Photo (cc) by vicki moore
Black homeowners lost considerably more wealth than white homeowners did during the Great Recession.
Black homeowners even lost money during the same periods of the 2000s during which white homeowners gained income.
Those are among the findings of a Johns Hopkins University study recently published in the journal Real Estate Economics. It details how race factored into the net worth of low- and moderate-income people who bought their first homes during the first 10 years of the 21st century.
For white homebuyers, timing was the main factor in whether they made money or lost money on the home, the study found.
But that was not the case for blacks, explains study co-author Sandra J. Newman, a public policy professor at Johns Hopkins University:
“They say that in real estate timing is everything, but blacks had a loss across the decade — even when their purchase time was impeccable. They would have done better if they’d stayed renters.”
For black homebuyers, the neighborhood in which they bought a home was the main factor in whether they profited from the purchase. According to Johns Hopkins, such neighborhoods were often in areas with:
- Primarily black populations.
- Lower housing prices.
- Lower appreciation.
- Declining homeownership rates.
Factors like education and marital status also affected the net worth of black homeowners, but not white homeowners.
Stark statistics revealed by the study include:
- During the Great Recession, from 2007 through mid-2009, the net worth for new white homebuyers dropped 33 percent, while new black homebuyers lost 43 percent of their wealth.
- During the boom that preceded the recession, between 2005 and 2007, white first-time buyers enjoyed net worth gains of 50 percent while new black homebuyers lost 47 percent. In dollar terms, while whites were gaining about $24,000, blacks were losing $16,911.
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