Monday, December 10, 2012
- Forbes: How Home Ownership Keeps Blacks Poorer Than Whites, by Dorothy Brown (Emory):
The racial wealth gap has hit an all-time high while Barack Obama has been president. The median net worth of white households is now 20 times that of black households. Why?
Some argue that the gap is a current manifestation of a historical problem. Others say blacks are to blame. While I can’t eliminate the lingering effects of slavery and Jim Crow, or change stereotypes, I can highlight one area where blacks may be inadvertently contributing to the racial wealth gap: When most black people buy homes, we hurt ourselves economically.
Home ownership has been an important vehicle in creating a solid white middle class, but it has not done the same for most black homeowners, because blacks and whites buy homes in very different neighborhoods. Research shows that homes in majority black neighborhoods do not appreciate as much as homes in overwhelmingly white neighborhoods. This appreciation gap begins whenever a neighborhood is more than 10% black, and it increases right along with the percentage of black homeowners. Yet most blacks decide to live in majority minority neighborhoods, while most whites live in overwhelmingly white neighborhoods. ...
The recent crash and subsequent rebounding of the market—”fiscal cliff” jitters notwithstanding—show how meaningful this is: White median net worth is down by only 16%, while black median net worth is down by 50%. This is because the stock market has significantly rebounded and compensated for whites’ losses in home equity, but blacks, without comparable stock investments, have not benefited.
A new Tell Me More series, 'Why Not?' takes a closer look at what's on the table during the fiscal cliff negotiations. Host Michel Martin talks to NPR's Scott Horsley and Dorothy Brown of Emory University School of Law. They weigh the pros and cons of cutting tax deductions, including mortgage interest and charitable giving adjustments.