The Unfair Gap Between Racial Wealth And Homeownership

the racial wealth and homeownership gap


by Jameelah Stovall [edited by Andre/Admin]

If you have been a victim of unfair housing practices, unfortunately there is nothing you can do about it, because that is a consequence of practices which have been in play for decades. The 1968 Fair Housing Act (FHA) was designed to regulate unfair discriminatory real estate practices, and lessen the housing disparities between Black and White people in the United States. Sadly, those housing disparities still haven’t been improved or equalized!

There is a 30% gap between Black and White homeownership; which is greater now than it was before the FHA was passed (Jung Hyun ChoiUrban Institute).

The national average for White homeownership is 73%. Black homeownership is only 43%; the lowest of all ethnic groups. How did we get here? As noted in Richard Rothstein’s “The Color of Law”, local, state, and national practices allowed new housing communities to be developed, and sold, at extremely low costs, as long as real estate agents and homeowners did not sell to African Americans. That blatantly racist housing practice went on for many years.

Therefore, while White Americans were allowed to take advantage of those new and developing housing communities at very low costs, Black and Brown people were relegated to under-developed slums, and degrading public housing communities. As a consequence, White America was gaining unfair equity, but Black America was losing their equity.

Additionally, White Americans were able to increase their household wealth; but Black and Brown Americans were fighting an impossible uphill battle to gain wealth, due to the aforementioned housing discriminatory practices.

Making Money, Saving Money, and Investing Money are 3 keys to building wealth over time. African American income on average is only 60% of White income. This disparity is present despite education, location, age, and career position (John Schoen at CNBC). If you make less money, there is not much to save, and even less to invest, which obviously creates a severe barrier to wealth building.

Homeownership is the main component of wealth and investment for most of American households (Susan Wachter | The Wharton School of the University of Pennsylvania). With the aforementioned mid-century unfair discriminatory housing practices, and the domino affect it has caused; it should be no surprise that African American Wealth is just 10% of White Wealth (Samuel DuBois CookCenter On Social Equity)!

While White Americans were able to build the majority of their wealth through homeownership, there were other opportunities afforded to them that Black Americans just didn’t have. Black Americans were less likely to be able to build, and borrow, equity out of their mortgaged homes. Also, whenever or wherever they did outright own their homes; their homes were always considered less valuable.

Homes that were exclusively sold to White Americans for low costs in the mid-20th century are now selling for $300,000 or more (Richard RothsteinThe Color of Law), while homes sold by Black Americans are often under-valued, on average, by $48,000 (Brookings Institute and Gallup Study joint report).

The profit and equity from homeownership allows families to experience many aspects of life differently. Parents put their children through private school, and college, with home equity and profit. Those same funds are often reserved and used in times of economic downturn. Homeownership funds can also be used for medical expenses, unforeseen emergencies, or passed down to children as a contribution towards the purchase of their first home.

If you don’t have home equity, or a large lump sum of cash to use in those critical financial situations (above), what do you do? Well, you take out loans for college, you incur debt through medical expenses, and you are forced to rent, or to take out larger mortgages than your White counterparts.

The 1968 Fair Housing Act (FHA) along with programs put in place by the Department of Housing and Urban Development (HUD) have “tried” to address the gap between Black and White homeownership. Practices have been put in place that should work to help more Black people own homes, so why are there greater disparities than we’ve seen since the 1950s?

If White homeownership has increased to 73%, and Black homeownership has decreased to 43%, then it is obvious that FHA Loans, Down Payment Assistance Programs, plus The Outlawing Of Housing Discrimination Based On Race when selling, renting, or financing a home has not fixed the unfair housing problem. Therefore, the initial deficit of access to Black homeownership, and wealth building, has not improved whatsoever.

Hopefully, to promote or prove white empathy for black equality, The Unfulfilled Promise Of The Fair Housing Act, will soon be recognized and rectified.

As a matter of historical fact; an Historian Says Don’t ‘Sanitize’ How Our Government Created Ghettos. Also, it is factual that: The federal government created inner-city ghettos with racist housing regulations to deliberately segregate and stifle black homeownership and wealth building.

In conclusion, the Fair Housing Act, along with other programs, and laws, has not successfully addressed and resolved the past systemic inequalities that are the direct cause of today’s black wealth inequities: [read | listen]. So, in other words, “The Past Black Homeownership Inequalities Are Now Today’s Black Wealth Inequities.”

Jameelah Stovall is just a first time home-buyer wanting to know about what led up to the creation and implementation of all those FHA Programs that don’t ever seem to be easily or effectively accessed by qualified applicants?

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