January 29, 2019
Activities: Civil Rights / Social Action, Community Development / Capacity Building, Housing / Shelter
Geography:
Demographics:
Annual ROI: 0.0%
Image source: Pixabay
Home ownership has long been part of the American Dream. However, this dream isn’t equal for everybody.
Decades of racist federal housing policies and segregation have made it much harder for black people to purchase homes and build wealth, in turn making it harder to afford college education and invest in businesses.
The Brookings Institute researched this problem, attempting to assess the economic cost of racist policies through the lens of the housing market.
If we can detect how much racism depletes wealth from black homeowners, we can begin to address bigotry principally by giving black homeowners and policymakers a target price for redress. Laws have changed, but the value of assets—buildings, schools, leadership, and land itself—are inextricably linked to the perceptions of black people. And those negative perceptions persist.
Through the prism of the real estate market and homeownership in black neighborhoods, this report attempts to address the question: What is the cost of racial bias? This report seeks to understand how much money majority-black communities are losing in the housing market stemming from racial bias, finding that owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses.
Here is a sample snapshot of the Detroit area housing market, and its impact of racial devaluation:
What does this mean?
Because municipalities are primarily funded by property taxes, this problem places black neighborhoods at a significant disadvantage. Lower property values imply lower taxes, which imply lower funding for good schools, roads, economic development, and other services.
The less money is spent on these critical public services, means the less attractive these communities become to outsiders. This further drives property values down, in an endless cycle.
The answer lies with government. The same institutions that created this mess are the ones that need to enact creative policies for incentivizing more mixing of different types of people. The system in place today has created free market dynamics smothered with racial biases, so absent large government intervention, this market will not change overnight.
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