(Image Credit: Elliott Erwitt)
“Housing equity makes up about two-thirds of all wealth for the typical (median) household. In short, for median families, the racial wealth gap is primarily a housing wealth gap.”
-Janelle Jones, an economic analyst at EPI
The differences between black and white housing appreciation created the large wealth gap that exists today. The FHA’s discriminatory practices have yet to find a compromise to this day.
“Appreciation is the increase in a home's value over time.” "Just 2% of the heavily subsidized mortgages made available by the Federal Housing Administration in the 30 years following the Great Depression went to non-white households." |
The appreciation of wealth was especially impactful on black families since 80% of family assets come from the generation before. The 1968 Fair Housing Act was created to dissolve discriminatory practices, but didn’t account for the fact that white Americans already had the advantage of appreciation. The houses bought before the act received more appreciation and were in better neighborhoods than homes owned by black Americans after the act. Therefore, black families who could afford homes before the Fair Housing Act no longer could.
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The lack of black wealth passed down from generation to generation through inheritance greatly contributed to the wealth gap.
Daly City, the largest city in San Mateo County, California, is famous for being an idyllic suburb. In the mid 20th century, Daly City's houses sold for twice the median income. They were affordable to both black and white Americans as long as they were insured by FHA mortgages. However, these homes sell for a minimum of six to eight times the median income today and are now unaffordable to black Americans. The white families who bought houses in Daly City doubled their equity in the next two generations.
“White families gained appreciation - equity appreciation - of about 300 - $400,000. They used that money to send their children to college, to send their grandchildren to college.” |
“This leads to the racial wealth gap widening as people age, because white families accumulate more wealth over their lives than black and Hispanic families...1 in 7 white families are now millionaires. For black families, it’s 1 in 50.” The lack of assets passed down through inheritance led less black Americans to pursue a higher education. This made it harder for them to get high paying jobs, passing down even less money onto their children. This cycle is the reason behind the widening wealth gap.
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(Video Credit: CNN Money)
“One of the most popular liberal post-racial ideas is the idea that the fundamental problem is class and not race...but for whatever reason, we’re unwilling to stare racism in the face.”
-Ibram Kendi, a professor and director of the Antiracist Research and Policy Center at American University