Racial Disparities in Home Appreciation

Racial Disparities in Home Appreciation

Implications of the Racially Segmented Housing Market for African Americans’ Equity Building and the Enforcement of Fair Housing Policies

Michaela Zonta, Center for American Progress, July 15, 2019. Available Here. 

Last year marked the 50th anniversary of the release of the Kerner Report2 and the passage of the Fair Housing Act. Spurred by race-related unrest that broke out in more than 100 U.S. cities between 1965 and 1968, the Kerner Report denounced the structural barriers to economic equality afflicting black communities in the United States.3 The report pointed to the role of white racism and the pervasive discrimination against and segregation of African Americans in housing, employment, and education in the creation and perpetuation of two societies: “one black, one white—separate and unequal.”4 The Fair Housing Act, which was passed in April 1968 as Title VIII of the Civil Rights Act, was meant to eliminate overt discrimination and disparities in the housing market and ultimately end residential segregation. Specifically, it prohibited discrimination in the sale or rental of housing; the financing of housing; and the provision of brokerage services based on a person’s inclusion in a protected class, including race, color, and national origin.5

Despite the economic and political gains that African Americans have achieved since the passage of the Civil Rights Act, significant disparities still exist between African Americans and non-Hispanic whites in terms of access to homeownership, quality education, and employment, among other assets. These disparities are reflected in persisting residential segregation and a racially segmented housing market—and they have significant implications for African Americans’ economic mobility. Segregation, disparate access to credit and homeownership, and the consistent devaluation of homes in black neighborhoods6combine to constrict the ability of African Americans to build equity and accumulate wealth through homeownership.

This report focuses on the residential patterns of black and non-Hispanic white home mortgage borrowers and the racial disparities in home appreciation in neighborhoods where these borrowers purchase their homes. Throughout the report, the author uses the terms “African American” and “black” as well as “non-Hispanic white” and “white” interchangeably. The neighborhoods where homebuyers purchase their homes contribute to their home’s worth and its chance of appreciating over time, which has important implications for the long-term financial returns associated with homeownership. Before presenting original analysis of home mortgage lending to black and white homebuyers prior to and after the 2008 financial crisis, this report discusses the government policies and other factors that have led to and continue to contribute to persisting African American segregation. The report also provides an overview of the Fair Housing Act in addressing housing discrimination and segregation. Despite some progress in achieving integration, weaknesses in fair housing enforcement have undermined the ability of the Fair Housing Act to dismantle segregation and combat discrimination.

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