Our house, in the middle of our street
Our house, in the middle of our street
Melissa Harris-Perry: You're listening to The Takeaway. I'm Melissa Harris-Perry. We are in the midst of a massive real estate boom. Not a bubble, folks, a full-on boom. Mortgage interest rates have plummeted to historic lows. Throughout 2021, the rate on a 30-year fixed mortgage has hovered at or below 3%. Low-interest rates make monthly payments more affordable, so buyers can spend more. Spending more is absolutely necessary because existing housing is in short supply and new construction is more expensive due to COVID-related supply chain shortages that have raised the cost of lumber and labor.
High demand, low supply, vanishing interest rates. These are the ingredients for a housing boom. Right now, you all are feeling the effects.
Meredith: Hi, this is Meredith. I'm calling from Odessa, Florida, just north of Tampa. We actually bought and sold a home during the pandemic, and it worked out great. Though, at the time, the home value of our resale is exponential compared to when we bought it nearly three years ago, and the value of our new home is actually less than what we're paying.
Iris: Hi, my name is Iris. I am calling from Woodcliff Lake in Bergen County, New Jersey. We have not bought or sold a home, but my husband and I were in the market to buy and downsize last winter. It was crazy. Everything was appointment only, obviously, and bids were coming in so fast. There was no time to look at a house twice to check out the details in case renovations were needed. We actually put a bid on a house for way over the asking price. Before it was done, we came to our senses and pulled out. We are very happy to stay put for now.
Our house, that was where we used to sleep
Our house, in the middle of our street
Melissa Harris-Perry: For Black Americans and others priced out of this pandemic-fueled housing frenzy, the boom has been more like a bust. Here with me are Anne Price, president of the Insight Center for Community Economic Development. Anne, welcome.
Anne Price: Great to join you today.
Melissa Harris-Perry: Also, Keeanga-Yamahtta Taylor, who is a professor of African American Studies at Princeton University, and author of Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership. Professor Taylor, thank you for being here.
Keeanga-Yamahtta Taylor: Thanks so much for having me.
Melissa Harris-Perry: I want to start with you, Professor Taylor. Let's talk a little bit about the durable realities of Black homeownership, even before the pandemic.
Keeanga-Yamahtta Taylor: I think before the pandemic, there were the continuing stories of why Black homeownership remained stuck between 40% and 45%. There had been published articles about continuing patterns of redlining that made it difficult for African Americans to secure home loans. Newsday, Long Island publication, published a kind of exposé in, I believe it was 2018 or 2019, about the racial discriminatory behaviors of realtors in steering Black potential buyers, in particular, to Black neighborhoods and out of white neighborhoods. This was well into the 21st century.
I think that the patterns of racial discrimination throughout every sector of the housing industry, whether it is among realtors, whether among bankers, we have now heard the stories from housing assessors, all of this before the pandemic, already made it difficult for Black people to break through the glass ceiling into higher ranks of homeownership, which has really stayed between 40% and 45%, even more than 50 years after the Fair Housing Act.
Now when you layer the issues created by the pandemic onto that, which is higher rates of unemployment for African Americans, when you factor in the ways that the pandemic has disproportionately impacted Black people professionally, economically, it has made it even more difficult with the rising, escalating prices of housing in the major markets across the country for African Americans to take advantage of historically low-interest rates and to enter the market. It has become almost impossible.
I have just a quick anecdote. A friend of mine, a Black woman, attempted to buy a house in the neighborhood that I live in, in Northwest Philadelphia, a home that was already grossly overpriced for its size and its location. When she submitted a bid, there were 28 other bids for this house. It ended up selling $108,000 over asking price. It ultimately went to a young white couple whose parents swooped in and offered cash. That is the nature of the market. Black women, Black families can't compete in that.
Melissa Harris-Perry: Anne, give us the "so what?" What is the connection here between homeownership and broader issues like racial wealth inequality?
Anne Price: Well, thanks for that question. I think the big thing is that in this country, we believe that homeownership is the Holy Grail when it comes to building wealth. What we don't recognize is that you need wealth underneath to actually own a home. For Black folks, they just don't build wealth in the same way that whites have been able. White people have been able to build wealth through homeownership, largely because of the neighborhoods in which they live in, because they've been excluded from those markets, and they haven't been able to pass wealth down from generation to generation.
Melissa Harris-Perry: Talk to me about the challenges of buying a home and then actually building value in African American communities.
Anne Price: We just released a report today called Still Running Up the Down Escalator: How Narratives Shape our Understanding of Racial Wealth Inequality. When we think about housing and how narratives around Black criminality have shaped housing inequality for decades, this has really led to a lessening value of homes in Black neighborhoods than in majority-white neighborhoods.
We have to really recognize that the way in which white people have been able to build wealth in this country through homeownership was done through government policy. Done from decades and decades of government policy that allowed low mortgage loan rates and allowed them to move into suburbs. Blacks were excluded from all of those policies. Just in Northern California, where I'm from, 360,000 homes were provided through low-interest FHA rates here, mostly to whites, and only 100 Black families got that advantage.We're talking about large-scale exclusion. It's had generational impacts.
You need wealth underneath to put a down payment on a home, as Professor just mentioned, and we just know that Black people are lacking that wealth because they've not been able to pass it down from generation to generation. When we look at wealth for Black families, they have about $24,000 in wealth, compared to about $189,000 for white families. Non-housing wealth alone for Black families is about $1,900.
You're really talking about very little money, in the first place, to put down on a house. Once you get into that home, there are a number of ways in which wealth is stripped away from Black families through the ways that we think about: home appraisals and how that's biased, anything from mortgage insurance rates, to tax assessments, which Black people pay typically about $400 more a year than white families, through energy costs. There are just a number of ways that keep Black families from being able to build their wealth through equity and a number of other ways in terms of neighborhoods that white families have an advantage.
Melissa Harris-Perry: Anne, we talk a lot about barriers to becoming a Black homeowner. Are there also barriers to staying a homeowner?
Anne Price: There are definitely barriers to staying a homeowner. Oftentimes, we just think once someone's in a home, they're going to automatically accrue equity in that home and they're going to actually build wealth. For Black families, that's not necessarily the case. In fact, more than one in three Black families who bought a home after the age of 44 switched to renting. We know that Black folks take a little bit longer to buy a home because they need to save up for that down payment, and the later that they buy those homes, the likelihood increases that they may actually lose those homes when they become older and end up with actually less wealth.
We have a long road to really think about the ability for Black families to buy homes, especially when we look at millennials. What's happening with Black millennials, it's really foretelling for what we might see with Black families in the future. Just really one or two quick things. We know that for white millennials, they've been able to really amass more wealth during this pandemic because they have more money invested in stocks, and they have been able to buy homes at a higher rate. Two thirds of white millennials own homes compared to one third of Black millennials.
What's happening is that Black millennials are not just falling behind white millennials, but also what previous generations amassed in wealth. White millennials are falling behind around 5% of what their previous generations had, but for Black millennials, it's around 52%. What this is going to mean is that we're seeing about homeownership rates around 22% for Black millennials, very, very low. If they're unable to really build wealth through homeownership, what's that going to mean for their offspring and being able to pass down the advantage of even being a homeowner to their children?
Melissa Harris-Perry: In so many ways, what I feel like you've described there is that reversal of the American dream. Grandparents presume that their children and their grandchildren will do better than them. It's part of why you buy a house, so that you could help to pay for education, you could help to pay for that down payment, you can contribute something going forward.
Talk to me about one other thing then on this end. Are there places in the country-- it's a big country. Housing prices are booming everywhere, but some of the booms started with median house prices of $100,000. Some of them started where median house prices were $500,000. Are there some places where it is easier for African Americans to break into homeownership?
Anne Price: Well, I think, certainly, it depends on the market. I live in a very expensive market. Homes around here are about $1 million, so homeownership is out of reach for a number of folks. Certainly, in areas of the deep south and in the Midwest, homeownership is more affordable. We have to really take into account what's also happening with people's incomes, what's happening with future opportunities, schools, that really say, "Is it worth it to actually buy a home in a place where you don't have many amenities," for example. Yes, you can buy a home more cheaply in some areas, but there might be other costs involved.
Melissa Harris-Perry: Professor Taylor, walk us through-- We just heard from Anne there, the ways that government policy affects and impacts the ability of white families to build wealth over decades. Walk us through the policies that exist as a possibility. Maybe they haven't even been implemented yet, but how might state policy actually begin to correct some of these challenges for African Americans?
Keeanga-Yamahtta Taylor: Sure. To do that, we have to have a really sharp assessment of the problem. One of the things that I write about in my book, Race for Profit, is that we have to not just look at government policy, which has obviously been a cinching part of the problem beginning in the 1930s for sure. It's also, I think more fundamentally, the way that the federal government has embraced the production of housing through the private sector as the sole process by which housing is created in this country. That is a big part of the problem.
When the federal government first created its housing policies as it pertain to homeownership in the 1930s, as our government continues to do, it recruits people from the private sector, so people from the housing and real estate industries, to call from their so-called best practices to inform how public policy is shaped in the first place. In real estate, from its very inception, and particularly through the course of the 20th century, best practices have been racism. Best practices have been the exclusion of Black people from white neighborhoods.
The federal government absorbed those lessons. We see today that the federal government continues to yolk its policies to the private sector. There is no pretense any longer that the federal government will create housing, or will independently manage housing. All of that has been outsourced to the private sector, which continues to this day, have racial discrimination and exclusionary practices as part of its best practices as an industry. Which is why every year we continue to hear about continued patterns of redlining. We continue to hear about real estate steering.
All of the things that animated the housing industry in terms of racial exclusion prior to the passage of the Fair Housing Act, continue to be core features of real estate in the United States. When we talk about what policies to look at, I think one of them is not necessarily a policy, but it's an inherent understanding that housing will be governed by public-private partnerships. I think that there is a problem with that, not only because of the history of racism in the real estate industry, but the ways in which that partnership undermines the federal government's ability to fully regulate its housing programs.
To that end, we have the laws on the books that make housing discrimination illegal, that make discrimination in the financing of housing illegal, that make discrimination in renting housing illegal. The bigger question we have to grapple with is why none of those laws are systematically enforced? Is why are these patterns allowed to continue? I think the reason for that is because of the continued relationship in public-private partnerships that makes the federal government vested in the profitable outcome for the private sector, that therein undermines the federal government on federal, local, and state levels ability to fully regulate, to implement civil rights laws, and to assure a fair and equitable housing market.
Melissa Harris-Perry: Keeanga-Yamahtta Taylor is a professor of African American studies at Princeton University, and author of Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership. Anne Price is the president of the Insight Center for Community Economic Development. Thank you both for joining The Takeaway.
Keeanga-Yamahtta Taylor: Thank you.
Anne Price: Thank you.
New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.