1. Chapter Ten: Inequality in Housing and Wealth By Tanya Maria Golash-Boza

2. Housing and Wealth  Homeownership is one way wealth is measured.  Wealth also is money or valuables that are not used to pay for daily expenses.  “Wealth is the sum total of a person’s assets—cash in the bank and the value of all property, not only land but houses, cars, stocks and bonds, and retirement savings— minus debt. It is something built up over a lifetime and passed on to the next generation through inheritances.” (p. 269)

3. Housing and Wealth  80% of the wealth in the United States is owned by 20% of the richest tier.  When race is part of the analysis of wealth, black and Latino families have very little wealth compared to whites: 5 cents of every dollar white families own. “On average, African Americans and Latinos have less than 8 percent of the wealth of whites (See Figure 10.3).” (p. 282) From 2000 statistics, Native Americans born between 1957 and 1965 had only $5,700 in wealth, compared with whites born during the same period who had $65,500. The gulf of wealth in 2009 between blacks and whites was three times what it was in 1984. (p. 285)  Blacks, Latinos, and Native Americans and other ethnoracial groups today face a historical legacy of being legally shut out of ways to amass wealth and continue to face barriers.

4. Segregation  Segregation prevents wealth from accumulating as educational institutions important for bettering future generations experience less funding in communities of color and property values are lower.  Segregation of blacks and whites did not occur until between 1900 and 1940—this was due to white flight— many whites left the cities to move to the suburbs where their homes were subsidized by federal mortgages.  Additionally, several legal forms of discrimination and exclusionary practices occurred during this time period.

5. Segregation  Violence committed by whites toward blacks in the northern part of the United States included cross- burning, vandalism, and attacks by large crowds  Racial covenants—these were written agreements from the 1930s to the 1960s that homeowners signed upon moving to a new home in which they agreed not to sell the home to a person of color.  Racial steering—a potential homeowner would only be shown homes by real estate agents in neighborhoods that matched the homeowners’ race.

6. Subsidized Homeownership Limited to Whites  “Between 1933 and 1978, U.S. government policies enabled over 35 million families to increase their wealth through housing equity. As homeowners, millions of Americans were able to begin to accumulate the tax savings, home equity, economic stability, and other benefits associated with home ownership. White Americans benefited disproportionately from this shift for two primary reasons: (1) it was easier for white people to purchase homes, and (2) the homes that whites bought increased in value more rapidly than those purchased by blacks because of the perceived desirability of all-white neighborhoods.” (p. 274)

7. Predatory Lending in the 1990s and Early 2000s  Discrimination in the real estate market took the form of the kinds of loans disproportionately targeted to people of color.  Even with the same credit scores, people of color were still offered the less quality types of loans (subprime loans).  “Between 1993 and 2000, the percentage of subprime mortgages in black and Latino neighborhoods rose from 2 to 18 percent. Overall, black and Latino families were about twice as likely to receive subprime loans as white families.” (p. 277)  Segregated black areas were also targeted for subprime loans by unregulated mortgage brokers.

8. Predatory Loans and Foreclosure Crisis  The economic crisis that began in 2007 especially impacted communities of color.  Segregation amplified the impact of the foreclosure crisis.  Many more homes were in foreclosure in communities of color.  Many more families of color experienced financial problems due to the foreclosure.  This all negatively impacted wealth accumulation for families of color facing the challenges of the foreclosure crisis.

9. Other Forms of Wealth Inequality  Along with differentials in equity and foreclosure in housing along racialized lines, the amount of debt in general is another inequality. “In 2002, over a quarter of black and Latino households had negative net worth, compared with 13 percent of white households.” (p. 285)  Stocks owned by blacks and Latinos declined in value during 2007 at the start of the financial crisis, more than the stocks owned by whites and Asians.  Whites and blacks earning the same incomes do not get equal benefits. Whites are more apt to have employers paying for medical care and paying into a retirement plan.  In research done over 25 years by a group of scholars headed by Shapiro, “36 percent of white households inherited some money over the 25-year period under study, compared with only 7 percent of black households.” (p. 287)

10. Explaining the Contributing Factors to Wealth Inequality A study done by Shapiro, Meschede, & Osoro in 2013 explained that five influences shape wealth differences among ethnoracial groups.  Saving or consumption patterns were not factors.  Years of homeownership, household income, years of employment, college education, and inheritances or financial help from family.  The most influential were years of homeownership.

11. Conclusion  “…wealth inequalities are entrenched and complex... Not all white families have wealth, but historical racial disparities in the United States, as well as ongoing discriminatory practices, ensure that white families are more likely to accumulate wealth than black and Latino families.” (p. 287)