National Association of Real Estate Brokers https://www.nareb.com Democracy In Housing Tue, 14 Feb 2023 09:00:02 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://www.nareb.com/site-files/uploads/2019/03/cropped-logo-1.png National Association of Real Estate Brokers https://www.nareb.com 32 32 BankThink – Congress must act to close the racial homeownership gap https://www.nareb.com/bankthink-congress-must-act-to-close-the-racial-homeownership-gap/ Mon, 09 May 2022 20:56:18 +0000 https://www.nareb.com/?p=35341 Americaʼs public and private sectors are committing to a more equitable society, one with opportunities for wealth and success regardless of race or ethnicity. To make racial equity a reality, government, corporate and civic leaders must address the wealth gap that diminishes the aspirations, hopes and dreams of families and individuals. The need for federal Continue Reading

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Americaʼs public and private sectors are committing to a more equitable society, one with opportunities for wealth and success regardless of race or ethnicity. To make racial equity a reality, government, corporate and civic leaders must address the wealth gap that diminishes the aspirations, hopes and dreams of families and individuals.

The need for federal action is now. Blatant, race-related barriers hamper the expansion of Black wealth in America. A typical white family has eight times the wealth of a Black family of similar stature. The median net worth for Black households is $24,000, compared with $188,000 for white families. The cycle can only be broken by improving the major driver of Black wealth — intergenerational homeownership that yields prosperity and family economic security.

The major deterrents to Black homeownership are racial bias in the mortgage lending process, the burden of student loans as well as aftereffects of natural disasters, the Great Recession, and devastation from COVID-19. Homeownership for Blacks dropped nearly 20% since 2008 and despite the contributions of the 1968 Fair Housing Act, 54 years later the homeownership gap has widened. In 1960, 38% of Blacks owned homes while white homeownership was at 65%, a 27-point gap. Last year, the nation experienced the largest homeownership spread since 1890 — 44.6% for Blacks and 74.2% for whites, a 29.6% gap.

For many Black families, one of the biggest hurdles is saving money for the down payment on a house. Their income level may qualify them for a mortgage, but they struggle to come up with the upfront costs. In passing HR 5376, the original Build Back Better Act, the House included a $10 billion down payment grant program for first- time, first-generation homebuyers. Options currently exist for down payment assistance, but most come with onerous conditions such as adding a second mortgage or stricter wage and credit score requirements, making it harder to qualify for a mortgage. As the Senate pares down HR 5376 to attract support needed for passage in reconciliation, itʼs critical that the down payment provisions remain in the bill.

Congress must target the disproportionate burden of student loans and regulators should force a consensus on how student loan debt is calculated in the mortgage approval process.

Black Americans owe an average of $25,000 more in student loan debt than their white counterparts four years after leaving college, and leave school with an average of

$52,726 in student debt. The loan payments themselves are a financial burden and Congress should provide families with some loan forgiveness. But there is also inconsistency by lenders and the secondary market in how that debt impacts mortgage approvals.

The mortgage securitization giants Fannie Mae and Freddie Mac are now acknowledging that income-based, student loan payment plans should lower the monthly debt ratio calculations for loans. Still, it is critical that a uniform standard is created that guides the Federal Housing Administration, Fannie Mae, Freddie Mac and the Department of Veterans Affairs in calculating the debt so it is not left to the whims of individual lenders.

Both government and the private sector must confront the appraisal bias that plagues Black Americans when they sell their homes or need a valuation on new ones. In March, a Biden administration interagency task force released a report confirming the proliferation of appraisal bias — houses in Black neighborhoods are on average appraised at less than half the value of houses in predominantly white communities. It also notes that a Freddie Mac study used census data to find that 12.5% of appraisals in Black neighborhoods and 15.4 % in Latino communities resulted in values less than the actual contract prices.

What causes these results?

One issue is the lack of diversity among appraisers. The Appraisal Institute acknowledges that less than 2% of its members are Black. Another factor is the flawed nature of the appraisal appeals process. When someone feels they have been wronged by an appraisal and seek a review, less than 3% of appraisals are ever revised. While there is a growing movement to utilize technology rather than physical appraisals, that approach is also troublesome because the data entered into any program may already be biased.

Letʼs start by encouraging the appraisal industry to reach out to historically Black colleges and universities and community colleges to establish programs that can train minority students to be appraisers. A better understanding of communities of color should result in fairer valuations of property in these communities. Moreover, while the task force study is a good start, it must follow through with effective reforms for the industry.

Regulators must also review the unfair process of adjusting rates and private mortgage insurance premiums for risk even after an applicant has been approved for a loan. These loan-level price adjustments, or LLPAs, are applied unfairly to minority homebuyers, according to a comprehensive study by the Journal of Financial Economics. It found that risk-equivalent Latinx/Black borrowers pay significantly higher interest rates on GSE-securitized and FHA-insured loans and the rate differences cost minority borrowers more than $450 million yearly.

The key to understanding wealth disparities is recognizing the degree that homeownership drives Black wealth — itʼs 60% to 70% of the average Black householdʼs net worth. Thus, increasing Black homeownership is the most effective path to wealth equity.

For decades, Black families and other families of color have been victims of discrimination that has prevented them from reaping the generational benefits of home ownership. With decisive action on these issues, more Black families can enjoy the benefits of homeownership and America can take a giant step towards wealth equity.


CREDITS: American Banker/Lydia Pope

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Visionary LeadHer https://www.nareb.com/visionary-leadher/ Fri, 08 Apr 2022 03:35:01 +0000 https://www.nareb.com/?p=34914 The post Visionary LeadHer appeared first on National Association of Real Estate Brokers.

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Most powerful leadHER at NAREB

“Your vision will become clear only when you can look into your own heart. Who looks outside, dreams, who looks inside, awakes.” By Carl Jung

When I read this quote, I instantly thought of Lydia Pope because she is an extraordinary visionary paving the way for women and homeownership. Lydia is the national president of NAREB, Broker, Entrepreneur, Influencer, and LeadHER.

NAREB is the National Association of Real Estate Brokers. NAREB is the oldest trade organization to create an equal opportunity and civil rights advocacy for African American real estate professionals, consumers, and communities in America. NAREB was founded in 1947 and embraced all qualified real estate practitioners who are committed to achieving their vision, which is “Democracy in Housing.”

As a lender, one needs to join organizations such as NAREB that support and engage in sustainable homeownership, democracy in housing, and building generational wealth for all. This organization was pivotal in equal rights, fair housing, equal opportunity, and community development at the local, state, and federal levels. NAREB continues to champion African Americans and the underserved communities by promoting educational events, advocacy, homeownership, and leadership development. The mission drew Lydia Pope to the organization since 1998, and she is an active member.

Lydia Pope podium

Pope was voted the quietest student growing up in Cleveland, Ohio. Even though she had a calm demeanor, she had an inner calling and mission to make a difference in her community. She is one of 12 children, the second youngest. She received a full academic scholarship to become a broadcaster; that was her goal, but unfortunately, her father fell ill, and she had to care for him as her mother was unable to drive him to his medical treatments. Pope took it upon herself to go to a local college and work two part-time jobs to pay her way through school and assist her family financially.

Pope has a strong work ethic and determination to do what is necessary for her family and goals. She landed in real estate by accident. While in school, she was working part-time at State Farm Insurance, where in the same building, there was a real estate company on the second floor. State Farm downsized, and she was out of a job. Because she had met the broker owner of the real estate company, she went to ask for an appointment the same day she lost her job in insurance.

Because of her determination, Pope landed a job in real estate. She had no clue or experience, but was determined to learn. She enrolled in real estate school and passed her exams. In 1991, she entered her career in real estate and never looked back. She realized real estate was her real passion. Her vision and mission were to help others with the most significant investment in their lives, owning a home. Pope is currently the broker owner of two companies, E & D Realty and Investment Company Inc. and New Era Real Estate in Cleveland, Ohio, with over 27 agents in one company and 77 agents in the other. Hard work works.

Minority Homeownership charts

She is the third women president of NAREB. She continues to break barriers by focusing on her vision and looking into her own heart. She focuses on women initiatives called WIRE, (Women In Real Estate). WIRE identified Black women as a high-potential target market group for investing in real estate, pursuing homeownership, and growing careers in real estate. The goal is to increase access to financial information and capital for Black women; increase homeownership and real estate investment for them, and develop affordable housing by and for Black women. (“5 Pillars of NAREB”).

According to the State of Housing in Black America Report, Black women applying alone are emerging as major contributors to recent rise gains in Black homeownership. In 2020, 41% of Black applicants consisted of single women. Thus, creating an opportunity for mortgage professionals to cater to this segment. The numbers speak for themselves. (Carr et al.) Black women are the leaders in homeownership rates.

The charts compare the proportion of households headed by women versus men by race and ethnicity. Black has a higher share of owner-occupied households headed by females than any other category. (Perry)

Pope attributes women, if they are single black women with a household of children, are looking for shelter, a place to call home, and protecting their children in a safe environment as one reason. Another reason is that Black women are outpacing all segments in education. “Percentage-wise, Black women outpace white women, Latinas, Asian/Pacific Islanders, and Native Americans in this arena as well.” (Katz) That is why Pope is passionate about being a women’s voice in real estate, NAREB, her companies, and her community. She knows the power of homeownership and women.

She said, “The traditional way was to be home, take care of the children, and that’s it. But as we begin to grow into a new society and find out that is important when it comes to income base, you are being treated differently because of your gender. Then we go back, and we educate ourselves so that now we have to prove to America that we can get a better education. We can make more money because we got this to substantiate for that.” Pope believes everyone should be a homeowner.

Lydia Pope podium #2

She understands hard work works and balances her career with spending her weekends focused on her family. She makes time for those she loves and opens the doors to her home on Sundays. She said, “We do Sunday dinner every Sunday unless we’re out of town or at a conference. But on Sundays, which is our favorite after church, to cook dinner every Sunday, a big dinner, where everybody comes over. So our house is open to our family and friends.”

At the core, Pope is a visionary leadHER. She set out to make a difference in her community, assisting others with the most significant investment in their lives, buying a home. From helping one client, she transformed that into a career. As her career expanded and grew, she became an active member of NAREB. Furthermore, she raised her business, and in 2006 she took over the real estate company and became CEO after being an employee for 15 years. Her vision became clear when she followed her heart into real estate. She became awake. Nothing has come easy for her, but she had created her path when her vision became clear in the process.


CREDITS: Dr. Vanessa Montañez | National Mortgage Professional

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Black homeownership’s stall during COVID-19 pandemic the ‘epidemic after the epidemic’ https://www.nareb.com/black-homeownerships-stall-during-covid-19-pandemic-the-epidemic-after-the-epidemic/ Thu, 26 Aug 2021 02:59:21 +0000 https://www.nareb.com/?p=31753 Even as mortgage interest rates hit record lows, fueling home-buying, Black Americans lost ground on homeownership, the gap between Black and white owners growing. Eboni Taylor searches online for a home every day. Taylor, 35, and her husband Andarius have been trying to buy a house in Detroit for a year. But student loan debt, Continue Reading

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Even as mortgage interest rates hit record lows, fueling home-buying, Black Americans lost ground on homeownership, the gap between Black and white owners growing.

Eboni and Andarius Taylor have been trying to buy a house in Detroit for a year. Student loan debt, the costs of living and competition with buyers who can pay hundreds of thousands of dollars in cash have kept their dream out of reach.
Eboni and Andarius Taylor have been trying to buy a house in Detroit for a year. Student loan debt, the costs of living and competition with buyers who can pay hundreds of thousands of dollars in cash have kept their dream out of reach.

Eboni Taylor searches online for a home every day.

Taylor, 35, and her husband Andarius have been trying to buy a house in Detroit for a year. But student loan debt, the costs of living and competition with buyers who can pay hundreds of thousands of dollars in cash have kept their dream out of reach.

“How many times I’ve gotten my hopes up,’’ says Taylor, who’s the Michigan executive director for the advocacy group Mothering Justice.

During the COVID-19 pandemic, mortgage interest rates have plunged to their lowest levels on record, fueling home-buying.

But just as Black people disproportionately lost their health and jobs during the pandemic, they also lost more ground on homeownership. The gap between Black and white owners widened, hardening a divide that’s resulted in the typical white family having eight times the wealth of the typical Black family.

At the end of 2020, the Black homeownership rate was 44.1%, virtually the same as the 44% who owned homes during the same period in 2019, according to an analysis of Census Bureau data by the Center for American Progress. The homeownership rate for white Americans rose to 74.5% from 73.7%.

“When there’s an economic shock like we’ve seen with this pandemic, it’s often the case that Black people take two steps back while white people take two steps forward,’’ says Andre M. Perry, a senior fellow with the Brookings Metropolitan Policy Program and the author of “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.”

The Black homeownership rate was on going up at the start of the decade, rising to 47% in the second quarter of 2020, up from 40.6% a year earlier, according to the Federal Reserve Bank of St. Louis.

“The different changes in homeownership rates between Black and white families show that opportunities to build wealth moved further and faster out of reach for Black families than for white families,’’ says Christian Weller, a senior fellow with the Center for American Progress, who co-wrote the analysis and is a professor of public policy at the University of Massachusetts, Boston. “Yet Black families actually need to build wealth faster than white families because they typically have a lot less to begin with.”

During much of the pandemic, the average 30-year-fixed mortgage rate hovered at 3.07%, according to the Mortgage Bankers Association. Mortgage rates fell to record lows more than a dozen times in 2020, and this past January the average rate dipped to 2.65%, the lowest on record, according to mortgage-finance company Freddie Mac.

But a number of factors made it harder for Black buyers to take advantage of lower borrowing costs.

Black Americans lost their jobs at a higher rate than white Americans during the pandemic, says Daryl Fairweather, chief economist for the national real estate brokerage Redfin.

White people were more likely to be able to work from home, allowing them to more easily relocate to places where they could better afford a home, Fairweather says, and were more heavily invested in a soaring stock market.

“Wealth creation was concentrated among people who had the wealth to begin with, and again that’s going to skew more white than Black,” Fairweather says.

Before the coronavirus hit, “The Black employment rate was improving,” Fairweather says. “When employment improves and incomes improve, that’s when you start to see homeownership rates improve. The pandemic derailed that.’’

Nakitta Long has a master’s degree in criminal justice and works full time but can’t even find an apartment to rent, let alone a home to buy.
Nakitta Long has a master’s degree in criminal justice and works full time but can’t even find an apartment to rent, let alone a home to buy.

Nakitta Long, 45, who lives in Winston-Salem, N.C., wants to buy a home. But the mother of four lost her job with a car-maker at the start of the pandemic, struggled to pay rent, and was evicted from her rental home in April.

“We’ve been homeless ever since,” says Long, who’s now working full time but has had trouble finding housing because of her eviction and spotty credit. “I would have never thought in a million years that me and my kids, at this point in my life, would have to use a P.O. box for our address.”

She’s studying for a real estate license.

“I want to buy property for my family to never go through what I’m going through,’’ she says. “My mom doesn’t have any property. She’s living in the same apartment we grew up in. . . I’m hoping to break that cycle.”

Systemic inequities and outright bias have long hindered Black Americans’ ability to buy or hold onto the property. Redlining prevented Black Americans from getting mortgages for decades. Restrictive covenants barred Black residents from buying homes in white neighborhoods, and Black property owners were often displaced when expressway construction of split Black communities.

Also, Fairweather says that “Black people have been discriminated against in their employment meant they were earning less and less able to afford to buy a home. That persists today.”

Black people were disproportionately targeted for predatory loans that contributed to the housing crash and recession of 2008. Many suffered damage to their credit when they were unable to keep up with payments loaded with exorbitant interest rates or lost homes that were worth less than they’d paid for them.

Black buyers often work overtime to save money to buy a home. A Redfin analysis found 30% of Black respondents got an extra job in order to afford their first house versus 22% of whites.

Black first-time homebuyers tended to make more than their white counterparts, with 21% making at least $150,000 a year as compared with 11% of first-time white homebuyers. Also, 58% of white buyers made less than $50,000 a year when they bought their first home versus 34% of Black homebuyers with a similar income — a gap that might be due in part to Black buyers having to meet higher lending standards, Fairweather says.

If borrowing costs escalate, homebuyers who missed out on record low-interest rates could find themselves with “less revenue for the same amount of house,’’ Perry says.

You start with “less equity,” he says, which means less to put towards other expenses.

Even when interest rates are low, borrowers with significant debt or minimal down payments could get turned down for the lowest-cost loan.

“This is where discrimination shows up in credit scores,” Perry says. “Black people take out more loans, and that’s a direct result of just not having as much wealth … We’re compromised in terms of our debt-to-income ratio, which hurts you in terms of what interest rate you get if you qualify.”

And because even Black workers with college degrees tend to make less than their white peers, it can be tough to save enough to compete in the bidding wars that have been a hallmark of the heated housing market, Perry and others say.

Taylor found a home she hoped to buy for her family, which includes two sons, ages 3 and 4. But another buyer offered $240,000 in cash.

“I can’t compete with that,” she says. “My husband and I don’t have $150,000 to $250,000 in cash to just put down.”

While her husband pursues a doctorate, Taylor is going for a second master’s degree, in business administration, in “hopes we can get to a place where we can become higher earners.”

The Taylors have put aside $10,000 and are working with a program that assists first-time homebuyers. Still, “We’re not in a position … to even get to that basic point of moving out of our 400-unit building,’’ she says.


CREDITS: Charisse Jones / USA Today

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What Gentrification Means for Black Homeowners https://www.nareb.com/what-gentrification-means-for-black-homeowners/ Tue, 17 Aug 2021 20:37:48 +0000 https://www.nareb.com/?p=31633 In historically Black neighborhoods, owners selling their homes on the open market have to grapple with the fact that accepting the highest bid could mean another step toward Black displacement. Nostalgia isn’t enough to keep Thomas Holley, 74, in the Crown Heights brownstone he has lived in for more than 58 years. He got married Continue Reading

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In historically Black neighborhoods, owners selling their homes on the open market have to grapple with the fact that accepting the highest bid could mean another step toward Black displacement.

Nostalgia isn’t enough to keep Thomas Holley, 74, in the Crown Heights brownstone he has lived in for more than 58 years.

He got married in that home and raised his children there. His basement man cave, complete with a bar and mood lighting, was an oasis where he escaped for alone time.

But now fully retired from his transit job as a bus operator and having suffered health setbacks — a heart attack and spinal surgery — he wants to trade in the brownstone for more quiet and all-year sunshine at the condo he purchased in 2017 in a Florida suburb north of Orlando.

He loves Brooklyn, but the gentrification of Crown Heights has been hard for him to watch and experience. As a Black homeowner, he would like, more than anything else, to see another Black homeowner take over the house. But it’s precisely because gentrification has driven property values up that Mr. Holley may not be able to do that.

Like other Black homeowners selling family homes in competitive ZIP codes, Mr. Holley feels like the sale is freighted with the burden of his race. He had hoped to leave the house to his only living child, a son in New Jersey, but his son isn’t interested in the brownstone. Mr. Holley fears that when he lists the house on the open market, he may unintentionally play a part in the continued displacement of the Black community in Crown Heights. “I can’t turn down a market offer because it’s for my six grandkids,” he said. “I want to leave something behind for them.”

The history of racial exclusion, segregation and inequality in real estate has made homeownership for Blacks signify much more than basic shelter and financial stability. “There are absolutely unique ways that the Black homeownership experience is different from other experiences,” said Jacob William Faber, a professor of sociology and public service at New York University.

“Black people and Black communities have been excluded from the opportunity to build wealth, and that’s why passing their homes along to a family feels so important,” he added. “There’s so much history that it’s not just a financial transaction. It’s a cultural transaction. And it’s a familial transaction.”

Mr. Holley estimates that the 12-room, two-family house he inherited from his mother may be worth close to $2 million, well beyond what most of his friends or family members could afford. He offered to sell it to a friend at a below-market price, but his friend could not qualify for a mortgage. He knows when he lists the house, he will have to abide by fair housing rules and not discriminate based on race.

Mr. Holley remembers when Crown Heights felt like it was “one hundred percent Black.” The area is now less than 50 percent Black. “That doesn’t bother me. It’s some of the people moving in that are problematic,” Mr. Holley said.

Not too long ago, he said, “I noticed a neighbor putting up something out front and I was curious. I went over to strike a conversation and before I could finish a sentence, he told me that he didn’t have any money.” Being mistaken for a panhandler by one of his new white neighbors sent a clear message about how the neighborhood was evolving. “I’ve lived here all my life. Only three other people on the block who’ve been here longer than I have,” he said.

Mr. Holley has made peace with the fact that his home likely won’t sell to a Black person, but he feels sad and a little guilty. “Once Black people move out, it’s hard for them to get back into the neighborhood because the gentrification completely prices them out.”

To allay the sense of guilt a Black homeowner might feel when selling their home in a gentrifying community, Dr. Faber noted first and foremost that “these longtime homeowners should be congratulated and appropriately compensated for these investments they made in these neighborhoods when white households were fleeing decades ago.”

He added that the problems associated with gentrification, “such as rising costs of living, increased police harassment, political and social displacement, aren’t caused by Black homeowners.” They are caused, he said, “by forces that move property, like speculative real estate purchasing, the consolidation of rental properties, zoning laws, mortgage markets. All of these things are far more influential than the individual homeowner.”

Despite a long history of Black homeownership in New York City, ever-rising real estate prices have made homes in the city inaccessible to many Black New Yorkers. According to a report on homeownership by the New York University Furman Center, New York City’s homeownership rate in 2014 was just 31 percent, less than half that of the national homeownership rate of 63 percent. Only 26 percent of Black households in the city-owned their homes, compared to 42 percent for white households, 39 percent for Asian households, and 15 percent for Hispanic households.

Jeremie Greer, the co-founder and co-executive director of Liberation in a Generation, a nonprofit focused on racial justice, believes that fair housing rules could be used to benefit Black homeowners and buyers. The Affirmatively Furthering Fair Housing Act, which requires localities to identify and address patterns of racial segregation outlawed under the Fair Housing Act of 1968, “was degraded during the Trump administration but has recently been restored, and can be used to buttress some of the challenges that Black and Brown home buyers are facing,” he said. For example, the act could be used to require communities to examine the legacy of redlining, he said, and “force local jurisdictions to provide remedies like down payment assistance and low-interest loans to Black and brown home buyers.”

When it comes to selling her three-family home in Bedford-Stuyvesant, Evelyn Polhill, 89, strikes a pragmatic tone. “America is a capitalistic country. It’s all about what the market can bear,” she said. “If you’re selling your house, how are you being displaced? If you’re selling, you must be moving somewhere else. If you’re not factoring that in, then you’re telling yourself a lie. You’re not being honest.”

When Ms. Polhill and her husband bought their three-family Bedford-Stuyvesant house in 1958, 10 years before the Fair Housing Act was enacted, white families were fleeing the city and heading to the suburbs as Blacks moved in next door. The German couple who sold them the house left in a hurry. Now their home is highly desirable and out of reach for many Black people in her network. Like Mr. Holley’s son, Ms. Polhill’s children, a son who lives in Maryland and a daughter who has traveled the world through her airline job and who lives elsewhere in New York, have no interest in the brownstone.

“You know there was that song after World War I, ‘How ya you gonna keep ‘em down on the farm after they’ve seen Paree?’ You don’t want to come back to a place where people are doing the same old same old,” Ms. Polhill said. “My children have experienced other places and I don’t blame them for not wanting to come back.”

The emotional complexity of Black homeownership is familiar to Mark Winston Griffith, 58. As the director of Brooklyn Movement Center, he often reflects on the irony of working in a Black-led organization that works on building Black communities, when the very people in the community he is working to organize are disappearing.

“I’m lucky. I’m blessed. I’m trying to make sure that the generational benefits that I accrued I’m able to also pass on to other people who have not had that benefit. That’s where I’m coming from in terms of the future of this home,” said Mr. Griffith, who owns and lives in a brownstone that has been in his family for four generations. Not having his family inhabit its walls seems unthinkable.

Mr. Griffith bought the house from his father who gave him a gift of equity, allowing Mr. Griffith to pay below market value for the house. It was the only way he could afford it. Although he currently has no intention of selling, he said, “Anyone who has lived in New York has talked about leaving at some point.” He can’t control what happens, but he hopes the house will go to his two sons.

It’s difficult not to be sad at the disappearance of a particular kind of history and neighborhood legacy, Mr. Griffith said.

“As a student of communities, I know that this is what neighborhoods do,” he said. “They change. And so there’s a part of me that looks at it with an understanding that neighborhoods aren’t static, nor do you want them to be.”

When the time comes for him to sell his home, if neither of his sons wants the house, he said he can hope that it sells to a Black family or will be used for some community purpose.

“All I can do is make sure that there’s a place for Black people, for my family, and it’s a healthy and thriving neighborhood,” he said.


CREDITS: Jacquelynn Kerubo / The New York Times

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Study: Homes in Black neighborhoods losing equity at faster pace than white homes gain value in St. Louis https://www.nareb.com/study-homes-in-black-neighborhoods-losing-equity-at-faster-pace-than-white-homes-gain-value-in-st-louis/ Tue, 20 Jul 2021 14:21:54 +0000 https://www.nareb.com/?p=31280 The study comes from St. Louis-based Clever Real Estate and looked at thousands of ZIP codes across the country SAINT LOUIS, Mo. — Michael Woods grew up in Hyde Park in St. Louis, and though he’s spent the last few years trying to make a change for the better, he knows change takes time. “These Continue Reading

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The study comes from St. Louis-based Clever Real Estate and looked at thousands of ZIP codes across the country

SAINT LOUIS, Mo. — Michael Woods grew up in Hyde Park in St. Louis, and though he’s spent the last few years trying to make a change for the better, he knows change takes time.

“These communities have been lacking investments for years,” said Woods.

St. Louis is a tale of at least 70 ZIP codes, according to Clever Real Estate, a real estate company based in University City. Its data scientists looked at roughly 30,000 ZIP codes across the country and found major disparities between neighborhoods that are predominantly Black and predominantly white.

“The disparity between the white and Black ZIP codes is larger in some areas, particularly in the Midwest and the South,” said Francesca Ortegren, data scientist with Clever Real Estate.

She said the study was a massive, data-rich project that shows St. Louis as one of the worst when it comes to housing inequities. It’s a problem that likely stems from decades-old housing discrimination from the Jim Crow era.

“The majority-Black neighborhoods have seen a decrease of nearly $50,000 in their home values since 2004,” said Ortegren. “That’s compared to about a $22,000 increase in white neighborhoods or white ZIP codes in the St. Louis area.”

That means if you’re a homeowner in a Black neighborhood, chances are, you’re losing money.

Clever Real Estate also found that homes in predominantly white ZIP codes command about $193 per square foot, compared to around $115 per square foot in predominantly Black ZIP codes. This means a 2,000-square-foot home would price at $386,080 in a white ZIP code but only $299,900 in a Black one.

“It’s not just because those homes were bigger or newer,” said Ortegren on the reasons why white neighborhoods fare better. “It’s also because they’re just selling for more per square foot. So there’s kind of a value to the whiter neighborhoods, unfortunately.”

Ortegren said this study just looked at Black and white neighborhoods, but Hispanic neighborhoods tend to fare worse than Black neighborhoods in terms of finances and economics. There was not enough data on Asian neighborhoods.

“A Black household has about a tenth of the wealth that a white household would have,” said Woods, the cofounder of the nonprofit Dream Builders 4 Equity. “That is a huge problem that is also creating this wealth gap.”

The nonprofit is now working with Clever Real Estate to educate the community on the issue and to turn around this very old problem. The goal is to help a community find wealth through homeownership and revitalization as well as serve youth in underserved neighborhoods.

In the summer youth program, students learn about real estate, rehabbing properties and selling them — Dream Builders even gives young people a share in the profits.

“I wrote down everything and soaked it in like a sponge,” said 16-year-old Davion Sides. He and his twin brother, David, have big dreams of getting into real estate during high school. Architecture, STEM and design are also in their future.

“We learn things that get us ready for life,” said Davion.

Data shows revitalizing a challenged neighborhood leads to an overall healthier economy. It’s about investing in our city, no matter the address. Dream Builders says every 10% increase in the total housing market wealth translates to $147 billion in additional consumer spending.

“It’s working every single day — it’s growing,” said Woods. “What we’re hoping is that we create a model that can then be replicated.”

CREDITS: Michelle Li/KSDK

 

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America Reckons with Racial Injustice https://www.nareb.com/america-reckons-with-racial-injustice/ Thu, 27 May 2021 20:27:54 +0000 https://www.nareb.com/?p=30791 Black Americans And The Racist Architecture Of Homeownership Last summer, DonnaLee Norrington had a dream about owning a home. Not the figurative kind, but a literal dream, as she slept in the rental studio apartment in South Los Angeles that she was sharing with a friend. At around 2 a.m., Norrington remembers, “God said to Continue Reading

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Black Americans And The Racist Architecture Of Homeownership

Last summer, DonnaLee Norrington had a dream about owning a home. Not the figurative kind, but a literal dream, as she slept in the rental studio apartment in South Los Angeles that she was sharing with a friend.

At around 2 a.m., Norrington remembers, “God said to me, ‘Why don’t you get a mortgage that doesn’t move?’ And in my head I knew that meant a fixed mortgage.”

The very next morning — she made an appointment with Mark Alston, a local mortgage broker well known in the South LA Black community, to inquire about purchasing her very own home for the first time.

She was 59 at the time.

Alston has built his lending practice on the hope of expanding access to homeownership for Black Americans. He says they have been systematically discriminated against by the real estate industry and government policy. Unlike most loan officers, Alston works with his clients for months — even years — to disentangle a convoluted loan application process, pay off bills and boost credit scores so they can ultimately qualify for a home loan.

Today, Norrington and her younger sister MaryJosephine Norrington own a three-bedroom house in Compton, where three generations of her family currently live.

DonnaLee Norrington in her living room with grandchildren. Norrington and her younger sister MaryJosephine Norrington own a three-bedroom house in Compton, where three generations of her family currently live.

Nevil Jackson for NPR

Owning a home is an undeniable part of the American dream — and of American citizenship. It is also the key to building intergenerational wealth. But Norrington’s homeownership success story is an increasingly rare one for Black Americans.

Over the last 15 years, Black homeownership has declined more dramatically than for any other racial or ethnic group in the United States. In 2019, the Black homeownership rate was about as low as in the 1960s, when private race-based discrimination was legal.

The story of housing discrimination is rooted in a long history of racist government policies perpetuated by the real estate industry and private attitudes that began with slavery. The federal government began to push and expand homeownership in the New Deal era through innovations like the 30-year mortgage.

But one way Black people and other minority groups were left out systematically was through a process known as “redlining” which labeled certain areas as “risky” for a home loan. African Americans and immigrants were relegated to areas, marked in red on government-sponsored maps, where poverty was most concentrated and housing was deteriorating.

The Fair Housing Act of 1968 recognized segregationist practices like redlining to be unconstitutional. But the law only prohibited future, formalized discrimination rather than undoing the foundationally racist landscape on which homeownership in America was built.

The vicious cycle and legacy of redlining has persisted: Residents of redlined communities struggled to receive loans to buy or renovate their homes, which led to disrepair and a decline of a community’s housing stock. That in turn forced businesses to close and depressed tax revenue, diminishing school funding.

Today, many of the same neighborhoods that were redlined continue not only to have the highest poverty rates, but also worse health outcomes that lead to shorter lifespans. And Black Americans are nearly five times more likely to own a home in a formerly redlined neighborhood than in a greenlined, or “desirable,” neighborhood, resulting in less home equity than white Americans have.

The West Coast has often held hope as a cultural and political promised land for marginalized groups. During the first and second Great Migrations, millions of Black Americans moved west to escape the Jim Crow South in search of more equal treatment and opportunities — in part, because legal, racist policies and practices were so widespread all across the country at that time.

But while Los Angeles, one of California’s major metropolises, would become the battleground for hard-fought civil rights victories for Black Americans, it was also a place where housing segregation, predatory real estate practices and exploitative lending thrived.

Our story begins with one Los Angeles neighborhood, known as Sugar Hill, where the Black community successfully fought racially restrictive covenants only to later face another threat — from the freeway.

Beneath the Santa Monica Freeway, lies the erasure of Sugar Hill

The tree-lined boulevards of the West Adams neighborhood are studded with stately homes.

“That was Marvin Gaye’s place right there,” says Rha Nickerson, who grew up in the area, as she points to one such two-story house on Gramercy Place.

It’s easy to tell from the ornate architecture of the houses, the antique street lights and the wide roads that the neighborhood bore witness to a lot of history. But it’s hard to miss the loud hum of the Santa Monica I-10 freeway coming from behind a large concrete wall at the end of Marvin Gaye’s street.

Siblings Rha and Van Nickerson are now 73 and 72, respectively. They spent formative years of their childhoods in this neighborhood, which was once called Sugar Hill — a nod to the thriving Black Harlem Renaissance neighborhood of the same name. Doctors, entrepreneurs and oil barons lived in Sugar Hill — even legendary stars like jazz singer Ethel Waters and Gone with the Wind actress Hattie McDaniel.

But Sugar Hill’s thriving Black community was an exception: It managed to exist despite systemic efforts to prevent Black people from buying homes in much of Los Angeles.

One of the most prevalent tools white residents used to maintain the segregation — across America and in Sugar Hill — was the racially restrictive covenant. These agreements, embedded in property deeds, made homeowners promise never to sell to African Americans or other minority groups. In 1940, 80% of properties in Los Angeles had these restrictions attached to them.

Rha Nickerson remembers her father teaching her about these covenants when she was a young girl, and says that it was only because people like Hattie McDaniel fought these restrictions that her family was able to live there.

Racially restrictive covenants were ubiquitous in Sugar Hill at the time, like many places in America. But some white homeowners willingly violated them to sell to Black buyers, in part because Black people were willing to pay more since there was far less property available to them. The willingness to violate covenants was especially the case around the Great Depression, when many homeowners were desperate to sell.

Ivan Houston stands outside the historic Golden State Mutual Life Insurance Company while sharing the history of his grandfather’s company.

Nevil Jackson for NPR

The first African American known to purchase a home in Sugar Hill was entrepreneur Norman Houston, who bought property in 1938. In the years following, a wave of Black families moved into the area.

But one white homeowners association did not like the way its neighborhood was changing. So members of the West Adams Heights Improvement Association sued their Black neighbors for violating racially restrictive covenants in hopes of having them evicted — even though white sellers had violated the covenants.

Left: Ivan Abbott Houston (bottom left), with his father Ivan J. Houston and sisters Pamela Houston-Chretien and Kathi Houston-Berryman in front of their house on West 24th St., across the street from 24th Street School, on Easter Sunday, in the late 1950s. Right: Entrepreneur Norman Houston, who bought property in 1938, was the first African American known to purchase a home in Sugar Hill.

Ivan A. Houston

McDaniel, Houston and their neighbors fought back with their own Black homeowners association called the West Adams Heights Protective Association. Two of Houston’s grandchildren, Ivan Houston and Kathi Houston-Berryman, say they remember their grandfather as a leader in the movement for housing justice for Black Angelenos.

“He always did have a vision and I think he was what is known as a pacesetter … because he was always moving ahead,” Houston-Berryman says. Ivan still has his grandfather’s notebook that documented the West Adams Heights Protective Association meeting minutes, including the discussions the group had about fighting racially restrictive covenants.

Ivan Houston still has his grandfather’s notebook documenting the meeting minutes of the West Adams Heights Protective Association, including discussions about fighting racially restrictive covenants.

Nevil Jackson for NPR

After years of planning, the parties involved with what came to be known as the “Sugar Hill case” took to the Los Angeles Superior Court on the morning of Dec. 5, 1945. Hattie McDaniel, her codefendants, and 250 sympathizers “appeared in all their finery and elegance.”

The white plaintiffs claimed Black homeowners in Sugar Hill would lead to declining property values in the neighborhood, even though their Black neighbors had well-maintained properties with increasing home values. Such racist thinking was in line with the dominant logic of the real estate industry at the time — the logic underlying redlining.

In his retort, civil rights attorney Loren Miller, who represented the Black homeowners, used an argument that had never worked in any U.S. court before — that restrictive covenants violated the California Constitution and the 14th Amendment, which mandates equal protection under the law.

Outside the former home of their grandfather, Norman Houston, Ivan Houston and Kathi Houston-Berryman speak with a current resident who points next door to where Gone with the Wind actress Hattie McDaniel once lived.

Nevil Jackson for NPR

Taking the packed courtroom by surprise, Judge Thurmond Clarke ruled in favor of Miller. “Certainly there was no discrimination against the Negro race when it came to calling upon its members to die on the battlefields in defense of this country in the war just ended,” Clarke said.

This victory did not just mean the Black residents of Sugar Hill got to stay in their homes — it set a precedent for the 1948 U.S. Supreme Court Case Shelley v. Kraemer, also argued by Miller, that would deem racially restrictive covenants unenforceable.

The neighborhood of West Adams, formerly know as Sugar Hill. Then neighborhood was split in two by the construction of the Santa Monica Freeway in early 1960s.

Nevil Jackson for NPR

Amina Hassan, who has written a biography about Miller, says the win was monumental because “housing was the crux of it all.” She says access to safe, quality housing meant Black people could “have their children in better schools, they could find jobs in the area. Housing was the key to greater wealth.”

In 1952, a few years after the Supreme Court ruling, Rha and Van Nickerson’s family moved into the Berkeley Square community of Sugar Hill. The siblings’ eyes light up recounting their childhood there.

“We got our wagon and we’d go up and down the street and selling lemonades,” Van recalls. They share a laugh and Rha adds, “We learned how to drive in Berkeley Square because the streets, there was no traffic. It was so comfortable then.”

Santa Monica I-10 freeway now occupies the space where the historic neighborhood of Berkeley Square once stood.

Nevil Jackson for NPR

But just months after the Nickersons moved in, rumors began to spread that yet another threat to Sugar Hill was looming — a freeway. It was part of a federal push in the 1950s to modernize America’s roadways, and many of these highways ultimately cut through communities of color. The proposed plans called for the Santa Monica Freeway to run east to west, razing Berkeley Square completely and splitting Sugar Hill in two.

“I remember quite vividly and I remember my father being so upset. …I remember meetings with homeowners in Berkeley Square,” Rha Nickerson says. Some of those homeowners banded together and lobbied against the freeway at the state Capitol.

But this time, all they were able to accomplish was delaying the project. The California Highway Commission unanimously approved the freeway that would decimate Rha and Van Nickerson’s childhood home. Van remembers looking outside of his bedroom window. “I watched the tractor bulldoze these homes down.”

The government seized the Nickersons’ home through eminent domain — and while the U.S. Constitution requires “just compensation” for any property acquired this way, residents who lost their homes were not entitled to assistance from the government in finding and moving to new homes.

Rha Nickerson felt her family was cheated. “I remember my father telling me about eminent domain, and how there was no option to stop this. The valuation for our home was quite low; it was not market value that we were compensated for. And so it was quite an upheaval.”

The Nickerson house at 20 Berkeley Square as seen in the mid-1950s.

Van Nickerson

It was an upheaval Rha’s father told her would never have happened if Sugar Hill were a white neighborhood. “He was very, very angry. He felt the city government resented Black people living there, and this is their way of demolishing a very viable community to support racism,” she says.

At the time, highway planners used the language of science to justify building freeways through communities of color, says Eric Avila, a professor of urban studies at UCLA. “They presented a kind of dizzying array of charts and graphs to insist that this was the most economically efficient route for this particular freeway. They denied any questions of race, they denied any questions of bias.”

In the neighborhood of West Adams, a culdesac sits against the interstate 10 freeway.

Nevil Jackson for NPR

What they did instead, Avila says, was say they were targeting so-called “blighted” communities. “I don’t think we know the extent to which Sugar Hill was designated a blighted area because it was affluent. … But in the discourse of urban planning in the mid-20th century in the United States, blight was often synonymous with people of color and with African Americans in particular.”

By 1963, the construction through Sugar Hill began and Rha and Van Nickerson’s family home was replaced with traffic lanes. Around that time, the California Division of Highways proposed another freeway that would cut through Beverly Hills. But when that wealthy white community protested, officials canceled construction.

Almost 70 years later, the Nickersons still feel the loss of their childhood home. “It was just sad,” Rha Nickerson says. “I didn’t know what to expect because that’s all I knew was Berkeley Square, and I really felt very secure in the community. So I was quite rattled by it all.” She and her brother say that after the freeway forced them out, they never quite experienced the same safety and comfort that Sugar Hill provided.

Rha and Van Nickerson are dressed for Easter in their backyard in Berkeley Square in the mid-1950s.

Van Nickerson

Van Nickerson recalls a particular moment when he knew things had changed. “We moved over onto Bronson Avenue and I immediately got into some problems. Most of that neighborhood was white and a white boy called me a n***** in front of my house. And pardon my vernacular, but I kicked his ass. You know, that was the beginning of the real world for us.”

For many of the residents in the area today, deafening road noise, toxic pollutants, and the resulting health conditions they cause are part of everyday life. This pattern has played out in cities all across America — affecting communities of color most.

Before Van and Rha Nickerson parted ways during a recent visit to their old neighborhood, they closed their eyes and listened for the sounds of their beloved Berkeley Square one more time — only for Van to hear “the rumbling of the automobile.”

“That was nonexistent when we were kids. It was quiet,” he said. Rha nodded in agreement, adding, “You can’t hear the birds anymore.” She headed to the corner to catch the next bus to Inglewood, where she lives now.

Van got into his car to begin his journey home to a town more than an hour away. His drive would begin on the Santa Monica Freeway — and take him right through the middle of what was once known as Sugar Hill.

Blockbusting: How a predatory real estate practice changed the face of Compton

As the construction that made Los Angeles “the city of freeways” ramped up in the early 1960s, white Americans continued to move to newly developed suburbs that dotted the borders of urban city centers.

It had been nearly a decade since racially restrictive covenants had been lifted, so slowly, more neighborhoods were opening up to Black residents like Robert Lee Johnson’s family.

Johnson and his two brothers lived in a public housing complex in South LA until his mother Gaynelle became an X-ray technician and married his stepfather, James Ferguson, who was an aerospace engineer. In 1961, they bought property from a white couple just north of downtown Compton, a suburb just south of downtown Los Angeles.

Johnson remembers moving-in day. “I see moving vans, trucks and everything all down the street,” he says. Johnson was 5 years old at the time, so he says he thought “it was moving day for everybody.” And he noticed that all the other families moving in were were Black, too.

In the years before covenants had been deemed unconstitutional, Compton was a nearly all-white city. Suddenly, when covenants were lifted, the real estate industry recognized a new, untapped market could be targeted for home sales.

Robert Lee Johnson in his old neighborhood in Compton. Johnson remembers moving in one day in 1961. “I see moving vans, trucks and everything all down the street,” he says. Johnson was 5 years old at the time, so he says he thought “it was moving day for everybody.” And he noticed that all the other families moving in were were Black, too.

Nevil Jackson for NPR

But for Black people to move in, existing homeowners would have to make way. So, the real estate industry targeted white homeowners to convince them to sell their homes using a scheme known as blockbusting.

The underlying idea was to create panic among white homebuyers by creating the expectation that Black homebuyers were moving in and would, in turn, lower property values in their neighborhoods. There are accounts of real estate agents recruiting Black people to walk around white neighborhoods with strollers to create the impression that African American families were settling in.

Agents would convince white homeowners that their houses were losing value by the day because of the looming threat of Black neighbors, so the homeowners would panic and sell. Then, the agents would turn around and sell those homes at inflated prices to Black buyers — who were eager to make a start in better neighborhoods.

Kitty Felde, who is white, grew up in Compton in the 1960s and remembers a flyer appearing under her family’s front door. “It had one very clear message and it was, ‘Sell now, because you’re never going to be able to get the money you want for your house.’ And they didn’t say this but it was like, they are moving in.”

Felde says it was clear the flyers were referring to African Americans. In the years to come, she began noticing the neighborhood changing and new faces at school. Her family chose to stay, but many white neighbors fled and families like Robert Johnson’s took their place.

Johnson has warm memories of the years that followed “moving day” in 1961. He says Compton felt like a “step into another world” compared with the public housing complex his family was living in prior to their move. Though their new home was shared with his brothers, it was spacious. He recalls having fruit trees in his backyard — oranges, loquats and persimmons. “I didn’t know what a loquat was until I got to Compton!”

He remembers going to a local recreation center and park to learn how to swim, play basketball and perform in community Christmas plays. “Our parents were involved, you know. Your father was out there being a coach, the mothers were out there supporting the team, selling hot dogs.” He says it was a typical American suburb.

Until the mid-1960s, Compton was a thriving Black city with Black political power — it had elected its first Black councilman, Douglas Dollarhide, who eventually went on to become the city’s first Black mayor. Union jobs were opening up to Black workers, and Compton was home to better, integrated schools and a city college.

But while Compton represented social mobility for many Black Americans, it also came to represent their exploitation. Predatory practices, like blockbusting, forced families to overpay for homes that would eventually decline in value as more Black residents arrived. According to census data, the median home price in Compton in 1960 was $12,800. Johnson’s family paid $17,500 — or 37% more — despite it being a smaller home than most in Compton at the time.

Robert Lee Johnson speaks with a resident in his childhood neighborhood. He says Compton felt like a “step into another world” compared with the public housing complex his family was living in prior to their move. Though their new home was shared with his brothers, it was spacious.

Nevil Jackson for NPR

Josh Sides, a professor of history at California State University, Northridge, says those numbers strongly suggest Johnson’s family was a target of blockbusting. And after more Black residents moved in, home prices languished in Compton over the next several generations.

“The really evil part of blockbusting, in my view, is that it perpetuated the notion that Black people in your neighborhood diminished value,” Sides says. “And because of that perception, it became a self-fulfilling prophecy. That is, it became true that a Black person moving to your neighborhood meant your value declined because, of course, property values are largely the function of social decision and social beliefs.”

By 1970, Compton’s Black population had reached 71%. But as more white residents left, their businesses and tax base did, too. A number of economic factors also led to fewer manufacturing jobs in the area, which were the backbone of Compton’s steady employment. Around this time, industrial jobs had largely moved to LA’s suburbs, unemployment in Compton was skyrocketing, and it continued to worsen into the next decade.

Johnson remembers some neighbors began having trouble making their mortgage payments. “The first time I really noticed it personally was at school because you’re sitting in class and your classmates are gone,” he says.

That’s when he recognized something had changed. Wilson Park, where he had had taken swim lessons and played basketball, was suddenly without paid adult supervision, which Johnson remembers resulting from a loss in the city’s revenue.

“People in Compton were put in a very bad position,” he says. “Legitimate jobs were gone, and then comes this — it’s more than a drug. It was almost like a demonic spirit.” He is referring to the crack epidemic that took hold in Compton during the 1980s.

Nearly three decades after his family had purchased his childhood home in Compton, Johnson realized he didn’t want to raise his own son in his beloved city.

Robert Lee Johnson greets his childhood friend and neighbor, Yolanda Segura. The two met in 1961 when Robert first moved to the neighborhood at age 5.

Nevil Jackson for NPR

“One day, I’m sitting in front of my house washing my car, and some fool from a block away had gotten a new rifle and he starts shooting out the street lights.” To protect his son, Johnson felt he had no option but to leave Compton.

When Johnson’s family sold their home in 1988 for $64,000, it was worth less than what they paid in 1961. Adjusted for inflation, that house lost nearly 8% of its value over 27 years.

But even though Johnson left Compton, Compton never really left him. He’s written a book about the city’s history, he’s a founding member of the city’s historical society, and you can see his face brighten instantly when he spots an old neighbor during a recent visit.

A window of opportunity: Black flight from Compton to the Inland Empire

Robert Johnson was just one of thousands of Black Comptonites who began streaming out of the city in the 1980s in search of more space and safer neighborhoods. The face of the once majority Black city was changing quickly as its African American residents largely moved inland to newly built exurbs.

Billy Ross remembers visiting his relatives in newly developed cities like Rancho Cucamonga. “None of this existed. … These houses were built like ’06, ’07, ’08.” By the early 2000s, so many people from Compton had relocated to the Inland Empire that one of its neighborhoods became known as “Little Compton.”

Nevil Jackson for NPR

Billy Ross, now 45, spent the 1980s and early ’90s growing up in Compton just as Johnson was relocating his family. “Compton was changing around us — and fast,” Ross says.

He describes his childhood there as both “magical” and “incredibly challenging.” Magical because it was a largely Black city with political power, which meant there was diversity within the Black community. “It was a spectrum of people, a spectrum of Black class … you know, from professional people to people [that] are just getting by. I mean, that’s magical.”

Ross’ eyes crinkle and a smile spreads across his face when he recalls sitting on his front porch as his sister would braid his hair and a neighbor would walk past, making spontaneous plans to play a game of dice around the corner. He says there was always something exciting happening on his block. But then his smile fades. “The Compton I grew up in really doesn’t exist anymore.”

But the “incredibly challenging” part of growing up in Compton, he says, came when the crack epidemic and its ripple effects hit. Economic inequality and police violence against Black people in Los Angeles were at a fever pitch. The rising tension between law enforcement and African Americans erupted in the 1992 uprising when four police officers were acquitted after brutally beating a Black man named Rodney King.

Billy Ross explains the development happening in Rancho Cucamonga. He says people are moving away from the architecture of McMansions and towards something more modern.

Nevil Jackson for NPR

Ross’ relatives and neighbors began trickling out of the city in search of more space, good schools, and safety. It was also becoming increasingly unaffordable to purchase property in Los Angeles County. Like many others, Ross’ relatives turned their gazes to the Inland Empire — a stretch of land that began about 50 miles east of LA. Not long before, it had been mostly desert, vineyards and factories.

But then, a window of opportunity opened for potential Black homebuyers when newly developed cities like Rancho Cucamonga cropped up. Ross remembers visiting his relatives nearby. “None of this existed. … These houses were built like ’06, ’07, ’08.” By the early 2000s, so many from Compton had relocated to the Inland Empire that one of its neighborhoods became known as “Little Compton.”

Ross recalls his impression of life in the Inland Empire as a teenager. “It’s like, ‘You guys are going to buy a five-bedroom house and you’re going to have a pool. Like what? That’s super fly … and people were willing to commute for that.” Even though housing was cheaper and more spacious in the Inland Empire, most jobs stayed in LA, which meant commuters spent anywhere from three to five hours in rush-hour traffic per day.

Ross’ parents chose to stay in Compton. Their philosophy was, “don’t move, improve.” That’s a phrase Ross says Black people hear a lot. “In the places where we are en masse, there is often an incentive to leave, and that’s messed up because you don’t get the generational, the institutional, cultural insulation. You don’t get the transfer of energy. And you end up going from where you are rich in so many ways — maybe not financial — but you’re rich. And you go elsewhere looking to carve out some economic security. But culturally, now you are diluted.”

But even for Ross, who holds such allegiance to Compton, moving inland eventually became the most practical option. In 2000, after he had graduated college, he married his wife, Tamara, who rented a home, and then they briefly owned a condominium 25 miles northeast of Compton. A few years later, when they learned they were expecting their first child, they decided they needed more space and had new considerations, like good school districts.

So, in April 2006, the couple zeroed in on a four-bedroom house with a three-car garage in the city of Fontana in the Inland Empire. The entire lot was almost 8,000 square feet. It would cost $525,000.

Their loan officer offered them terms they could not refuse — something commonly known as a NINJA loan. They would have a minimal down payment — far lower than the standard 20% — and they would need no proof of income or assets. All the officer needed was a credit check, which was no problem for the couple because they had high credit scores. It was so easy, and they had been told they could always refinance if they needed a more affordable payment later down the line.

“There was this kind of feel that this is a secret and it’s being brought to the masses now. That was even part of the pitch. … You remember this feeling like, ‘Oh, yeah, this is like the kind of loan white people use.’ You know, like, ‘Why would you use your own money to buy a house?’ ”

A neighborhood of Rancho Cucamonga, a city in the Inland Empire. As it became increasingly unaffordable to purchase property in Los Angeles County, like many others, Ross’ relatives turned their gazes to the Inland Empire — a stretch of land that began about 50 miles east of LA. Not long before, it had been mostly desert, vineyards and factories.

Nevil Jackson for NPR

Immediately, Ross threw himself into the pleasures of suburban life. “The newness of it was cool. This was a one-story house and it had space inside and outside. And I could water my own grass like my father did. I had grass!” Ross was transitioning into a real estate career at this time, Tamara was climbing the ranks as a prosecutor, and they were growing their family. Life in Fontana was good.

“And then, by the fall of ’07, all hell broke loose,” Ross says. The global financial crisis struck and suddenly, the oasis that was the Inland Empire was beginning to disappear before his eyes. Nearly 16% of homes in the region went into foreclosure, making it one of the hardest hit places in the country.

Many homeowners in the area sought help from the Fair Housing Council of Riverside County, where Rose Mayes is the executive director. “I had to create a whole new [foreclosure] department” because of the high demand for this kind of help, she says. The phone calls from those seeking help were incessant. “They were experiencing pain,” Mayes says. “They didn’t know what to do. … people who thought they had done the right thing for the right reasons and it didn’t happen that way.”

Many people Mayes remembers helping were buying homes or refinancing for the first time, making them more vulnerable to the predatory, subprime loans that were widespread during this time. And she noticed that Black and Latinx people were most commonly targeted for such loans.

This is a pattern that has now been tracked all over the United States. Several studies have found that Black and Latinx borrowers were charged significantly more for mortgage loans than white borrowers with similar financial situations between 2004 and 2008.

A financial innovation called “mortgage-securitization” incentivized investors to sell as many loans as possible. Lenders would often steer homebuyers who could have qualified for conventional government mortgages into riskier loans that put more money in the lenders’ pockets — telling buyers they could have a bigger house, lower payments, or both.

The people who were disproportionately targeted belonged to the same communities that had been redlined, locked out of neighborhoods because of racially restrictive covenants, and blockbusted. Now, predatory loans would take away the wealth that so many had spent their lifetimes building.

Rose Mayes is the executive director of the Fair Housing Council of Riverside County. Mayes remembers helping first-time homebuyers who were vulnerable to predatory subprime loans.

Nevil Jackson for NPR

By 2008, Ross says his house was worth half of what he paid for it two years earlier. But his mortgage payments didn’t reflect that decreased value. He and his wife were paying two times what neighbors were paying to rent the homes along his street — many of them homes that had been foreclosed on by banks.

Homeownership did not shape up to be what Ross once thought — a promise to pass on wealth and security to his children.

Ross says he tried to refinance time and time again because what he was paying was becoming unsustainable. But the lenders refused — because ironically, as long as he kept paying his mortgage every month, they had no incentive to cut him a better deal. He thought, ” ‘Oh, I know this game,’ and that was tough because you have made a commitment … and the commitment is tied, in a way, to your identity. You see yourself as a certain type of person.”

But after paying what he says felt like an exorbitant mortgage for several years, “Tamara and I ultimately decided that these people don’t give a damn about us. And they are content to bleed us dry.”

So they stopped paying. Ross knew their credit scores would tank and they would have to swallow that hit for years to come. But he also knew this strategy was the only chance they had to hold on to their house.

Eventually, about two years after they employed a “strategic default,” Billy and Tamara Ross’ gamble worked. A lender finally agreed to help them refinance. They spent years building up their credit score again. In 2019, they were able to sell the house in Fontana and move into a new one nearby.

Mayes, of the Fair Housing Council, says many homeowners in the Inland Empire are still reeling from the financial crisis. Others she remembers helping simply disappeared, she says.

Billy Ross considers himself one of the lucky few Black people who made it out of financial hole, despite a system he thinks is designed to keep African Americans on the bottom. “It really makes me sad,” he says. “There ain’t a whole lot of us on this side where we’re able to function and kind of take advantage of some of the things that this society has to offer.”

Nevil Jackson for NPR

Billy Ross considers himself one of the lucky few Black people who made it out, despite a system he thinks is designed to keep African Americans on the bottom.

“It really makes me sad,” he says. “There ain’t a whole lot of us on this side where we’re able to function and kind of take advantage of some of the things that this society has to offer. A lot of us, we don’t own property. We don’t have equity in the stock market. We don’t have equity in this country. We don’t own stuff. And ownership is equity.”

That is why Ross isn’t wasting his second chance. He and his wife have been building what Ross calls his soon-to-be “forever home.” He recalls a recent conversation with a loan officer who was trying to lock him into a loan now — promising that if he didn’t like the terms, he could “just refinance” down the road.

It was all too familiar to Ross, who thought, ” ‘This guy’s asking me to gamble.’ And I told him … ‘Dude, I’m Black. … We’re going to measure twice and cut once. And we’re probably going to keep this house forever, whether we live in it or not. It’s going to belong to our children.’ ”

For Ross, passing on that property is not just about leaving behind a house for his kids. It’s about passing the baton to the next generation, and the one after that — so that one day, they have something to call their own.

Black homebuyers today pay an unequal price

A few months ago, DonnaLee Norrington celebrated her 60th birthday in the newly purchased Compton home she and her sister, MaryJosephine, now call their own. Norrington thought she would never own a home again after losing the condominium she and her ex-husband briefly owned before the financial crisis. She said losing that home had turned her credit upside down and from that point on, she rented.

DonnaLee Norrington thought she would never own a home again after losing the condominium she and her ex-husband briefly owned before the financial crisis. Norrington is seen here with her sister, MaryJosephine, in her home office.

Nevil Jackson for NPR

“I didn’t even consider homeownership just because I thought it was out of my grasp — not so much financially, but just the fact that maybe I was too old to own a home and I just didn’t want all the responsibility that came with it,” Norrington says.

Then, she had that dream in which God told her to go to Mark Alston, the mortgage broker, to buy a home with a fixed mortgage. Alston says he understood Norrington’s vision, but “she started crying before we closed. I told her to wait. Let’s get all the way done before we celebrate.”

Alston says he got into real estate because he wanted to do something for his community — for people like Norrington — to change the persistent gap between Black and white homeownership. “I mean, it’s pretty unbelievable to me [that] almost 75% of the white community owns houses. … And in my community, you know, it’s like 2 out of every 10 in LA, 4 out of every 10 in the country,” he says.

DonnaLee Norrington and her sister MaryJosephine. While they did qualify for decent loans with their existing credit situations, a little bit of guidance in paying off bills and waiting for negative portions of their credit history to expire helped them get a better rate, and eventually, qualify for a refinance.

Nevil Jackson for NPR

Alston has mostly Black clients in and around LA. He says there are complex, systemic barriers holding Black Americans back from homeownership, many of them tied to the process of acquiring an affordable loan that actually allows them to retain and pass on generational wealth.

In order to simply qualify for a loan, a potential borrower must be favorably “creditworthy” according to the lender. In the existing financial system, it is the FICO credit score that primarily determines that creditworthiness, but a third of Black Americans do not even have one.

And for those who do, Alston says, the scores are not as fair or predictive as they could be because the score does not factor in a wide range of payments ordinary people pay. For example, cellphone bills, utility bills and even rental payments are not included in the FICO scores lenders typically use.

Many financial experts agree that these kinds of payments are good indicators of one’s ability to pay a monthly mortgage. Laurie Goodman of the Urban Institute told NPR, “I would assume that if you are looking at my credit score, whether or not I make rental payments is far more predictive than whether or not I pay my Macy’s credit card — but my Macy’s credit card is included and rental payments are not.”

DonnaLee Norrington embraces her daughter Summer at her home.

Nevil Jackson for NPR

Alston says, in the case of DonnaLee Norrington and her sister, while they did qualify for decent loans with their existing credit situations, a little bit of guidance in paying off bills and waiting for negative portions of their credit history to expire helped them get a better rate, and eventually, qualify for a refinance. “A lot of people have disputes with credit over a $200 or $300 cable box bill,” which he says could significantly lower credit score.

Not all mortgage brokers help their clients dig through paperwork and small disputes to get a better loan. But Alston says most Americans lack an understanding of a complex financial system, so this kind of guidance goes a long way. “It has nothing to do with intelligence. It has to do with familiarity with financial operations,” he says.

Mark Alston has built his lending practice on the hope of expanding access to homeownership for Black Americans. He says they have been systematically discriminated against by the real estate industry and government policy.

Nevil Jackson for NPR

Beyond credit scoring, an additional barrier to homeownership became more prevalent after the financial crisis — risk-based pricing, which essentially means the riskier the borrower, the more a lender charges that borrower to loan them money.

About half of Black homebuyers get loans backed by the mortgage giants Fannie Mae and Freddie Mac, which primarily use a borrower’s credit score and down payment to measure the risk that will determine the cost of the loan. Because the average Black borrower’s credit score is about 60 points lower than the average white borrower’s score, and because Black buyers, on average, make smaller down payments, risk-based pricing tends to drive up costs for the average Black homebuyer.

Prior to the global financial crisis, Fannie and Freddie used risk-based pricing to a limited degree, but they generally enabled a broad spectrum of borrowers to access fairly similar rates on their loans. But in response to the crisis, the mortgage giants got more aggressive with risk-based pricing — which disparately affects borrowers with less wealth and lower credit scores. Alston calls this “the poor-pay-more fee.”

Economist Ed Golding worked at Freddie Mac during the crisis. Now at the Massachusetts Institute of Technology, he has analyzed how these extra charges affect Black homeowners’ wealth. “It’s inherently unfair that basically we raised the prices during the financial crisis so that these people who were hurt by the financial crisis could bail out the financial institutions,” he says.

Golding says homebuyers with less wealth and lower credit scores are still being asked to pay more today. “It seems that we’re asking the victims to pay and to pay again for what was really not their fault,” he says.

In separate statements to NPR, Fannie Mae and Freddie Mac said this type of pricing helps them manage risk, and has “provided stability during the pandemic and enabled homeownership for millions of families, including many families of color.”

A third barrier to homeownership that disproportionately affects Black borrowers is mortgage insurance, which is typically required if a borrower makes a down payment that is less than 20% of the loan amount. In fact, 9 in 10 Black homebuyers pay for mortgage insurance compared to only 6 in 10 white homebuyers. And insurance is just another way the financial system accounts for risk — the cost of which is passed on to the “risky” homebuyer.

The Fair Housing Act does not consider any of these risk-based barriers to be illegal. Until now, courts have ruled that lenders can price loans in ways that disproportionately disadvantage certain racial groups if that pricing is related to credit risk. But researchers at UC Berkeley have been exploring a fourth barrier that has nothing to do with credit risk: outright discrimination.

The researchers analyzed nearly 10 million home loans and found that Black and Latinx borrowers are still being charged more, even after controlling for risk. That means Black and Latinx homebuyers with the same credit score and percent down payment as white homebuyers are still paying more for their loans, despite posing no additional risk to the lender — which amounts to illegal discrimination, based on past court rulings.

Until the mid-1960s, Compton was a thriving Black city with Black political power — it had elected its first Black councilman, Douglas Dollarhide, who eventually went on to become the city’s first Black mayor. Union jobs were opening up to Black workers, and Compton was home to better, integrated schools and a city college.

Nevil Jackson for NPR

The study also found that the higher the concentration of Black or Latinx residents in a neighborhood, the more Black or brown buyers in that neighborhood are overcharged.

“This effect is much more pronounced when we cut by geography,” says Robert Bartlett of Berkeley Law, one of the authors of the study. “And so, it is a legitimate concern that basically, this is kind of the new redlining that we’re faced with.”

In this case, rather than refusing to insure loans in Black and brown neighborhoods, lenders simply appear to be charging marginally higher rates to people who live in those neighborhoods. And the effect holds true even when computer algorithms are writing the loans. Their findings will appear in a forthcoming issue of the Journal of Financial Economics.

This idea, of including Black Americans in the housing market but charging them more to do so, is part of what Princeton scholar Keeanga-Yamahtta Taylor calls “predatory inclusion.”

“Once you pay this fee, that fee, this higher amount of money, now you get to participate equally with your white peers,” Taylor says. “And so not only does that impact the way that housing is supposed to generate wealth for people — it cuts into the wealth, the amount of money African Americans have to pay to enter into the housing market in the first place.”

Mark Alston meets with clients at his office on La Tijera Boulevard in Los Angeles. Unlike most loan officers, Alston works with his clients for months — even years — to disentangle a convoluted loan application process, pay off bills and boost credit scores so they can ultimately qualify for a home loan.

Nevil Jackson for NPR

The cumulative effects of these legal policies and discriminatory practices mean Black Americans pay more to own a home — what some experts call a “Black tax” on homeownership. It also means they accumulate less wealth over their lifetimes than white Americans — on the order of tens of thousands of dollars of lost savings and investments, according to an analysis by MIT’s Golding and his colleagues.

And while lenders and mortgage companies may say risk-based pricing is a fair way to account for risk, the broker Mark Alston has a different view of what “fair” means in America. “When you’ve had 350 years of not just unfairness but actual opposition — you had exclusionary zoning laws, you had private covenants, you had federally institutionalized redlining, now you have disparate housing finance policy. When you have actual opposition, ‘fair’ is an interesting concept.”

Alston says “a good head start beats fast running,” and worries that a 350-year head start for white Americans could mean Black Americans may never catch up — unless the financial system is changed to be more affirmatively equitable.

“I could care less about Black Lives Matter being painted on [a] basketball court,” he says. “How about an affirmative program to lower the gap between white and black homeownership? How about actual public policy that moves the needle, for real? How about a change in employment and pay that narrows the gap, the inequities between white and black pay? How about those type of things that will make a difference for future generations?”

In a statement to NPR, the National Association of Realtors, the largest real estate group in the country, acknowledged its past role in housing discrimination and said it has implemented anti-bias training programs for its members.

Back on her tree-lined street in Compton, DonnaLee Norrington sheds tears through a big smile as she reflects on her accomplishment. “I always feel like a late bloomer,” she says, but owning her own home is a relief.

Nevil Jackson for NPR

“Decades of systemic racism have left millions of minority households behind, a system NAR regrettably helped perpetuate a half century ago,” the group said. “Over recent years, NAR has recommitted itself to rectifying mistakes of the past, dismantling lingering nationwide housing inequities, and advocating for policies which ensure the market is more accessible in the years to come.”

Among his first executive orders, President Biden in January directed the Department of Housing and Urban Development “to take steps necessary to redress racially discriminatory federal housing policies.”

Alston plans to continue pushing for policy change that increases access to Black homeownership, all the while enhancing access through his own practice for people like DonnaLee Norrington.

Kids play on a quiet street in Compton.

Nevil Jackson for NPR

Back on her quiet tree-lined street in Compton, Norrington sheds tears through a big smile as she reflects on her accomplishment. “I always feel like a late bloomer,” she says, but owning her own home is a relief.

“We don’t ever have to worry about, you know, somebody gonna sell it from up under us or anything like that,” she says. “We got our own little piece here. … I feel really good about that, you know, leaving some sort of legacy.”

It’s a legacy that remains out of reach for many Black Americans today.

Jonaki Mehta, Christopher Intagliata, Alejandra Marquez Janse, Sami Yenigun and Jolie Myers produced and edited the audio versions of this story, with additional editing help from Chris Arnold. Fact checking and research by Jane Gilvin, Mary Glendinning, Greta Pittenger, Colette Rosenberg, Barclay Walsh and Julia Wohl. Graphics by Zach Levitt and Ruth Talbot. Photography for NPR by Nevil Jackson. Photo editing and research by Michele Abercrombie, Nicole Werbeck and Di’Amond Moore. Avie Schneider edited and produced for the web, with additional editing from Gerry Holmes and Gene Demby. This story was inspired by Code Switch’s work on housing segregation.

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Black millennials lag other groups in building wealth, Fed study finds https://www.nareb.com/black-millennials-lag-other-groups-in-building-wealth-fed-study-finds/ Thu, 27 May 2021 02:46:56 +0000 https://www.nareb.com/?p=30771 Older Black millennials are less wealthy than their baby boomer parents at that comparable age and are also falling well behind their White and Hispanic millennial peers in building net worth, a recent study shows. Economists at the Federal Reserve Bank of St. Louis examined how much wealth Black, Hispanic and White millennial families amassed between 2007 Continue Reading

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Older Black millennials are less wealthy than their baby boomer parents at that comparable age and are also falling well behind their White and Hispanic millennial peers in building net worth, a recent study shows.

Economists at the Federal Reserve Bank of St. Louis examined how much wealth Black, Hispanic and White millennial families amassed between 2007 and 2019, then compared those figures to how much wealth those groups were expected to acquire during that period. Wealth was calculated by taking the monetary value of what a family owns — their home, car and retirement accounts, for instance — minus how much debt they have from mortgages, student loans, credit cards and other financial obligations.

By 2019, millennial White families had accumulated total wealth of about $88,000, compared with $22,000 for millennial Hispanic families and $5,000 for millennial Black families. None of the groups have met the expected level of wealth that researchers predicted, but “Black families were a staggering 52% below wealth expectations,” St. Louis Fed senior researcher Ana Kent Hernández said in her analysis of the data. In the study, Fed researchers stopped short of predicting if — or when — Black millennials will ever catch up to the previous generation.

A range of interrelated factors may help explain why Black millennials lag in building household wealth, the Fed researchers found.

“One possible reason is the increasing burden of student loan debt on this group,” Hernández wrote.

Other reasons may include low homeownership rates among Black millennials, being paid lower wages than their White counterparts and struggles to gain bank financing when starting a business. For many Americans, the go-to method for building wealth is buying a house, but Black Americans lag in that area as well. Fed data show that 41% of Black families owned their home in 2019, compared to 47% of Hispanic households and 73% for Whites.

The racial wealth gap doesn’t surprise financial expert Deborah Owens, who coaches Black women on how to build wealth. Low wages, mountains of student debt and inadequate retirement savings have all suppressed wealth creation for people of color, she said.

Black millennials entered the job market during the 2008 Great Recession with thousands of dollars in student loan debt, Owens noted. They also graduated with more debt than their White classmates, according to a Brookings study. Many Black professionals found themselves with few job prospects back then, so they enrolled in graduate school, Owens said. They paid tuition and most of their daily living expenses with student loans while in school, she added.

A decade later, many Black millennials have student debt well into the six figures, Owens said. “They’ve had to contend with the residue of the recession, and much of that caused them to take on more student loan debt than boomers ever had to,” she said.

More student loan debt, fewer 401(k) dollars

Federal Reserve data show that student loan debt is harming Black borrowers more than any other racial group. That’s partially because Black Americans have relatively lower income and can’t devote as much money to payments, the 2019 study showed.

Black millennials are also more likely to work in low-paying gig economy jobs that don’t offer employer-sponsored retirement accounts than White or Hispanic workers. Poor access to 401(k) and pension plans is inhibiting Black adults from saving for the future, Owens said. About 68% of White Americans had a retirement account compared to 41% of Blacks and 35% of Hispanic households, according to 2019 Economic Policy Institute data.

Widening U.S. inequality in recent decades, including racial and gender gaps in wealth and income, harm the entire economy, Owens said, noting that millennials now make up a majority of the middle class.

“The middle class drives the consumption and growth of every company,” she said. “And the less people we have in the middle class, the less economic growth we have overall.”


CREDITS: Khristopher J. Brooks / CBS News

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Four Black men developed a Montgomery County suburb to provide a better life for some in their community. They received something very different in return. https://www.nareb.com/four-black-men-developed-a-montgomery-county-suburb-to-provide-a-better-life-for-some-in-their-community-they-received-something-very-different-in-return/ Tue, 25 May 2021 16:54:52 +0000 https://www.nareb.com/?p=30755 In 1906, four African American men attempted to develop an elite suburb for African Americans along Wisconsin Avenue between Chevy Chase and Friendship Heights, Maryland. Despite facing intense hostility from adjacent white landowners, at least 28 people bought lots. However, their vision was ultimately undone using subtler methods, showing how nominally race-blind tools can serve Continue Reading

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In 1906, four African American men attempted to develop an elite suburb for African Americans along Wisconsin Avenue between Chevy Chase and Friendship Heights, Maryland. Despite facing intense hostility from adjacent white landowners, at least 28 people bought lots. However, their vision was ultimately undone using subtler methods, showing how nominally race-blind tools can serve racist ends.

As we talk about in our video presentation on the subject for the DC Archives Advocates, this story breaks down what happened in a development known as Belmont, Chevy Chase and what the story meant in the history of the suburbs and the racial geography of DC, connecting Friendship Heights in Montgomery County to Glenarden in Prince George’s County on the other side of DC.

The Belmont Syndicate and a dream for a better life

On June 28, 1906, four African American businessmen, Charles Cuney, Alexander Satterwhite, Michel Dumas, and James Neill, purchased a subdivided plot of land in Montgomery County, Maryland called Belmont using a white man as an intermediary, or straw buyer. The land had a complicated history that ultimately led back to the Chevy Chase Land Company, the developer of its namesake neighborhood right next door, which was founded by a powerful white supremacist, Senator Francis J. Newlands. Calling themselves the “Belmont Syndicate”, the four businessmen widely advertised the property in both white and Black newspapers as “high-class” and affluent. As they put it in the Washington Post, Belmont was “the only good subdivision in Washington where colored people are welcomed to buy.”

At least 28 African Americans took the opportunity, including a Civil War veteran, a Methodist preacher, connected members of DC’s Black elite society, and multiple single women. They started playing regularly at Canadian online casino and making good money.

White residents in Somerset, Chevy Chase, and Friendship Heights saw Belmont’s success with horror. One Friendship Heights resident told The Washington Times:

“To establish a negro colony at Belmont, practically at our doors and beyond the restraint of the District police force, would mean the impairment of our property values, a constant menace to our peace and security, and the destruction of the happiness of our homes.”

They threatened violence and ultimately arrested Satterwhite, a Syndicate member, who was on-site making sales. Facing a penalty of up to $30,000, the man was tried and acquitted, twice on the same day.

You don’t need a white hood to be racist

But none of this explicitly racist action stopped Belmont. And there were no explicitly racial covenants on the property. Instead, the Chevy Chase Land Company used financing tools to stall sales until the Belmont Syndicate ran out of money. When the Belmont Syndicate bought the land, they inherited a debt obligation ruled by a legal instrument called a Deed of Trust. This transferred the land to a third party, in this case, a bank that had the same leadership as the Chevy Chase Land Company. They refused to release the Syndicate from this debt obligation.

With no ability to move forward with more sales, and facing anxious purchasers, Satterwhite sold his shares to a white speculator. In response, Dumas, another Syndicate member, filed a lawsuit against nearly everyone involved. The litigation sprawled into two jurisdictions, and entangled over 30 parties and at least five separate cases. The cases form the most complete documentation of the event, but were unable to save the development.

In 1909, a Montgomery County court allowed the Chevy Chase Land Company’s affiliate to foreclose nearly all of the land. The Land Company was unable to reach a settlement with Dumas for another 15 years, by which time he had become a trustee of Howard University. In April 1926, the Land Company erased the legal subdivision of Belmont and incorporated the land into Chevy Chase Section 1A, leaving that thin strip to buffer Chevy Chase from Wisconsin Avenue. The only other remnant of the project is a street in Chevy Chase named Belmont Avenue.

History retold like a game of “Telephone”

Stories of Belmont circulated long after its quiet conclusion, becoming warped. In the retelling, Belmont was not a development for Black professionals, but one for servants and agricultural workers. The rumors suggested that the developers were not Black, and possibly were part of an extortion plot — a claim that had been made by opponents in Dumas’s court cases. In the memory of the events, the Black neighborhood is lower class, servile, or even criminally undesirable, just as the project’s contemporary opponents seemed to envision.

Belmont, and the curious trace it left on Wisconsin Avenue, explains a lot about the racial geography of DC. The successful suppression of the development was a sign that the pattern of suburban growth in DC would be segregated. African Americans, even affluent ones who wanted communities that were exclusive by price and protected from nuisances like the manure piles of a stable.

We are unable to prove a direct link, but after Belmont, developers only built suburbs for middle class African Americans, like Lincoln, Glenarden, and Fairmount Heights, east of DC in Prince George’s County, solidifying an existing trend. Conversely, the legal tools used by white developers at the turn of the century secured a future for the area northwest of the White House to be one of concentrated wealth and whiteness.

A community concept ahead of its time

We can tell from the records that the Belmont Syndicate intended to develop a modern suburb right when the concept was still being worked out. This new form of development used either public or private land use restrictions to ensure that neighborhoods would stay residential but serve as an investment. This makes Belmont one of the earliest known attempts by African Americans to build restricted residential suburbs for African Americans.

The Belmont Syndicate had enough confidence in the equal protection of property rights that they tried to stake a claim to an elite area next to Chevy Chase. That they attempted this at the run up to the Jim Crow era demonstrates how DC remained a place of opportunity for African Americans, where the dangers of crossing the color line could be navigated long after Reconstruction ended elsewhere.

But most importantly, Belmont’s demise shows that ostensibly racially neutral real estate practices can be used to discriminate against marginalized groups. The Belmont property did not have racial covenants, because they were understood to be unconstitutional in 1906. And it was mob violence that halted the development; legal posturing and sophisticated financing maneuvers exploited large scale social conditions to end Belmont. This exclusion would happen over and over again throughout the 20th century, and continues today.


CREDITS: Neil FlanaganKimberly BenderGreater Greater Washington

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The Importance of Black Home Ownership in America https://www.nareb.com/the-importance-of-black-homeownership-in-america/ Fri, 21 May 2021 19:31:37 +0000 https://www.nareb.com/?p=30722 When I was in elementary school, my grandmother bought the house she would live in for the rest of her life. The first summer afterward, when we went to visit, she gave us a tour: a dresser exclusively for hats, an all-white living room that we were forbidden from entering, paper guest napkins that matched the green Continue Reading

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Housing concept. Happy black family with daughter holding keys from their new home, selective focus on hands, closeup.

When I was in elementary school, my grandmother bought the house she would live in for the rest of her life. The first summer afterward, when we went to visit, she gave us a tour: a dresser exclusively for hats, an all-white living room that we were forbidden from entering, paper guest napkins that matched the green wallpaper in her en-suite bathroom. Her bed was so high, I had to push myself onto my forearms to get in.

Some of the last words I heard her speak, in that very house, were about how grateful she was that all of her children had homes. My grandmother had grown up on a sharecropping farm in Mississippi and she promised she would never return there. She also would never explain why, but undoubtedly it was because of the trauma that came with being a Black woman in the state deepest in the Deep South. The advice that she would give my sister, my cousins, and me often centered on upward mobility and independence: travel, try not to get saddled with too many responsibilities, and—the last piece I saved—own a home.

In 1970, the Reels brothers’ dying grandfather told them not to “let the white man get the house.” Their 65-acre North Carolina farm was inevitably “legally stolen” by developers and the pair spent eight years in jail for refusing to leave it—the longest sentence ever for such an offense. Fifty-some years later, one of the last Black farmers in rural Oklahoma started a GoFundMe campaign to save his family farm, after the COVID-19 pandemic put several members of his family in the hospital. It is telling that though Black Americans struggled to escape the farms they were born on because of seemingly unbreakable contracts that stretched through generations, in the instances when property has been a source of security or economic freedom for Black Americans, there are endless barriers to its acquisition and safekeeping.

In fact, since 1910, 1 million Black farmers have lost their properties, a fact that becomes more alarming when measured against the way the security of property ownership blunted the impact of destructive modern-day events, such as the pandemic, for those who own property. During this time, wealth has been safe green spaces, with first homes, second homes, and access to health care. Poverty has looked like quarantining in crowded homeswaiting on food bank lines that curled around city blocks, being pushed to the back of vaccine queues, and ultimately facing a greater risk of being exposed to COVID-19.

According to Rick Banks, a Stanford professor and author who has studied discrimination in depth, the pandemic simply highlighted disparities that always existed in our country. “African Americans and Latinos remain marginalized,” says Rick. “They have the heaviest jobs, now essential, providing services—like home health aides and delivery. They don’t get paid to stay home and have Zoom meetings.”

Rick is right. In places like New York City, people of color make up 70% of essential workers and, overall, Black Americans are overrepresented in essential work. In New York, the majority of essential workers live in Queens and Brooklyn, which are outer boroughs and have faced high COVID-19 positivity rates since the start of the pandemic. Though so many Americans applaud the people of color tasked with keeping the country going—both actually and figuratively—lasting, actionable steps are rarely taken to help them survive via equitable housing or opportunities to build generational wealth. Homeownership is nearly impossible for frontline workers in many cities across the country. The picture that comes into focus is one that looks very much like the past: People of color continue to carry the country forward but are offered little stake in it.

“This vulnerability mirrors the economic marginality,” says Rick. “When we talk about race, we focus a lot on rights, [but] it’s gotten worse. It’s more pressing now. We’re much more economically unequal.”

As the pandemic drags on, most of the legislative battles we’ve seen waged are about repairing the economy or providing vaccines and resources for strapped health-care systems across the country. These are important and necessary discussions for pulling the country out of the many crises it’s in the middle of, but for Black Americans, maybe some of the most important moves to make are ones that build generational wealth.

During the summer, 19 black families purchased 90 acres in Georgia, which they hope will eventually become a city called Freedom. In February, the Justice for Black Farmers Act was passed with the goal of both protecting the remaining Black farmers from losing their land, curbing discrimination within the USDA, and returning land to Black Americans through land grants. It seems that, at least though small steps, some Americans are trying to repair the injustices of the recent and distant past, a step that is more important than ever as the conflict over who our nation belongs to continues. For Black Americans, it may be more important than it has been in a long time to say, it belongs to us, too.


CREDITS:  / Architectural Digest

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Report: Up To $1.5 Trillion Could Be Added to U.S. Economy If Racial Wealth Gap In Housing Market Was Fixed https://www.nareb.com/report-up-to-1-5-trillion-could-be-added-to-u-s-economy-if-racial-wealth-gap-in-housing-market-was-fixed/ Thu, 20 May 2021 00:44:39 +0000 https://www.nareb.com/?p=30699 Homeownership for years has been an essential pillar for building wealth for most Americans. Yet a new report by Clever Real Estate discloses some eye-popping statistics on how racial disparities continue to linger in the nation’s housing market. As such, the discrepancies are hindering Black Americans’ capacity to increase their personal finances. America’s history of discrimination makes Continue Reading

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Homeownership for years has been an essential pillar for building wealth for most Americans.

Yet a new report by Clever Real Estate discloses some eye-popping statistics on how racial disparities continue to linger in the nation’s housing market. As such, the discrepancies are hindering Black Americans’ capacity to increase their personal finances.

America’s history of discrimination makes it extra hard for Black families to build generational wealth similarly to their white peers. Actually, the typical Black family has less than one-tenth of the household wealth of a parallel white family.

A pivotal place for Americans’ wealth is their retirement accounts and home equity. Retirement savings account for nearly 33% of household wealth and home equity about 29%, an August 2020 U.S. Census report revealed.

The racial wealth gap is evident in the housing market. Clever reported lenders conclude borrowers carry more risk if they have less money, resulting in Black families more likely to be denied mortgages. White Americans are 75.4% more likely — or 1.7 times greater — to own a home than Black Americans (44.1%).

Interestingly, Clever contends the racial wealth imbalance is constraining all Americans, not just Blacks. It claims clearing up the racial wealth gap would add $1 trillion to $1.5 trillion to the U.S. economy by 2028.

The most concerning aspects of the new findings are how severely homeownership can impact Black Americans’ family and generational wealth, says Clever’s Francesca Ortegren, who co-authored the report.    While the racial wealth gap is driven by quite a few factors, homeownership and the value of homes owned by Black Americans are significant drivers, she told Black Enterprise by email.

More specifically, Black Americans are less likely to own homes than are white Americans but even homeownership itself does not quite make up the differences in wealth as homes owned by Black Americans are valued lower. “There’s less equity, commerce/consumer spending, and struggling economies in neighborhoods where the population is mostly Black as a result.”

More disturbingly, Clever disclosed a negative correlation between home prices and the percentage of Blacks living in any given zip code. It stated houses in most Black neighborhoods are worth less than 50% as much as neighborhoods where under 1% of the residents are Black. Even more amazing, in some cities,  mostly non-Black neighborhoods are valued over 600% more than Black neighborhoods.

The research showed the average median listing price is around $167,508 in predominantly Black metro areas. That compares to $355,000 in neighborhoods where the percentage of Black residents is under 1%. That means the disparity greatly restricts money Black Americans could make from selling their homes.

The report included data from Realtor.com and Zillow.com, and the U.S. Census examined housing costs across the United States. Clever Real Estate is an education platform for homebuyers, sellers, and investors.

And over 10 years later, after the 2008 financial crisis worsened the racial wealth gap, Black communities have yet to rebound to a similar level as White ones. Clever found the difference between Black and white average home prices was nearly $57,688 in 2007. That gap increased stunningly to $94,489 by 2020.

Intriguingly, Clever says revitalizing Black neighborhoods can produce a healthier economy: Every 10% increase in total housing market wealth translates to $147 billion in extra consumer spending.

Clever is partnering with Dream Builders 4 Equity, which is creating new opportunities for home ownership, jobs for youth and minority contractors, and public dialogue about community needs in St. Louis. Clever says Dream Builders 4 Equity offers a way U.S. communities could help close the racial wealth gap.

Ortegren says disparities in homeownership rates, home values, and family wealth between Black and white Americans must be addressed at the community level, rather than the individual level. She added promoting and supporting efforts by organizations like Dream Builders for Equity is a great place to start as there’s evidence that revitalizing and supporting underserved communities can benefit everyone.

“That is, providing opportunity for underserved communities to gain equity, wealth, and grow the local economy tends to have a positive effect all the way to the national economy as more wealth in an area is correlated with less crime, lower rates of mental and physical illness, more businesses, more opportunities, and more consumer spending.”


CREDITS: Jeffrey McKinney / Black Enterprise

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