Black home ownership is a story that can be traced by to 40 acres and a mule or when Africans themselves were considered chattel. The story of ownership for Black Americans has many chapters
Home ownership in Black America has been controlled by the strategic promotion of racial inequality. From the good ole' days, back when racism was simple blacks just weren't allowed to live where they wanted. Blacks weren't even eligible to receive loans.
Things are a bit more complicated today. Using key strategies such as a lack of fair access to credit, predatory lending, redlining and more black families have been removed from home ownership. Even the government’s action or lack thereof has contributed to housing inequalities for black families. Housing is a private sector industry that has yet to fully break through the obstacles of institutionalized discrimination. Even with the Fair Housing Act of 1968, racism is a driving force of housing inequality.
Private businesses are hidden and protected from public scrutiny, despite their indirect methods of denying credit access to blacks. This is a continuation of a legacy of unchecked discrimination that allows the industry to justify the limited access to loan originations to blacks. Financial firms use technology, demographic algorithms driven by financial models to justify their lack of black buyer inclusion. With reporting mandates loosen, there will be even more room for institutions to bypass the black borrower.
This has created the lowest home ownership rate for Blacks today since the 1930s. Today, home ownership rates for blacks is at 42%. Even this number is bottom half of the country heavy. The south has areas where black home ownership rates are over 60%, while places such as Boston, Hartford and other northern cities have rates as low as 19%.
This inconvenient truth is based around the facts of how Blacks have never enjoyed equal access to mainstream mortgage credit. In fact, on the flip side Black families looking to become homeowners have commonly been denied access to home loans or trapped in cycles of predatory mortgage schemes.
Predatory lending such as payday loans, buy here pay here car loans, tax refund anticipation loans and consumer debt loans typically targets minorities, the poor and the less educated. They also prey on people who need immediate cash for emergencies such as paying rent, medical cost or car payments. A common thread of these loans exploit borrowers who are low income, have bad credit and lack of credit.
During the housing crisis, federal regulators and independent researchers documented the fact that many subprime home loans were blatantly exploitative. Big banks and financial institutions who were responsible for these bad loans only had to pay fines. To date those fines and fees have totaled more than $100 billion. Meanwhile Black borrowers who were disproportionately affected still carry debt and blemishes on their credit scores because of them.
These blemishes are keeping many black households away from home ownership and trapped in renting. Home ownership is the single most important asset for wealth accumulation by the typical American household. In 2014, home ownership rates stood at 41.2 percent among Blacks compared with 68.5 percent among non-Hispanic Whites.
A unique state is that the rates of white home ownership is level throughout the country. There are even certain areas where white home ownership reaches 85%.
These numbers highlight a hidden truth that is keeping black household’s poor. We often talk affordable housing and gentrification, both major issues. We rarely discuss the systematic process that have found the cracks in fair housing laws that are keeping blacks chained to landlords. With no access to wealth building tools, the cycle of debt, income inequality and wealth inequality will continue.
These factors are why Black wealth will is at risk of averaging $0 in the next 20 years.
We are at a time in our communities and nation where solutions to these institutionalized obstacles to the American dream are debated at every turn. Fear, hatred and racism drives opportunity. Black home ownership is a story of America. It is and will always be a story of hope.