Unlocking The Key To The American Dream: Black Homeownership

For most Americans, one of the cornerstones to achieving the American Dream is homeownership. It is also their ticket to wealth. The truth is that buying and selling a home in a booming market can lead to huge monetary gains. It seems that this fact is no longer being missed by African Americans. The financial advantages of becoming a homeowner have lured a record number of blacks into the real estate market. New data indicates black homeownership reached an all-time high in 2006.

This information comes from the Urban League's essay on "Black Homeownership: A Dream No Longer Deferred" which was written by Lance Freeman, the Assistant Professor of the Urban Planning Program at Columbia University. The essay, contained in their 2006 'The State Of Black America' report, talks about several key pieces of legislative acts passed in the 1960s and 1970s that are being partially credited for the increase. The Community Reinvestment Act (CRA), which was designed to dismantle discriminatory housing barriers, and the sweeping housing policy reforms of the 1990s have helped also contribute to the rise in African-American property owners.

However, despite the recent gains, black home ownership rates are still 25 percentage points below that of whites. This illustrates some other dramatic differences between the two races. Blacks also have less equity in their homes than whites. They also tend to have less money than their white counterparts which causes them to live in poorer homes. Meanwhile, black homeowners have an uphill battle trying to build equity in their homes. Residential segregation has created dual housing markets in many major cities. For African Americans that purchase homes in predominately black neighborhoods, higher poverty rates and scarce access to many of the services that are found in white-middle class communities tend to drive down property values. In turn, this creates less home equity and wealth for homeowners.

Another huge disparity between white and black homeowners relates to mortgage rates and fees. On average, black homebuyers pay six-tenths of a percentage point higher than white homebuyers. For example, that interest difference on a $200,000 mortgage over a six-year time period can total up to $28,000. This causes a major loss of equity due to interest payments.

There are a few things that could bridge the gap between white and black homeowners and allow for equal equity. The strong enforcement of anti-bias laws in housing would help stop discrimination in the housing market. Also, more policy reform and better access to information on credit would help bridge the equity gaps between black and white home ownership.

See More Details in an Abstract of the Urban League's Report

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