborhoods, Black and Brown Philadelphians would be $57 billion richer.” — Jeff Hornstein, The Economy League

It made for an easy pick to go with for this year’s iteration of the Economy League’s pitch competition. Project proposals fall into three groups (examples of topics are listed on the Economy League’s website):

• • “The Home & The Homeowner” category, which includes projects that aim to directly support the needs of low- and moderate-income homeowners
  • “The Neighborhood” includes projects that are focussed on the cleanliness and safety of neighborhoods
  • “The City,” which addresses advocacy and organizing around housing policy

According to Hornstein, applicants might be block captains, civic association leaders, pastors or other religious leaders, or just citizens who are fired up about improving their neighborhood, and have a plan. Between April and September, participants who progress through several stages of competition will hone their ideas and receive feedback from experts, culminating in a grand-prize winner announcement in the fall.

At a funders’ meeting in December 2023, Hornstein, Perry and the Economy League began persuading sponsors to support a challenge tackling that racial wealth gap. Over the course of about a year, four major institutions committed: TD Bank, Comcast, Independence Blue Cross and NewCourtland.

The Economy League’s previous three challenges have covered different areas, while following the same Impact Labs model — a “fail-fast” format borrowed from the tech world, which aims to identify and solve potential weaknesses in a plan before it is put in action. The model functions by taking community-sourced entrepreneurs, strengthening their pitches, and stress-testing their ideas in an accelerator.

Hornstein adds that while developing their ideas, participants should make sure to factor in how to avoid the displacement of residents while they work to increase property values. In a functional economy, he says, people should be able to count on a home that they buy appreciating in value over time. Policies like the Homestead Exemption, which allows eligible homeowners to save on property taxes by up to $1,399 a year, also help prevent homeowners from being taxed out of their houses.

“Every project has to at least acknowledge that there could be downsides to property value increases,” says Hornstein. For example, projects might incorporate an educational component to make sure that people in the affected neighborhoods apply for all the programs they are eligible for. “We want people to be cognizant, but we do want people to focus on boosting property values, because that is the key problem.”

Progress through pitches

The first step in the Challenge is the ongoing call for ideas. Teams must thoroughly outline their idea, explain what resources they need and how they would use funding, and include a written pitch as well as a video version.

Out of the submissions, 10 to 15 of them will be selected and put into the “incubator, ” a month-long program where participants will get professional coaching to develop their pitches, Shark Tank-style.

In May, a pitch competition will narrow the field to up to five finalists (likely one in each category and a crowdfunding-based “People’s Choice”), who will each win $10,000 and progress to the accelerator phase.

Armed with that prize, the finalists will connect with experts and organizations who can help identify any weaknesses in their plans, or provide insights they may not have thought about. During a three-month period, they’ll collaborate to pilot their initiative or business.

For instance, Hornstein suggests, a team looking to rehab homes on a neighborhood level could certainly benefit from being taken under the wing of Habitat for Humanity CEO Corrine O’Connell. If a team were looking to acquire properties in dangerous condition and rehabilitate them into a community center, they might need advice from one of the many legal experts on the Economy League’s board.

The first of the Economy League’s Impact Lab challenges, the Full City Challenge, was a 2019 collaboration with Billy Penn, which targeted the issue of food insecurity. The following initiatives, Well City Challenge: Heart and Mind Health, and Well City Challenge: Millennial + Mental Health, were both based on funding and research from Independence Blue Cross.

All three of the previous Grand Prize winners: Hospitality Together (now College Together), Hey Auntie! and the TCBM (That Could Be Me) Foundation have been successful, and remain active today.

The Economy League says it stays in touch with all of the previous winners, as well as two or three teams from each challenge who became finalists, but didn’t win the grand prize.

“There’s one called Peds 360+ that was a very innovative pediatric health model — they just got a brick and mortar situation, so we had them come to a board meeting and update the board. That’s part of the program we want to build out over time: the continuity piece,” Hornstein says.

Because the funding for these challenges is largely either from corporations or state tax credit programs, Hornstein says that so far, they haven’t been impacted by the widespread federal funding cuts to research.

Going forward, Hornstein mentioned that the next challenge topic hasn’t been selected yet. He suggested that the Economy League’s 2020 study on Pardons as an Economic Development Strategy might form the basis of a future challenge.

“We have 200,000 people with criminal records, and every one of them is working below their economic potential because of that,” Hornstein says. “So what can we do to change that dynamic? I mean, I have ideas, but I’m sure the community will come up with better ones. So if I had my way right now, that’s what I would say the next thing would be.”

Every Voice, Every Vote funds Philadelphia media and community organizations to expand access to civic news and information. The coalition is led by The Lenfest Institute for Journalism. Lead support for Every Voice, Every Vote in 2024 and 2025 is provided by the William Penn Foundation with additional funding from The Lenfest Institute for Journalism, Comcast NBC Universal, The John S. and James L. Knight Foundation, Henry L. Kimelman Family Foundation, Judy and Peter Leone, Arctos Foundation, Wyncote Foundation, 25th Century Foundation, and Dolfinger-McMahon Foundation.

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