Black wealth matters — and homeownership is the key

WASHINGTON » My grandmother Big Mama hated that I was a renter.

For the one and only year I rented in my early 20s, she endlessly chastised me, saying “Why are you giving your money to the white man?”

I would roll my eyes and dismiss her question, telling myself she was venting the frustration she had experienced battling discrimination in trying to create wealth through homeownership. In the late 1980s, her words felt too racial and radical.

I came to learn how naïve I was.

Big Mama, the great-granddaughter of slaves, wanted me to understand that owning land and a home is an economic game-changer for black families. After my apartment lease was up, I purchased a two-bedroom condominium.

The Black Lives Matter protests taking place across America have focused not just on police brutality but employment bias, pay disparities, and the lack of access to affordable health — all issues that have contributed to economic inequity between white and black families. Another key to closing the wealth gap is increasing homeownership for people of color.

For too long, systemic racism and racist policies and lending practices have stymied the ability of blacks to increase their net worth.

Until 1968, real estate agents and homeowners could legally refuse to show or sell homes to blacks. Banks could reject black borrowers based on their race or the neighborhood where they wanted to live. Anti-discrimination housing policies helped increase total black homeownership, which peaked in 2000 at 47.3% of black Americans, compared to nearly 73% for whites.

During the housing boom, it looked like black homeownership overall would surpass 50%. Then came the Great Recession between 2007 and 2009, exposing predatory lending practices and a glaring reminder that race biases weren’t gone.

From 2000 to 2015, the black homeownership rate dropped to 41.2%. The black homeownership rate in 2018 was 41.7%, compared to 72.2% for whites, according to the American Community Survey.

Consider this: It’s 2020 and the rate of black homeownership is near the same level as when race-based housing discrimination was legal.

Every economic crisis brings a greater threat to people of color that hard-won gains will be lost. And now, the severity of the coronavirus pandemic has the potential to further widen racial disparities, according to a new report by Alanna McCargo, vice president for housing finance policy at the Urban Institute, and Michael Neal, a senior research associate in the Housing Finance Policy Center at the Urban Institute.

For this month’s Color of Money Book Club, I’m recommending you read their report titled “How Economic Crises and Sudden Disasters Increase Racial Disparities in Homeownership.” You can find the 30-page report at urban.org.

“The Great Lockdown, instituted to reduce the spread of the novel coronavirus, has crippled households, jobs, and businesses in ways we have not seen in modern history and that will have lasting effects on racial homeownership and wealth gaps,” they write.

The researchers looked at the aftermath of Hurricane Katrina in 2005 and the Great Recession to draw conclusions on how COVID-19 might exacerbate the wealth gap. Their data analysis finds that natural disasters economic downturns hit communities of color harder.

SUBMITTED PHOTO This photo shows the label of Boardroom Spirits of Lansdale’s new product — Fire Bear. Releasing June 25, Boardroom Spirits has pledged 20% of its sales from the day will be donated to Dog Town Rescue.