Property ownership has long been part of the American Dream. Some even argue it is the cornerstone of the American Dream. It is built into the fabric of our society. Even our legal system gives ironclad protections for people’s property. For example, in Florida, and many other states, if you or I declared bankruptcy our creditors could not take our house and sell it to satisfy the debt – no matter how large the debt. This is called a homestead exemption and the scale of its protection varies state to state.
It is no wonder then that the leading source of wealth for most Americans is equity in their primary residence. According to the Pew Research Center, equity in the home for lower and middle income Americans in recent decades has represented between 40% and 54% of a households assets.
That is why it breaks my heart to see a massive discrepancy between participation in the real estate market by race. According to the U.S. Census Bureau, only 40.7% of Black people have equity in a home, by far the lowest participation of any racial group and only 0.5 percentage points better than High School Dropouts. Compare that to the staggering 71.2% participation rate for Non-Hispanic White people. That means White people are 75% more likely to have equity in a home than Black people, the number one store of wealth for most Americans. This gap is larger than it was before the 1968 Fair Housing Act which was supposed to help prevent racism in the real estate market. These are just a few examples, but you get the point.
All of this begs the question, why is it so difficult for Black people to become homeowners? Experts point to various issues such as a lack of affordable housing in areas, rising student debt, and discrimination. Discrimination in housing is both illegal and deeply unjust. According to the National Fair Housing Alliance (NFHA) the number of discrimination based complaints has reached an all time high since record keeping began, and accounts for an 8% year-over-year increase. On top of that, hate crimes in this area have jumped an alarming 14.7%.
So how does it happen? Studies show that it happens in several ways. On the sales side of the process it has been found that some real estate agents will guide Black people away from high-value neighborhoods. In other instances studies show agents withholding information that would result in an easier purchase, and requiring Black people to produce paperwork that their White counterparts did not have to.
“That means that both the access to and cost of credit for Black people is less available and more expensive than it is for White people for no other reason than the color of their skin.”
And then there is the financing side. Numerous studies have shown that Black people with similar financial circumstance as White people will experience higher rates of denial for mortgage applications and higher interest rates even if they are approved. That means that both the access to and cost of credit for Black people is more expensive than it is for White people for no other reason than the color of their skin.
Then there is the type of loans that Black people are steered to. Studies also show that a Black person is more likely to end-up with a predatory loan than their White counter art with the same financial profile. Black people are 105% more likely to get a high interest loan than a White person. That’s more than double.
When the Great Recession happened more than half of all Black homeowners had subprime mortgages versus the approximate 22% of White people. As a result, Black homeowners were hit especially hard by the Great Recession. Over a quarter of all Black homeowners went into foreclosure in the wake of the Great Recession.
The inequities are numerous and severe, and this is just one narrow topic of how systemic racism works against our Black friends and loved ones to make their lives harder and the American Dream that much more difficult to obtain. Imagine what we have discussed here and add the headwinds of discrimination in the workforce, legal system, and education system.
So, when people say there is not systemic racism present in today’s society it breaks my heart. To think that over all of these years we have only come this far. Shame on us for not doing more. Shame on us for not being our brother’s keeper. Shame on us for letting this persist that the next generation will still not yet be unburdened from the shackles of racism.
Call to Action: Donate to the National Fair Housing Alliance (NFHA) to help end discrimination in housing.
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