The Great Recession delivered a far bigger hit to black Americans’ already meager wealth holdings— depressed by slavery, centuries of discrimination, and deliberately discriminatory housing policies — than it did to whites.
That has left the home ownership gap between blacks and whites at its worst level since the New Deal, according to a new report from the Stanford Center for Poverty and Inequality.
The authors, Darrick Hamilton and Christopher Famighetti, compared household heads aged 20–29 across generations.
Their startling finding: “The only generation with a lower home ownership rate than millennials is the Greatest Generation. This generation was coming out of the Great Depression in 1940 and didn’t benefit much from the New Deal programs that assisted with home ownership.”
In addition, “for both blacks and whites, one has to reach back to the Greatest Generation — born approximately a century ago — to find home ownership rates that are lower than those now in play for millennials.”
Along with the overwhelming effects on black neighborhoods in the form of tumbling prices and rising foreclosures, other factors may be at play.
“It is likely that urban gentrification and more stringent mortgage eligibility criteria, along with ongoing lending and housing discrimination, are impeding home purchases among millennials,” the report says. “Moreover, the surge in student debt may be spilling over to hurt millennials in the housing market, especially black millennials.”
Reparations debate
The report was released as political debate around reparations for slavery and discrimination have been gaining momentum. Last week, Sen. Corey Booker testified at a hearing on the issue in Congress, arguing the country “could never be fully healed” without a candid, in-depth discussion of the harm done to black Americans over centuries.
Several Democratic presidential candidates have expressed support for the principle of reparations, including Booker, Kamala Harris, Elizabeth Warren and Julian Castro.
Hamilton and Famighetti firmly support the concept.
“Reparations could directly compensate blacks for a 400-year-long history of dispossession and discrimination that dates back to chattel slavery, when blacks were the capital assets of a white plantation class,” they write. “This was the beginning of a long history of oppression and unfairness that finds its most recent expression in housing inequities.”
Predatory loans
A separate study from Duke University’s Samuel Dubois Center on Social Equity released earlier this month found that, in Chicago alone, past discriminatory housing policies cost black families as much as $4 billion. That’s because black families were pushed into “contract buying” arrangements that were highly predatory.
“This common but little-known practice took root in the period of the housing boom that followed World War II, and grew out of federally endorsed red-lining policies that denied most black home buyers access to the conventional mortgage loans enjoyed by their white counterparts,” the study said.
“On average, the price markup on homes sold on contract was 84%.”
“The Color of Law,” a book by Richard Rothstein, a distinguished fellow at the Economic Policy Institute (where I work), is an in-depth historical review of just how deeply these legalized segregation tactics thwarted the ability of black Americans to build up any wealth.
It’s little wonder, in the face of all the evidence, that the black-white wealth gap remains so large: the median white American family has 12 times the wealth of their black counterparts.