The Racial Wealth Gap and Home Ownership

Netflix-ExplainedIn my recent post on “The Racial Wealth Gap,” I mentioned a growing number of articles and videos on this issue, but said I thought the best of these was 16-minute film The Racial Wealth Gap, the very first episode in the Netflix original series Explained.  It begins by saying that in The U.S. slaves were wealth, images of them even appearing on confederate money.  By 1863 they were worth $3 billion dollars—or, in 2018 money, $83 billion.  They made even more money for their owners, of course, all which those owners got to keep, none of which the slaves did.  There were free blacks who fared better—488,o7o of them, which represented just under 11% of the total black population in, as scholar Henry Louis Gates puts it, “that tumultuous year Lincoln got elected.”

Confed$-Slaves

By then most blacks had been enslaved for 241 years, with vanishing small chances for building durable wealth.  It looked like things might turn around when, in January 1865, as the Civil War was ending, General William Tecumseh Sherman asked a group of prominent blacks what they most needed to build themselves up.  Rev. Garrison Frasier, the leader of that group said, “Land.”  So Sherman instigated Special Field Order #15, giving a black family “40 acres of tillable land.”  Lincoln signed it into law two days before his Second Inauguration.  Soon after he was dead.  Soon after that, President Andrew Johnson reversed course with language asserting that this represented discrimination against whites.  That language has never lost its hold in much of white America, and is more intensively alive for some today than it was 150 years ago.

So from 1619 to the Emancipation Proclamation in 1863 (244 years) slavery was legal.  From 1865 to the Fair Housing Act of 1968 (103 years) segregation was legal, even considering the landmark Brown vs. School Board case in 1954.  And even though LBJ’s groundbreaking act outlawed such real estate practices as red-lining, the effects of red-lining are clearly alive today, and in some ways still in nearly full practice.  That is, after 347 years of slavery and legal segregation, racial segregation is still baked into a host of policies—business, federal, legal—that systemically hold back the majority of black people.

Blacks-Homes2Netflix’s Explained: The Racial Wealth Gap offers a wide and integrated view of all this information, and near the end even touches the issue of black reparations, a bold—perhaps unwise—choice.  For those who do not see, understand, or experience systemic racism, making reparations to a whole race seems a fantastical, even indecent, proposal.  The strength of this Netflix film is it’s explanation of how the inability to own homes, or own homes that will appreciate in value fairly, has widened the wealth gap—and, by implication, could be one of the best ways to start closing it.  Or at least to retard its rapidly increasing growth.

In 1970 the home ownership gap was wide: 21.3%, with 62.9% of whites owning homes, but only 41.6% of blacks.  This doesn’t tell the whole story, as many of those black homes—because of red-lining—were of poorer quality and in poorer neighborhoods, all of which made them worth less and appreciate less.  Furthermore, in the run-up to the great financial crisis of 2008, blacks—who just wanted equal access to normal loans—were more than twice as likely to be given risky subprime loans.  They were intentional targets for being coaxed into subprime loans that made banks and brokers billions.  Even if they had the same credit score as whites, 1 in 5 blacks still got subprime loans.  As we generally acknowledge now, and movies like The Big Short dramatize, those subprime loans fueled the 2008 crisis.  In that crisis many black communities lost upwards of 53% of their wealth.  American household wealth declined by $13 trillion, with a much greater percentage of this suffered by black families, of course.  And Wells Fargo—one of many banks pushing subprimes hard?: a $175 million fine—barely a slap on the wrist.

LBJ signs the Fair Housing Act, 1968

LBJ signs the Fair Housing Act, 1968

The median household wealth for whites is $171,000.  For blacks $17,600.  Nearly ten times less.  And since, for most Americans, 62% of wealth is tied to the home they own, it makes sense to try to get more and more poorer families into homes.  In 10 years, home owners will have 12 times the wealth of non-homeowners.  Unlike just a monetary investment, which Explained: The Racial Wealth Gap also says would build wealth—$100 in 1863 growing to $3,584,970 in 2018—a home also adds stability.  Home owners tend to stay in neighborhoods 4 times longer, thus getting more involved, and also creating educational stability that results in a 25% higher high school graduation rate, and an astonishing 115% higher college graduation rate.

TNP-Logo1This has been a post of lots of stats, and many of those in the paragraph above have been used to promote the work of what started as our family’s foundation.  When Rick and Desiree Guzman started Bryan House as a living memorial to Rick’s youngest brother, Bryan Emmanuel Guzman, it was for the express purpose of helping those who had been granted official refugee status buy their first home.  Bryan House became Emmanuel House, now reaching out not just to refugees, but to all the working poor.  It’s now The Neighbor Project, with a reach 4 times that of Emmanuel House.  Seen in its widest context, The Neighbor Project works to decrease the wealth gap, racial and otherwise, and create a more equitable society for all of us.

  Lorraine Hansberry’s famous play A Raisin in the Sun dramatizes her family’s struggle to escape red-lining and buy a home in a white neighborhood.  Read more about that Here.

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