Black Homeownership & Generational Wealth
(in 3 parts)
“If you are African American or otherwise and you have good income and good credit, having a home is an asset, like your 401(k). Understand it’s an asset. It’s not all peaches and cream. Like anything else, there are issues, but it is a home. And that home over time historically has allowed African Americans to create wealth, not only for themselves, but for generations to come.”
– Aaron Smith in “Declining Black Homeownership Has Big Retirement Implications“, Forbes.com, May 10, 2017
Motivation: Black Homeownership & Generational Wealth
Another motivation for this project is homeownership as an American of African descent, and more specifically, as someone descended from those Africans who were taken to this nation enslaved. I hope it becomes an asset that I can not only pass down to potential children as generational wealth once deceased (or family, friends or organizations should I not have children), but that can also serve as a place of shelter, rest, restoration, hospitality, and refuge for myself and others, while I am still living.
“The Youngers eventually move out of the apartment, fulfilling the family’s long-held dream. Their future seems uncertain and slightly dangerous, but they are optimistic and determined to live a better life. They believe that they can succeed if they stick together as a family and resolve to defer their dreams no longer.”
Despite the racial climate and the adversity that will come from integrating a white 1950s Chicago neighborhood, the Youngers move forward. Their decision is full of uncertainty, full of significant potential to become targets of violent physical and/or violent verbal opposition, but is more importantly full of hope, courage and walking-out the knowledge of their worth and equality. They seek a quality of life that will grant them greater autonomy and financial stability, both during their own lives and for their descendants.
The goals of these next three posts are to create a layman’s guide to the following topics:
- The status quo of homeownership in the United States,
- The known benefits of homeownership versus renting,
- Historical and persistent obstacles to homeownership unique to the non-Hispanic Black American population, and
- Black homeownership numbers, reports, analyses and policy suggestions for achieving wealth equality compiled by organizations and experts carrying out this research for a living.
Homeownership in the United States & An Infamous Net Worth Study in Boston
Homeownership Rates in the US & Questions They Beg
According to the U.S. Census Bureau’s Quarterly Residential Vacancies and Homeownership report released Thursday, July 26, 2018, at the close of Quarter 2:
- The nation-wide homeownership rate was 64.3%
- The regional homeownership rates were:
- Midwest – 68.3%,
- South – 65.9%,
- Northeast – 61.3%
- West – 59.7%
- Homeownership rates by age were:
- 65 years and older – 78%
- 55 to 64 years – 75.1%
- 45 to 55 years – 70.6%
- 35 to 44 years – 60%
- 35 years and younger – 36.5%
- Homeownship rates by race were:
- Non-Hispanic White alone – 72.9%
- Black alone – 41.6%
- Hispanic (of any race) – 46.6%
- Asian, Native Hawaiian and Pacific Islander alone – 58%
- Other – 55.7%
From these simple numbers, as a layperson and NOT an expert, my mind goes down the following paths of data analysis. Please receive these as hypotheses or questions about the implications of the differences above:
- Is there greater home affordability, easier achieve-ability of homeownership, more numerous occurrence of home inheritance in the Midwest and the South than in the West or Northeast? The red and blue map of Electoral College results for the 2016 Presidential election flashes in my mind. I make this remark not to imply a correlation between home-owning, renting and any negative associations (pervasive in the social climate) with the way a particular state or region voted. I make this remark as I ponder how the advantages of homeownership versus renting may contribute, reflect, or correlate with differing voter values in a particular community: neighborhood, city, county or state.
- As we get older, do more of us come to the conclusion, at least by retirement, that buying is the best way to go, preferring owning our own home to renting? How do we come to that conclusion? Do we find ourselves in a better financial situation than in our youth? Are we married? Is our college debt finally paid off? What factors contribute to the 35 and younger crowd’s homewonership rate being drastically lower than the other age groups? Also, 35 doesn’t sound very young compared to what I know of homebuying ages and rates in previous decades, before I existed. Hint: There are already many articles investigating homeownership trends and challenges for millennials. Here’s one from July 11, 2018, published by the Urban Institute. I reference an April 2018 Policito article on millenial homeownership in my previous post “Motivations: Affordable Housing, City Living & Settling Down”.
- Black people in this country are the least likely to own a home in the comparison of “races”. Why? What impact is this having on black net worth, generational wealth, financial stability and quality of life today? Two Washington Post articles from April and July 2018 touch on answers to this question reading:
- “We haven’t made any progress in homeownership since the passage of the Fair Housing Act in 1968… The little progress we did make has been wiped away by the foreclosure crisis.” -Nikitra Bailey, Executive Vice President at the Center for Responsible Lending, Washington Post, July 6, 2018
- In the Washington Post’s May 2018 article,“Black homeownership is as low as it was when housing discrimination was legal”, we read: “Owning a home can increase a family’s financial security, but black people and other minorities significantly lag behind white people in homeownership rates, a major factor contributing to the racial wealth gap.” – Alanna McCargo and Sarah Strochak of the Urban Institute
“The Color of Wealth in Boston”, a Relevant Case
With the knowledge that homeownership rates are second-to-lowest in the Northeast and lowest among Black alone and Hispanic groups, I segue to a 2015 publication that solidified black homeownership as a stand-alone motivation for my project:
wait for it… Keep reading! 😉
As stated in the April Politico article, tech jobs are increasing in cities like Boston, as well as the salaries paid for those positions, yet and still, even some well-paid tech workers are finding homeownership elusive. We cannot, however, stop here in our portrait of the aspiring city homeowner nor in our consideration of the obstacles in the path of their goal. We must dig further to investigate the distribution of this new wealth across a variety of demographic groups. Only then will we more fully understand the dynamic picture of who benefits, who does not, and how wealth distribution subsequently influences an individual’s or family’s ability to own a home in a city like Boston. To not dig further would be oppressive and marginalizing in its colorblindness.
The study that solidified black homeownership as a motivation for this project was: “The Color of Wealth in Boston”*. It was jointly published on March 25, 2015 by Duke University, The New School and the Federal Reserve Bank of Boston. It’s data affirms, for me, that while the wealth-cake may be growing in height, the layers are glaringly, absurdly, mournfully uneven. One of the four key findings of the summary reads:
“Nonwhite households have only a fraction of the net worth attributed to white households. While white households have a median wealth of $247,500, Dominicans and U.S. blacks have a median wealth of close to zero. Of all nonwhite groups for which estimates could be made, Caribbean black households have the highest median wealth with $12,000, which is only 5 percent of the wealth attributed to white households in the Boston [Metropolitan Statistical Area].
To be specific with the numbers in this report, the median net worth of a US Black household in the city of Boston was 8$ in 2015. The median net work of a Dominican household in the city of Boston was $0 in 2015. Net worth, for the record, is the the subtraction of one’s debt from one’s assets. Perhaps the following question is striking you at this very moment: How does it happen that there is a median net worth gap of a quarter of a million dollars between two ethnic groups?
To conclude part one of this three part series, I end with a second key finding of the Boston study. The transition from the previous paragraph to this next quotation may feel heavy handed in its emphasis on the correlation between homeownership and wealth, but as I seek to highlight in part two of this series, homeownership may be just that big of a deal. Wealth building is not dependent on homeownership alone, of course not, but if you are in doubt of homeownership’s significance, it warrants taking a second look. Again, I am still a layperson. A second finding of the Boston study is that “close to 80% of whites [in Boston] own a home, whereas only one-third of U.S. blacks, less than one-fifth of Dominicans and Puerto Ricans, and only half of Caribbean blacks are homeowners.”
“Homeownership is one of the main avenues Americans have for building wealth,” writes Jonnelle Marte in her July 6th article for the Washington Post.
Well, how so? I want to learn more.
What are the benefits of homeownership versus renting?
What might it take to get there?
How long might could that road be, and why do many say it’s still worth it?
Next up: ‘Uncertain and slightly dangerous’, Motivations: Black Ownership & Generational Wealth 2/3
Copyright © 2018 A.M. Wilsonne
*Much more data can be found when reading the full report for “The Color of Wealth in Boston.” As an additional note, I do appreciate how they break down the black and brown groups. There is cultural nuance between and within communities of black and brown people. We do not all come from one collective group starting point in our history, challenges, heritage, adversity, etc.