Addressing Policies and Regulations that Have Led to Cumulation of Disparity in Wealth in U.S.
In both examining the racial disparity in New Jersey’s homeless population as identified in NJCounts 2019 and planning for how to address the disparity, it is important to understand the long history of segregation and institutional racism that got us to this point.
Shelterforce’s two party series “Long Before Redlining: Racial Disparities in Homeownership Need Intentional Policies” examines the gap in wealth in the United States and how racist housing policies created that gap.
The second part of the series focuses on the foreclosure crisis of the 1990s and the disparate impact that it had on people of color. The subprime lending market took advantage of communities of color. When the loans imploded, Black, African American and Lantinx homeowners faced foreclosure at a higher rate than their White counterparts.
“African-American and Latinx homeowners experienced foreclosures at rates 2.5 and 2 times greater than white homeowners. While whites have seen real recovery in the aftermath of the foreclosure crisis, in many cases communities of color have not. In fact, the African-American homeownership rate, at about 42 percent, is where it was 50 years ago when the Fair Housing Act was passed. The homeownership gap between whites and African Americans is at its greatest divide since 1900 when the gap was 27.6 percentage points. Today the gap is 30.3 percentage points.”
As a result, white households are accumulating wealth at a higher rate that African-American and Latinx households. A household’s wealth does not just depend on the highest level of education achieved or even annual salary but instead depends greatly upon how much wealth a household can achieve through the equity in their homes.
African American and Lantix households looking to become homeowners or reenter the home ownership market may be forced to turn to non-traditional ways of getting credit. And non-traditional lenders may not be able to help them build or rebuild a credits score. Once credit is damaged, it becomes very difficult to get a home mortgage or even pass a credit check to rent an apartment.
Foreclosures and credit problems faced at disproportionate rates by African American and Latinx households can lead not only to the racial disparity in the homeless population but in homeownership rates, accumulation of wealth, accumulation of student debt, and
educational and health outcomes.
When communities of color are disinvested in, households get stuck with homes that have lost their value and that they cannot sell and are locked out of the opportunity to accumulate wealth. We cannot blame African American, and Latinx households, for not trying to “pull themselves up by their bootstraps” when they did not have the same equal access as their white counterparts from the very beginning.
The second part of the two part article concludes with recommendations for how to go about “undoing” the policies and practices that have perpetuated structural racism in the United States.
“Prosperity Now projects that holding white wealth constant, it will take African Americans 228 years and Latinxs 84 years to reach parity with their white counterparts. Since we know white wealth will not remain static, Prosperity Now’s analysis underscores the reality that without intentional change, the racial wealth gap will continue to grow. We have the resources to effectuate a fair and equitable system; what we need is the determination to bring it about and a government willing to provide equal support to its citizens of color.”