Policy Summary 

A 21st Century Homestead Act policy primarily serves to create homeownership opportunities for select communities to address the historic legacy of housing and wealth discrimination. Under this policy, a special purpose public trust would be created to purchase abandoned properties in target cities. An initial investment of government capital will be used to buy properties and transfer them to eligible individuals and families, which will allow for both the restoration of large clusters of abandoned properties in those cities as well as the creation of homeowners. Other provisions include a requirement that the improved property be held by the homeowner for 10 years. Communities would also receive investments for employment, infrastructure, and public resources. 

Case for Equity

The American tradition of land giveaways was enshrined in law for decades and served to create wealth and opportunities for economic mobility for generations of mostly white American citizens and European immigrants. People of color were largely prevented from benefiting from these policies. The detrimental effect of this exclusion was compounded by decades of government-sanctioned discrimination by housing lenders. Although redlining (the practice of systematically denying home loans in communities of color) was outlawed with the passage of The Fair Housing Act of 1968, there have been several recent lawsuits wherein banks were found to have engaged in the same discriminatory practice (Housing and Urban Development 2015 and Silver-Greenberg & Corkery 2015). This practice, along with the lack of access by people of color to the nation’s decades-long practice of land giveaways, has created a huge barrier to wealth creation, well-being, and upward mobility. The impact of these practices compounded from generation to generation and created communities that have been systematically locked out of investment and economic development. Correcting this ongoing policy failure would lead to a massive generation of wealth through homeownership, home equity creation, and neighborhood stabilization.

Return on Investment

Return on Investment for this policy is rated as HIGH given its potential impact on individual family wealth and community benefits across a range of factors.


The original Homestead Act is one of the single greatest wealth generation policies enacted by the United States government. If scaled, the potential impact of this new policy could be massive and transgenerational. The descendants of the estimated 1. 5 million people who were recipients of the Homestead Act now number well over 46 million US residents (Williams 2000).

This means that as of the year 2000, 1 in 4 [mostly White] Americans had ancestors and a connection to the legacy wealth generated by that original land grant (ibid). That legacy includes inherited money and lands, farms and businesses passed from generation to generation, enhanced geographic mobility, family financing for college and business ventures, and the creation of communities with well-funded schools and educational opportunities. The implications are that this policy could have similar effects for successive generations of participants.  

In the same way as the original act,  the 21st Century Homestead Act could spawn those same outcomes in communities of color through widespread growth of capital markets and private sector investment, as well as the development of prosperous communities. In turn, we would see increased local public goods provision via an improved property tax base and higher local spending patterns. The policy would create an increase in homeownership, affecting the largest contributor to the wealth gap–home equity–whereby white homeowners have on average $100,000 of home equity versus $56,000 for Black families (Schuetz 2020).

Research Base

The research base is rated as being MEDIUM. The limitation of research that speaks to the specific policy application is a key limitation in the research. However, the related literature(s) are of noteworthy value in assessing this policy.  

Generally, historians and economists have looked unfavorably on the Homestead Act, preferring to focus on the rampant graft, speculation, and failures of large numbers of families to successfully homestead. As a policy, it receives scant attention as compared to other major American policies. This has meant that we have little in the way of concrete analyses of the economic and social impact of the policy. This is all further complicated by the lack of good data on the administration of the policy and difficulty tracing its impacts over time on individual families. Only recently is the policy receiving a new lens as researchers are situating it within the context of its sheer scope and its racialized impacts.   

Similarly, when looking at research on more proximate policies – housing programs that feature similar elements as the proposed policy –the available research is also limited. Overall, the research literature that assesses community development housing-oriented programs has many challenges. The field is characterized as being an “uneven patchwork of evaluation evidence” that makes it difficult to draw sound conclusions because of inconsistency among programs, a lack of or comprehensiveness, and issues with metrics and research methodologies (Abravanel et al). Yet, there are several available high-quality research studies that provide a positive assessment of the policy’s potential impacts on the health and well-being of participants. 

The most promising field of inquiry is research on the impacts of homeownership in communities and families. This field of research is deep, comprehensive, and multi-disciplinary. Research using a variety of methodologies consistently finds a positive relationship between homeownership and child developmental outcomes (reading and math achievement and behavior). From a community perspective, it links homeownership to financial prosperity, neighborhood health, functioning labor markets, economic development, school quality, and a number of other positive economic indicators (for a summary see McCarthy et al).

State & Local Ease of Implementation

This policy is rated as having a MODERATE level of implementation difficulty. The ability for implementation at a local level lowers the difficulty, however political barriers and the need for new mechanisms increase its difficulty. 

Exploratory Steps for Local Leaders

Implementation of this policy would represent a major undertaking by the US politically, organizationally, and structurally. The parallels of this policy with the reparations debate make for a politically difficult undertaking. The need for the congressional, executive branch, and state/local coordination poses a significant hurdle as do the financial costs which forestall a scaled version at the state/local level. However, a number of cities have implemented similar revitalization/ownership programs under existing federal programs like the Home Investment Partnership Program and CDBG funding.

In exploring this policy area, a key step would be to conduct an inventory of housing availability and affordability. Such an examination should look at affordability issues for different income groups in a community as well as patterns of housing development and associated regulatory barriers. The Urban Institute’s housing profile of the state of North Carolina provides a useful model.

Policymakers and leaders should look at funding mechanisms in place in other communities that have implemented affordable housing initiatives. The range of funding streams and strategies can differ by locality. Local Housing Solutions provides a profile of the major sources of funding in use across the country.

The housing space is a complex sector that includes a range of stakeholders. Exploring housing solutions requires the development of a strong partnership among stakeholders and ideally a community outreach plan. Washington State’s Puget Sound Regional Council’s model is instructive.

Innovations Across America

Evanston, Illinois Reparations Initiative

Action Space: Local

Cost: $10 million for cannabis tax revenue

Mechanism: Resolution/Ordinance 126-2-19  

In 2019, the Evanston City Council voted to approve the “Restorative Housing Reparations Program.” The program seeks to address the legacy of redlining and other discriminatory policies by funding economic development and housing initiatives for Black residents of the city.

The City has established a committee charged  to advise the City Council on all matters related to the Reparations Fund. The committee will determine the feasibility and viability of initiatives and programs.

JPMorgan Advancing Black Pathways Program

Action Space: National 

Cost: $30 billion over 5 years  

Mechanism: Business Investment (Resource Page) 

Advancing Black Pathways is a program dedicated to strengthening the financial wellness of black families, expanding access to capital for black-owned small businesses, and supporting black homeownership. Under this initiative, JPMorgan will expand the Entrepreneurs of Color Fund; provide home lending down payment assistance programs, housing counseling, and homeownership grants; and increase access to financial health and wellness tools.

While this initiative is led by a national firm, similar initiatives can be launched by local financial entities or an assortment of financial firms. The disbursement of these funds is typically through nonprofit entities with expertise in program administration, thus the private-NGO partnership nature of these vehicles is a critical component.

Appendix and Resources 

Abravanel, M., Nancy M. Pindus and Brett Theodos. 2010. Evaluating Community and Economic Development Programs: A Literature Review to Inform Evaluation of the New Markets Tax Credit Program: Washington, DC: The Urban Institute. 

Schuetz, Jenny. 2020.  Rethinking Homeownership Incentives To Improve Household Financial Security And Shrink The Racial Wealth Gap. Brookings Institution.  

McCarthy, G.  Van Zandt, S., Rohe, W.  2001. The Economic Benefits and Costs Of Homeownership: A Critical Assessment of the Research. Research Institute for Housing in America. Working Paper No. 01-02 

Haurin,  D., Parcel, T., Haurin, R. Does Homeownership Affect Child Outcomes?

Ding, Chengri and Gerrit-Jan Knaap. 2003. “Property Values in Inner-City Neighborhoods: The Effects of Homeownership, Housing Investment, and Economic Development.” Housing Policy Debate 13(4): 701-72 

Schill, Michael, Ingrid Gould Ellen, Amy Ellen Schwartz, and Ioan Voicu. 2002. “Revitalizing Inner-City Neighborhoods: New York City’s Ten Year Plan.” Housing Policy Debate 13(3): 529–566.  

Ellen, Ingrid Gould and Ioan Voicu. 2006. “Nonprofit Housing and Neighborhood Spillovers.” Journal of Policy Analysis and Management 25(1): 35-52. 

Galster, George, Peter Tatian, and John Accordino. 2006. “Targeting Investments for Neighborhood Revitalization.” Journal of the American Planning Association 72(4): 457-474.  

Hebert, Scott, Avis Vidal, Greg Mills, Franklin James, and Debbie Gruenstein. 2001. Interim Assessment of the Empowerment Zones and Enterprise Communities Program: A Progress Report. Washington, DC: U.S. Department of Housing and Urban Development, Office of Policy Development and Research. 

US GAO. 2006. Empowerment Zone and Enterprise Community Program: Improvements Occurred in Communities, but the Effect of the Program Is Unclear. No. 06-727. Washington, DC: General Accountability Office. 

Williams, T. (2000). The Homestead Act: Our earliest national asset policy. (Working paper 00-9). St. Louis: Center for Social Development, Washington University.  

Lanza, M.L. (1990). Agrarianism and reconstruction politics: The Southern Homestead Act. Baton Rouge: Louisiana State University.  

Magdol, E. (1977). A right to the land: Essays on the freedmen’s community. Westport, CT: Greenwood Press. 

Housing and Urban Development. 2015.  Hud & Associated Bank Reach Historic $200 Million Settlement Of ‘Redlining’ Claim. Release No. 15-064. May 26, 2015  

Silver-Greenberg, J.; Corkery, M. 2015.  Evans Bank Settles New York ‘Redlining’ Lawsuit. The New York Times. Retrieved 2021-03-08. 

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