It’s no secret the wealth gap between African American and White households is widening. However, the estimated median wealth between the two groups would jump a whopping 450 percent if African Americans owned homes at the same rates as Whites, according to a study released earlier this year by a New York City-based think tank.
An analyst at Demos, an economic public policy advocacy group founded in 2000, commented that if policies were implemented to allow a freer and easier access to home ownership for African Americans and Latinos, the burgeoning gap between the have’s and have nots would all but disappear. “With policies that advance the rate of Black and Latino home ownership to the same rate as White household, Black wealth would more than quadruple and Latino wealth would more than triple,” said Catherine Ruetschlin, a senior policy analyst at Demos. Ruetschlin headed the year-long study in conjunction with the Institute on Assets and Social Policy (IASP)–another economic policy think tank.
The report highlighted the median Black household has about $7,113 in wealth holdings compared to the median White household of about $111,146—the bulk of which was in real estate and/or home ownership interests. To that end, if public policy eliminated racial disparities and other hurdles to home ownership for minorities such as disparities in income and college matriculation and graduation rates, median Black wealth would grow exponentially. For example, a typical White family owns about $16 for every $1 owned by a typical Black family and about $13 for every $1 owned by a typical Latino family.”
Hoping to tap into the trend of reversing an economic down slide and establishing wealth in the community, one young couple in Trenton, NJ, Darien and Teresa Parker purchased their home in November 2013. “As new homeowners, we want to build wealth with real estate by purchasing a home below market value so we had instant equity,” Darien said in an interview with TNJ.com. The 35-year-old professional added that he and his wife perform their own repairs to enhance the property and make it more valuable. “Buying the home in 2013 was a big step toward establishing wealth because our mortgage is less than what we were paying for rent and are able to save the difference,” Teresa said.
Trenton realtor Shelly Bryant Reed and owner of SBR Realty said, “Owning a home should be a reality and not just a dream for most people and especially people of color.” She added, “Home ownership is the foundation to establishing wealth.”
Lastly, officials at Demos and IASP agreed that public policies need to address income inequality and closely examine why the tools to establish and maintain wealth are plentiful for some and non-existent for others.