While much lip service has been paid to reversing the effects of systemic racism in the United States, racial wealth inequality, not to be confused with racial income inequality, continues to elude progress. Income is the amount of money you earn from your work or your investments while wealth is the amount of stuff you own: your house, savings, and retirement accounts 1. 150 years after the last slaves were freed 2, the typical white household still has 16 times the wealth of a black one 3. Furthermore, it would take 228 years for black families to accumulate the same amount of wealth as whites 4.
If you can’t afford to wait 228 years, how do you make headway on this now? Homeownership!
Homeownership has been and continues to be essential for wealth accumulation in the United States 5, as regular mortgage payments act as a form of saving that set families on the path to financial security 6. Yet, black homeownership rates have declined to levels not seen since the 1960s 7. As it stands, the homeownership rate among white Americans is more than 30 percentage points higher than among black Americans 8. There are historical and contemporary factors that contribute to these unsavory findings. Historically, governmental redlining policies rendered homeownership less accessible for black families 9, while major banks are still being found to have discriminatory lending practices by the United States Justice Department to this day 10. Don’t be discouraged, however. Recent legal decisions 11, activism 12, and journalistic efforts 13 are successfully combatting the discriminatory housing laws and practices of past and present.
Take advantage of the momentum gained, as it may not be permanent.
The state of the housing market is reason why now is the time for homeownership. There are various indicators which suggests that the housing market has not only recovered from the recession, but is as robust as it was in previous decades. One such indicator is the first-time foreclosure rate, which was lower in 2016 than it had been since 2000 14. Moreover, Yahoo Finance reported in April 2017 that home buyer traffic is having the best run since 2009 and that home builder sentiment is experiencing a 12 year high 15. One Market Watch columnist even argues that this may even be the best time to invest in real estate in history 16. Irrespective to the current health of the market, the National Association of Realtors’ seven reasons to own a home—tax benefits, appreciation, equity, savings, predictability, freedom, and stability—are timeless and as such are pertinent today as they have ever been17.
Minimum down payments may serve as a hindrance to many blacks who decide to purchase a home and deter many others from ever considering homeownership at all. Mortgage lenders generally require a minimum down payment, which may vary from 3% to 20%, or more, depending on factors such as your credit history and your reason for buying 17. Unbeknown to blacks who are discouraged by this, there are 2,290 down payment programs across the country that can help defray the costs for low and middle-income buyers 18. Buyers who use down payment assistance programs are saving an average of $17,766 over the life of the loan 19. Given such savings, it behooves a buyer to identify a down payment program for which they qualify by using resources such as this one here. That’s potentially 17,766 less hurdles to climb on the way to home ownership for black people, or any other racial/ethnic group for that matter.
Arguably the most effective and efficient way to eradicate racial wealth inequality in the United States is homeownership.
With legal, journalistic, and activist efforts to fight discriminatory laws and lending practices regarding homeownership on the rise, the advent of down payment assistance programs, and the health of the housing market, now is as good a time as ever for black people to buy homes. Despite all the talk about black lives mattering, we seem to have forgotten that black lives need black homes #BlackHomesMatter.