Nonprofit Quarterly, September 29, 2021, Closing the Racial Wealth Divide: A Plan to Boost Black Homeownership
The continued effects of structural racism can be seen in a broad range of indicators: African American unemployment is at 8.8 percent as of August 2021, compared to whites at 4.5 percent; the $38,000 median household income for African Americans is less than 60 percent of that for whites; and the poverty rate for African Americans is the second-highest for the main racial groups in the US at 21 percent, only behind Native Americans. Yet, it is in examining wealth where we see most clearly the depth and extent of racial economic inequality between Black and white Americans.
In 2019, the median wealth of African Americans, not including depreciating assets, was $9,000. By contrast, white Americans have a median wealth of $160,000. African Americans, in short, have not quite six percent of the wealth of white Americans.
For most Americans, homeownership is the most significant component of their wealth. If you look at Americans who are in the middle 60 percent of the population—that is, neither the wealthiest 20 percent nor the poorest 20 percent—homeownership represents 64 percent of gross assets. Even though only a minority of African Americans are homeowners, homeownership still comprises 49 percent of total Black assets. A research team at Demos has estimated that if Black homeownership rates were to rise to equal those of white Americans, that would boost median Black household wealth from $7,113 to $39,226, a fivefold increase.
To reverse the decline of Black homeownership and advance a more equitable economy, a focus on substantively increasing Black homeownership is necessary. In this vein, the National Community Reinvestment Coalition, where we are both from, advocates setting a goal of reaching 60 percent Black homeownership within 20 years. Based on data collected by the Urban Institute, getting to a 60 percent homeownership rate would mean 3.3 million new Black homeowning families.
This additional 3.3 million new Black homeowning households would create a total of almost 10 million Black homeowners nationwide. (For further information, see “Closing the Gaps: Building Black Wealth through Homeownership.”) To reach this level by 2040 would mean an additional 165,000 Black households (net) becoming homeowners each year. This radical increase requires a long-term commitment to new policies and practices.
