We’ve known the foreclosure crisis is hitting blacks and Latinos hardest for a while, but the Pew Hispanic Center further substantiates the point in a report released this week. The report summarizes a bunch of new housing data, but here’s the most important stat: Blacks lost more homes between 2004 and 2007 than any other racial group. According to a February Federal Reserve update, which Pew summarizes, black home ownership rates dropped by nearly three percentage points, to 47.5 percent.
This is an important stat for a bunch of reasons.
First, mortgage industry defenders have repeatedly asserted that the wave of subprime and other exotic loans that flowed over black neighborhoods did plenty of good, too. It drove up the black home ownership rate to an historic high of nearly 50 percent (alongside a rapid increase in home ownership across the racial spectrum). As we now see, however, that gain was illusory. It was based upon predatory, unsustainable loans. Worse, as I’ve reported, the massive strip mining of equity from longtime black homeowners means many, many families will come out of this much worse off than they started.
Second, home ownership is the most crucial element of middle-class wealth in America—and the black/white gap remains astounding. Overall, 69 percent of Americans were homeowners at the end of 2007, and 75 percent of white Americans. But fewer than half of blacks and just 53 percent of Latinos owned homes. Subprime brokers preyed upon this disparity—which was created through generations of publicly financed discrimination in the lending market—and gave everyone the impression that housing equality was on its way. Well, it wasn’t. Ultimately, the public sector will have to take meaningful action to erase the home ownership gap it helped create, or it won’t be long before another scam comes along to prey upon black and brown folks again.
I’ll dig into all of this in more depth in an upcoming essay in THE AMERICAN PROSPECT.