Pierre Lucien is a Haitian American millennial seeking financial freedom through multiple streams of income. He believes that teaching is the highest form of learning, so he reads and writes about investing to better educate himself on the concepts and principles.
In the United States, the median white-owned home is worth $85,800. Conversely, the figure decreases to $50,000 and $48,000 for black and Latino-owned homes respectively. This is not to say that white-owned homes are better constructed or more architecturally appealing. It is a reflection of the disparity in the quality of white neighborhoods versus black neighborhoods. As a homebuyer, one does not simply buy a home but also buys into a neighborhood.
When looking at blacks and whites of comparable income, whites are far more likely to live in neighborhoods with high-quality schools, day-care options, parks, playgrounds and transportation options. Likewise, a black household with an annual income of $50,000 lives in a neighborhood where the median income is under $43,000, while whites with an annual income of just $13,000 live in neighborhoods where the median income is $45,000. Simply put, poor white people live in more affluent neighborhoods than middle-class black people.
There are various reasons why the disparity in the quality of neighborhoods exist, but two pertinent causes of note are the disproportionate occurrence of foreclosures in black communities and the discriminatory treatment that those homes receive after foreclosure. It is no secret that home sale prices can take a nosedive due to nearby foreclosures. The unsurprising, yet disappointing, finding is that communities of color received a disproportionate share of subprime mortgages in the years before the housing crash and were therefore at a higher risk of facing foreclosure. Consequently, black mortgage holders were 76% more likely to have lost their homes than white borrowers when facing foreclosure.
To make matters worse, banks largely neglect foreclosed homes in black neighborhoods.
More specifically, the Department of Housing and Urban Development found that banks continuously failed to conduct simple maintenance such as grass mowing and securing of doors and windows in minority neighborhoods. Similarly, investigators from the National Fair Housing Alliance looked at more than 1,000 foreclosed homes in nine major metropolitan areas around the country and found there to be unequal treatment of the foreclosed homes in a black neighborhood.
How do we, as a community resolve this? Buy and upkeep the foreclosed homes.
While many may not be in the position to make such investments individually, co-investing as a group or team enables an entity to raise the capital to complete desired transactions. Such a way of accessing real estate assets outside of the typical fund structure is called a joint venture. Joint ventures in real estate tend to arise when a manager finds an opportunity but is currently not managing a primary fund with capital available to invest.
Miami Millennial Investment Firm is doing just that. The firm, formed by 12 young black professionals in Miami-Dade County in 2015, helps black people grow wealth through real estate, by bringing black investors to neglected black communities. They buy properties, rehab them, and sell them, focusing primarily in gentrifying neighborhoods.
Black people should follow that blueprint across the country. How better would our neighborhoods be if there were less and better maintained foreclosed homes? By how much more would the values of the homes increase? How many low to middle-income black families would live in a community where the median income matches their own? How much less susceptible to gentrification would vulnerable black families be?