In the Locked Out: Black Women, Wealth and Property series, Insight Center members, Springboard to Opportunities, and several expert co-authors connect the lived experiences, hopes, and dreams of low-income Black women and their perspectives on homeownership to historical and current policies that fuel our exclusive housing market—and its impact on health and well-being—to advocate for equitable housing solutions for Black women.
Racial and gender wealth inequality is a long-standing American embarrassment. The product of historical policies and practices that prevented black people from getting rich while simultaneously creating pathways to wealth for white Americans, the problem continues to plague our country. In fact, the data shows that wealth inequality may actually be getting worse today.
Right now, in the United States, women have only accumulated 55 cents of wealth for every dollar a man owns, and black people still only have 17 cents of wealth for every dollar of wealth owned by whites. Black women sit at the intersection of racial and gender wealth inequality and as a result own 90% less wealth than white men. This shocking statistic illustrates our collective inability to accurately diagnose the sources of racial and gender wealth inequality, which in turn fuels our inability to fully address the problem.
One of the biggest obstacles to correcting this inequality is that, while black women’s wealth inequality is a systemic problem – and therefore requires a large-scale transformation of our systems – our solutions tend to focus on individual strategies. Home ownership is a great example of how funders and advocates miss the mark when they identify the problem and in turn offer false solutions.
Racial justice advocates, including black women, believe home ownership will create wealth for black people because home ownership has been an effective strategy for wealth creation for white people. However, white people have been able to create wealth through home ownership because our housing industry was built for their benefit – and only for them. The history of anti-black housing policies in the United States reveals that without system-level change, black women will never be able to reap the benefits of homeownership as their white peers do.
Armed with intergenerational wealth, white homebuyers often have access to assistance with down payments and home maintenance that black families do not, contributing to a further black-white home ownership gap. by 30 percentage points. This intergenerational racial wealth gap is largely because racist policies and practices like redlining – the systematic denial of loans and other financial supports to communities of color, which guaranteed racially segregated and unequal neighborhoods – and grants to white suburbs allowed whites everywhere. history to gain massive amounts of wealth while preventing black people from gaining wealth in the same way. The legacy of these practices continues today. According to a 2019 Federal Reserve Survey of Consumer Finances, the median value of a home owned by black families is $150,000, compared to $230,000 for white families. In short, black and white households do not enjoy the benefits of home ownership in the same way.
Although redlining is technically illegal today, discriminatory lending practices by banks, creditors and people who work in the real estate market continue to play a role in denying black women the opportunity to become wealthy through access to property. The 2008 foreclosure crisis was no exception. During the Great Recession, many banks deliberately put black people on bad mortgages. Indeed, black women were 256% more likely to receive a subprime mortgage than a white man with the same credit score and financial outlook. Lenders have also refused black applicants mortgages at a rate 80% higher than white applicants.
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Racist housing valuation practices also limit the ability of black people to enrich themselves through home ownership. According to the US Bureau of Labor Statistics, 97% of home appraisers are white and, unsurprisingly, in the appraisal field, racial bias runs wild. Homes in majority black communities are constantly being devalued. The higher the proportion of black people in the neighborhood, the less its homes are worth, even controlling for age, social class, household structure and geography.
For example, a Brookings Institution report found that owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average compared to neighborhoods with few or no black residents. Researchers have found that differences in the quality of homes and neighborhoods do not fully explain such devaluation; homes of similar quality in neighborhoods with similar amenities are worth 23% less in majority black neighborhoods. The same report also notes that in majority-black neighborhoods, property devaluation results in aggregate wealth losses of $235 billion for residential real estate and $171 billion for commercial real estate.
“Predatory inclusion” – a term coined by Dr. Keeanga-Yamahtta Taylor, professor of African-American studies at Princeton University – adds another layer to the problem. Through predatory inclusion, the federal government worked hand-in-hand with bankers and real estate brokers to enact housing policies that benefited the corporate housing sector. Dr. Taylor argues that the federal government’s disinvestment in public housing and its failure to regulate the real estate market – which does not benefit from more racially equitable housing – has led to the boom in private housing profit, making safe, affordable homes a rarity and making home ownership a distant dream for less affluent black people and are paid less than their white peers. As Dr. Taylor points out, “The role of the federal government as a regulator has been undermined because it has withdrawn from developing, building, or managing any type of housing program. It completely outsourced it to the private sector. So the reason we haven’t gotten good housing for ordinary people for over 100 years is that it just isn’t profitable.
In recent news, neoliberal economists like Larry Summers are pushing the Federal Reserve to raise interest rates, including mortgage interest rates, to historic highs to curb inflation. Summers also recommends an unemployment rate of up to 5% to reduce inflationary pressure. These policy recommendations are a double whammy for black people in America; due to persistent and pervasive racial discrimination in the labor market, blacks consistently have double the unemployment rate than whites. If passed, Summers’ policy proposal could push the black unemployment rate to 10 percent, further compromising the ability of black women to secure and stay in the homes they own. Higher interest rates also mean that black women will have to pay higher mortgages, a difficult feat when, as research shows, black women are consistently underpaid and undervalued for their work.
As stated in the previous article in our series, Acknowledging the full spectrum of Black women’s views on homeownership is key to progress, the dream of owning a home for Black women is not just a question of financial gains. Home ownership has social and emotional benefits, allowing people to feel safe, have privacy and house loved ones. It’s important to consider these things when we think about Black women’s journey to homeownership. We cannot continue to believe that simply providing down payment assistance and lower interest rates will solve this problem. Nor should we continue to allow black women who overcome barriers to homeownership to be denied — through racial targeting and discriminatory practices like predatory lending — the homes they want and deserve. When we accept inequitable policies and practices that target the most marginalized, we harm the prospects of these people and create an opening for our government and financial institutions to lower the bar for everyone.
Instead, we need to fundamentally change the housing market so that black women can reap the benefits of home ownership, as many white people already do. This requires federal oversight of our property assessment system, extensive regulation of the real estate and banking sectors to eradicate racism and sexism, and massive investments by local and federal governments to build affordable and safe housing. We also need to stop throwing black people under the bus in our economic policies. Pushing for strategies that negatively impact black people is unfair and dangerous for all Americans. It is time to innovate with our economic tools and move beyond status quo solutions if we truly want a more equitable United States.