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Is Black Homeownership Still a Boss Move?

Is Black Homeownership Still a Boss Move?

By Christopher Pitts

  • The homeownership rate among black people stands at 41.1%

  • Black homeownership is as low as it was when housing discrimination was legal in 1960s 

For Black America the pursuit of the American Dream has never wavered, yet they still lag significantly behind other ethnic groups in terms of homeownership. The reasoning starts in the 1960s when the Federal Housing Administration infamously instituted redlining, a discriminatory practice where banks would avoid investments based on community demographics. Until 1968, banks could deny mortgage loans based on a homebuyer’s race or neighborhood, and predominantly white communities could pass zoning restrictions designed to keep people of color out of neighborhoods.

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Why This Matters: As a result of redlining, blacks in Chicago had to find another solution to homeownership, which became known as contract for deeds. A study at Duke University focusing on inner-city Chicago, shows that the dream of homeownership was essentially converted into a poverty trap for the black family.  Contract for deeds, involved, the “buyer” assuming all the responsibilities of a homeowner, including repairs and taxes, while the “seller” retained title, along with the power to evict for missing even a single payment. 

Contract for deeds, involved, the “buyer” assuming all the responsibilities of a homeowner, including repairs and taxes, while the “seller” retained title, along with the power to evict for missing even a single payment

As a result, families who bought “on contract” didn’t accumulate equity. The sale price and the interest rate were widely inflated and black families were overcharged between $3.2 million and $4 billion. Additionally, this left black families without the means to invest in their properties, contributing to the physical decline of their neighborhoods. 

According to the U.S. Census Bureau, the homeownership rate among white Americans is 73.2%, while the black homeownership rate stands at 41.1%. A Harvard study found that homeownership rates among African Americans in 2017 were among the lowest they’ve been since the passage of the 1968 Fair Housing Act

Situational Awareness: Homeownership can still be a path to the American Dream for the Black families, as journalist Ta-Nehisi Coates said, “Housing determines access to transportation, green spaces, decent schools, decent food, decent jobs, and decent services.” Although with these glaring data points, the lingering question is should we think about black homeownership as an aspirational goal for wealth creation, or look at other financial alternatives?

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