Cheryl Gray, left, shows social worker Kira Johnson around the house Gray is buying through Habitat for Humanity in Jackson, Miss. Gray is receiving support from Springboard to Opportunities to help her while she works two jobs, raises her two children and applies for graduate school. (Carolyn Van Houten/The Washington Post)
Columnist

My grandmother Big Mama hated that I was a renter.

For the one and only year I rented in my early 20s, she would endlessly chastise me, saying “Why are you giving your money to the white man?”

I would roll my eyes and dismiss her question, telling myself she was venting the frustration she had experienced battling discrimination in trying to get a mortgage and become a homeowner. In the late 1980s, her words felt too racial and radical.

I came to learn how naive I was.

Big Mama, the great-granddaughter of slaves, wanted me to understand that owning land and a home is an economic game-changer for black families. After my apartment lease was up, I purchased a two-bedroom condominium.

The Black Lives Matter protests taking place across America have focused not just on police brutality but employment bias, pay disparities and the lack of access to affordable health — all issues that have contributed to economic inequity between white and black families. Another key to closing the wealth gap is increasing homeownership for people of color.

For too long, systemic racism and racist policies and lending practices have stymied the ability of blacks to increase their net worth.


Until 1968, real estate agents and homeowners could legally refuse to show or sell homes to blacks. Banks could reject black borrowers based on their race or the neighborhood where they wanted to live. Anti-discrimination housing policies helped increase total black homeownership, which peaked in 2000 at 47.3 percent of black Americans, compared with nearly 73 percent for whites.

During the housing boom, it looked like black homeownership overall would surpass 50 percent. Then came the Great Recession between 2007 and 2009 exposing predatory lending practices and a glaring reminder that race biases weren’t gone.

From 2000 to 2015, the black homeownership rate dropped to 41.2 percent. Black homeownership rate in 2018 was 41.7 percent, compared to 72.2 percent for whites, according to the American Community Survey.

Consider this: It’s 2020, and the rate of black homeownership is near the same level as when race-based housing discrimination was legal.

Every economic crisis brings a greater threat to people of color that hard-won gains will be lost. And now, the severity of the coronavirus pandemic has the potential to further widen racial disparities, according to a new report by Alanna McCargo, vice president for housing finance policy at the Urban Institute, and Michael Neal, a senior research associate in the Housing Finance Policy Center at the Urban Institute.

For this month’s Color of Money Book Club, I’m recommending you read their report titled “How Economic Crises and Sudden Disasters Increase Racial Disparities in Homeownership.” You can find the 30-page report at urban.org.

“The Great Lockdown, instituted to reduce the spread of the novel coronavirus, has crippled households, jobs, and businesses in ways we have not seen in modern history and that will have lasting effects on racial homeownership and wealth gaps,” they write.

The researchers looked at the aftermath of Hurricane Katrina in 2005 and the Great Recession to draw conclusions on how covid-19 might exacerbate the wealth gap. Their data analysis finds that natural disasters economic downturns hit communities of color harder. But households with savings or home equity they can tap are better able to weather the storms.

One important aspect of the report is how homeownership benefits blacks and whites differently, McCargo and Neal highlighted in an interview.

Redlining is still alive and well in markets today,” McCargo said. “Segregated neighborhoods still exist, and if that neighborhood is predominantly black, it’s valued lower. There is still an appraisal bias.”

Median home equity and net worth for homeowners White Black Hispanic
Home equity $113,000 $56,000 $70,000
Net worth $276,680 $98,910 $105,200
Housing equity share of net worth 40.8% 56.6% 66.5%
Source: Urban Institute Analysis of Federal Reserve Data

The median home value for a black head of household is $155,000, compared to $220,000 for a white head of household, the report states.

“There is a white bias in home values,” Neal said. “Accounting for the structural characteristics of a home and neighborhood amenities, the same home in a neighborhood with no blacks is typically worth more than the median home in a predominantly black neighborhood, indicating that it’s much more difficult for black homeowners to build up housing equity.”

Neal said the research also found that the price of homes owned by African Americans was much more volatile. “The huge swings mean their home equity is much more at risk in a scenario of an economic downturn.”

Another key difference for black homeowners is the ability to access their home’s equity during an economic crisis.

“You’ve done the work of building up housing equity. You’ve paid down your debt. Your house is appreciating. And a downturn happens, and mortgage lenders tighten lending standards in such a way that it disproportionately hits African American homeowners,” Neal said.

McCargo also pointed out that home equity makes up a disproportionate amount of overall net worth for black households. That becomes a problem if they’re unable to refinance to take advantage of lower mortgage interest rates or do a “cash-out” refinance to access money during an economic crisis.

Some people will try to justify the racial disparity in lower homeownership rates by characterizing blacks as more financially irresponsible than whites.

“This is not an issue of behavior,” McCargo said. “It is the inequity that is the problem. It’s the same issue that resulted in that man holding his knee on George Floyd’s neck. It’s rooted in a long history of a system that has been working against people of color.”

My grandmother died shortly after my husband and I built our first single-family home. As we surveyed the construction site, Big Mama clasped her hands to her mouth. She didn’t cry, but her eyes watered.

I’m hosting an online discussion about the research report at noon Eastern time on June 18 at washingtonpost.com/discussions. McCargo and Neal will join me to discuss the racial disparities in homeownership.