National home prices are down more than 30 percent since they peaked in 2006. Experts expect prices to continue to decline for the rest of this year, into the next. This is bad news for Black and Hispanic homeowners who have most of their wealth tied into their homes.
Currently, White households have 20 times more wealth than Black households and 18 times more than Hispanic households. The wealth gap is at the widest it has been in 25 years. What is causing the divide? Most minorities had their funds invested in their homes, whereas Whites diversified their investments, putting money into the stock market, which has rebounded, and their 401Ks.
For many, buying a home is a sign that ‘they’ve made it’ and have captured a piece of that elusive American Dream. Indeed, home ownership is a critical first step on the road toward wealth. When buyers make that purchase, they do so hoping to see a return on their investment and rarely, if ever, expect to lose money. But that is exactly what is happening to millions of minority homeowners across the country. As the housing market continues to decline, so too do home values, further widening the gap between White and minority wealth and erasing decades of government programs that sought to close that gap.
Historically, Blacks and Hispanics have had a difficult time accessing the same levels of wealth whites have. Locked out of lucrative positions that would provide them with a firm financial footing, they’ve waited patiently to see the effects of government initiatives, such as affirmative action and minority mortgage lending programs. Those programs have helped and, in recent years, we’ve seen people of colors both leap into boardrooms with great success and purchase homes in the neighborhoods of their dreams.
Then the economy began to spiral downward. Because Whites had a head start, so to speak, they were able to better withstand the economic turmoil. Minorities, many of whom are just a generation or two removed from poverty, have not been as fortunate.
Though they may not have foreclosed, they are living in areas where many of their neighbors have and are living in a home that is now valued far less than their mortgage.
Everyone anxiously awaits signs that the economy is really improving and that the housing market is making a turn for the better. Minorities, in particular, need the market to swing upward. As the government decides steps for the future, we must urge them to consider initiatives that will stabilize and grow the housing market.
(Judge Greg Mathis is vice president of Rainbow PUSH and a national board member of the Southern Christian Leadership Conference.)