What does being brown in America have to do with housing? Frankly, not as much as it used to, thankfully. At least from an access perspective.
As background, in the last two generations we have enacted laws that attempt to assure all people are treated equally with respect to access to housing. These laws became a necessity because of people being denied housing simply based on the color of their skin- not because of their credit rating or job status. These were never checked as the barriers were so high (and arbitrary) that obtaining an application for rent was out was of the question.
Seldom does a person purchase a product after a single exposure to an ad- that's why repetition is key to brand advertising. Thus, over time, through various media brown has become more accepted. To wit:
Jackie Robinson- 1950's. Martin Luther King- 1960's. Jimmie Hendrix- 1970's. Michael Jordon- 1980's. Bill Cosby - 1990's. Tiger Woods and Denzel Washington- 2000's. President Barack Obama - today. There are many more, of course. This is just a sample from various processions over decades. Trailblazers all over a fifty year time table. But also, just people that excelled at their craft.
Now- to the core of the matter
This is not a post about social justice. The core of the matter presented here is the correlation between net worth and homeownership. According to a report by Sabrina Tavernise in the New York Times on July 26, 2011: "the median net worth of Whites is now 20 times that of Black households and 18 times that of Hispanic households.
According to the Pew Research Center, in the recent recession, Whites net worth decreased 16% while the net worth of Hispanics decreased 66% and 53% for Blacks. Why? Why such a disparity? In my view this difference rest squarely on the percentage of home ownership by each race.
From the same article by Sabrina Tavernise, here is the average net worth of families by race in 2009 from the Pew Research Center:
• Hispanics: $6,235
• Blacks: $5,677
• Whites: $113,149
• Asians: $78,066
This is breathtaking. (Question: how does society have a sincere discussion on the possibility of parity? I present no remedies here, nor place responsibility for change on any one group. This blog is about housing.) From a paper entitled Race, Homeownership and Wealth by Thomas M. Shapio (Washington University- St. Louis) Mr. Shapiro states the following:
Homeownership is the largest component of the wealth portfolios of both white and black families. In 2002, housing wealth accounted for 63% of all wealth in African-American families. In 2004, homeownership reached historic highs, as 69% of American families lived in a home they owned. In 1995, 42.2% of African-American families owned homes, increasing to a historic high of 49.5% in 2004.
Conclusion: a lower homeownership rate equals lower net worth. Continuing today, there is a full twenty percentage point differential between the homeownership rate between Whites and Blacks. This is reflected in net worth.
We look forward to the day when color is a non-issue in the homeownership decision-making process. We are not there yet- regarding neighborhood selection, red-lining and financing. This will occur when educational attainment reaches parity. Education is the third leg of the chair; net worth is to homeownership as educational attainment is to opportunity. Education completes the circle.
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Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. We discuss best practices in multifamily management and methods related to how to buy apartment complexes. Our focus is sharing strategies and tactics that can be implemented and measured. For more information, visit: www.MultifamilyInsight.com
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