African-Americans hurt by ownership

Owning homes worse than renting in many areas.

Politicians and advocates have long touted homeownership as the best way to build wealth, saying that over the long term, home values go in only one direction: up.

But since the dawn of the 21st century, that promise has been an empty one for many African-Americans.

In nearly a fifth of the ZIP codes where most homeowners are black, home values have decreased since 2000, compared with only 2 percent of ZIP codes where black homeowners are not the majority, according to a Stateline analysis of federal data on home prices, race and income.

Among the largest losers: some Detroit neighborhoods along Eight Mile Road and parts of Trotwood, Ohio, near Dayton, where home prices have dropped by a third or more since 2000. Home prices in majority-black parts of Clayton and DeKalb counties outside Atlanta also have declined since 2000, as have the values in some majority-black suburbs south of Chicago, such as Riverdale and Olympia Fields. All were hit hard when the Great Recession arrived in 2007.

Falling home prices affect both poor and affluent black neighborhoods, but it’s particularly vexing for policymakers who have long recommended homeownership as a method of building wealth for low-income black families, said Sandra Newman, a professor of public policy at Johns Hopkins University and author of a 2015 study of race and changes in net worth before and after the Great Recession.

“There really is a cautionary note here,” she said.

“Becoming a homeowner, or at least a first-time homebuyer, may not be the right approach for all households,” Newman said. “On black first-time buyers vs. renting: we’re pretty decisive, they would have done better had they stayed renters.”

At the same time, however, gentrification in some cities led to huge gains for some black homeowners when upper-income buyers became interested in their neighborhoods. Home prices have more than doubled in some well-known black neighborhoods in coastal cities, including every majority-black ZIP code in the Los Angeles area, from tony Baldwin Hills to gritty Compton, and, on the East Coast, in Brooklyn’s Crown Heights and parts of Miami’s Liberty City.

Mike Buttler, a real estate investor who grew up in Inglewood near Los Angeles in a majority-black ZIP code where prices have more than doubled since 2000, said his grandparents’ house was worth $800,000 at the peak of the housing bubble just before the recession. It is worth about $400,000 now, but that is still twice what it was worth in 2000.

The neighborhood is more desirable than it was in the 1990s, he said, because black investors brought jobs and entertainment options.

“When I was growing up, even though it was a middle-class area, there was only one movie theater and it was showing movies that were 15 years old. We had to get on a bus and go to another town to see anything else,” Buttler said. “Now people are looking at these communities and saying, ‘OK, they have the amenities. The drugs and the gangs are gone. I could live here.’”

In Brooklyn, there are four majority-black ZIP codes where home values have more than tripled since 2000.