Homeownership, economic and social cost of the housing ‘Black tax’
Lee A. Daniels | 6/30/2013, 1:46 a.m.
(NNPA) – If homeownership is, overwhelmingly, the foundation of individuals’ and families’ economic security in America, Black Americans face a profoundly difficult predicament. For when it comes to that signal marker, the wrenching economic shocks of the past half-decade have wiped out at least 14 years of Black Americans’ climb up the homeownership ladder.
That’s the inescapable assessment to be drawn from a series of recent reports on discrimination in the home buying market, and on homes foreclosed on as a result of the Great Recession.
These developments point to a “perfect storm” of individual, institutional and structural racism that – along with such largely race-neutral economic developments as the new surge of all-cash deals for home purchases in some metropolitan areas and the nation’s growing income inequality – will undermine many Black Americans’ ability to become homeowners for years to come.
That prediction is rooted in the stunning recent decline of Black homeownership. From its peak of 49.1 percent in 2004, it fell to 44.9 percent in 2011 (compared to 46.9 percent for Latinos; nearly 59 percent for Asian Americans; and more than 74 percent for Whites), according to diversitydata.org, a research project of Brandeis University’s Institute for Child, Youth and Family Policy. There’s every reason to think that since then it’s slipped below its 1997 level of 44.8 percent.
What happened between then and now illustrates how powerfully the “Black tax” – the greater economic and social cost that society’s ingrained racism forces Black Americans to endure – has operated the housing sector.
The prosperity that marked the 1990s brought unprecedented job and wage gains to Blacks along with other Americans. That, in turn, fueled the steady rise of Black homeownership.
But far too often the price many Blacks, Latino and Asian Americans had to pay for home loans was unjustifiably steep. During the last decade, study after study has shown that Black, Latino and Asian American homebuyers were forced to accept subprime mortgages far more often than their White counterparts. Those mortgages, which carry significantly higher interest rates and other costs than conventional, prime mortgages, are typically for buyers with substandard credit ratings. But the studies established that in many instances, banks and mortgage lending institutions forced these loans – which reap higher fees for the lender – on prospective home buyers of color despite being qualified for conventional mortgages.
One result of that, according to a new report by a national coalition of community organizations and housing groups, was that when the Great Recession hit, the housing bubble burst, and job layoffs mushroomed, many new Black and Latino homeowners found themselves awash in debt and bereft of resources – and thus, a target for foreclosure.
The report, Wasted Wealth: How the Wall Street Crash Continues to Stall Economic Recovery and Deepen Racial Inequality in America, underscores its point that because Blacks and Latinos are far more likely than Whites to have their home as their major source of wealth, these two groups have experienced collective losses of billions of dollars of wealth and depressed neighborhood property values.