Wealth in America is mostly held in either retirement savings or home equity, with roughly a third of wealth falling into each of these two categories (32.8% and 28.9%, respectively).
The average Black household in America, however, has less than one-tenth the wealth of a typical white household, and this certainly applies to home ownership and equity.
A study by Clever confirmed that the racial wealth gap in the U.S. is reinforced by disparities in home prices. Homes in predominantly Black zip codes are worth less than half as much as homes in predominantly white neighborhoods.
This disparity in home equity and generational wealth — of which Black families typically have less — has a ripple effect. When buying a home, with or without a real estate agent, lenders perceive borrowers to carry more risk if they have less money, so Black families are more likely to be denied mortgages (or have higher interest rates and less favorable terms if they are approved.) Over the life of the loan, a Black family will pay much more for the same home than a non-Black family.
In fact, researchers in 2015 found that Black borrowers pay 29 basis points more (or a 0.29% higher interest rate) than similar white borrowers. Black women are especially affected and pay 57.36 basis points more (or a 0.5736% higher interest rate) than white women.
Solving the racial wealth gap in the U.S. through home ownership would provide a benefit not just for Black families, but it could also stimulate the economy by adding an estimated $1 trillion to $1.5 trillion by 2028. The typical Black family has approximately $12,780 in household wealth, compared to $139,300 for white families. Equalizing homeownership rates alone would decrease this racial wealth gap by more than $40,000.
White neighborhoods are valued nearly 60% more than Black neighborhoods. But for every 10% increase in total housing market wealth, this is $147 billion in additional consumer spending. Building just 100 new low-income housing units could immediately create 80 jobs, plus an additional 72 jobs supported by ripple effects and new residents.
Innovative solutions, such as the nonprofit Dream Builders 4 Equity, can help reduce this wage gap and transform the lives of youth. Dream Builders 4 Equity’s Real Estate Program provides youth employment, training and mentorship, while working alongside minority contractors, local youth rehab vacant homes in North City St. Louis to be sold to first-time home owners. This model could be adapted to other cities to provide similar benefits to the community.
Here are the top 25 cities with the worst housing inequality.
Related: 15 cities where you can buy a home for under $100K
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25. Jacksonville, Florida
- Typical property values in predominantly Black zip codes: $154,033
- Typical property values in predominantly non-Black zip codes: $439,282
- Percent difference: 185%
Image Credit: Philip Rozenski / istockphoto.
24. Detroit-Warren-Dearborn, Michigan
- Typical property values in predominantly Black zip codes: $116,459
- Typical property values in predominantly non-Black zip codes: $333,278
- Percent difference: 186%
Image Credit: DepositPhotos.com.
23. Baltimore-Columbia-Towson, Maryland
- Typical property values in predominantly Black zip codes: $164,556
- Typical property values in predominantly non-Black zip codes: $496,351
- Percent difference: 202%
Image Credit: DepositPhotos.com.
22. Roanoke, Virginia
- Typical property values in predominantly Black zip codes: $116,500
- Typical property values in predominantly non-Black zip codes: $355,409
- Percent difference: 205%
Image Credit: Deposit Photos.
21. Tulsa, Oklahoma
- Typical property values in predominantly Black zip codes: $64,136
- Typical property values in predominantly non-Black zip codes: $195,799
- Percent difference: 205%
Image Credit: Johnny Warrior / istockphoto.
20. Cleveland-Elyria, Ohio
- Typical property values in predominantly Black zip codes: $98,311
- Typical property values in predominantly non-Black zip codes: $305,012
- Percent difference: 210%
Image Credit: istockphoto/Sean Pavone.
19. Saginaw, Michigan
- Typical property values in predominantly Black zip codes: $53,529
- Typical property values in predominantly non-Black zip codes: $175,550
- Percent difference: 228%
Image Credit: ehrlif/istockphoto.
18. Charleston-North Charleston, South Carolina
- Typical property values in predominantly Black zip codes: $526,190
- Typical property values in predominantly non-Black zip codes: $1,726,639
- Percent difference: 228%
Image Credit: DepositPhotos.com.
17. Akron, Ohio
- Typical property values in predominantly Black zip codes: $65,149
- Typical property values in predominantly non-Black zip codes: $219,391
- Percent difference: 237%
Image Credit: benkrut / istockphoto.
16. Mobile, Alabama
- Typical property values in predominantly Black zip codes: $117,955
- Typical property values in predominantly non-Black zip codes: $405,333
- Percent difference: 244%
Image Credit: DepositPhotos.com.
15. Omaha-Council Bluffs, Nebraska-Iowa
- Typical property values in predominantly Black zip codes: $86,109
- Typical property values in predominantly non-Black zip codes: $296,337
- Percent difference: 244%
Image Credit: Matt Bills / iStock.
14. Waco, Texas
- Typical property values in predominantly Black zip codes: $79,050
- Typical property values in predominantly non-Black zip codes: $279,968
- Percent difference: 254%
Image Credit: Hundley_Photography / iStock.
13. Winston-Salem, North Carolina
- Typical property values in predominantly Black zip codes: $102,775
- Typical property values in predominantly non-Black zip codes: $366,325
- Percent difference: 256%
Image Credit: Sean Pavone / istockphoto.
12. Niles-Benton Harbor, Michigan
- Typical property values in predominantly Black zip codes: $145,020
- Typical property values in predominantly non-Black zip codes: $526,641
- Percent difference: 263%
Image Credit: Kenneth Keifer / iStock.
11. Harrisburg-Carlisle, Pennsylvania
- Typical property values in predominantly Black zip codes: $75,493
- Typical property values in predominantly non-Black zip codes: $283,145
- Percent difference: 275%
Image Credit: Sean Pavone / istockphoto.
10. Salisbury, Maryland-Delaware
- Typical property values in predominantly Black zip codes: $173,458
- Typical property values in predominantly non-Black zip codes: $723,613
- Percent difference: 317%
Image Credit: Eric Fischer.
9. Rochester, New York
- Typical property values in predominantly Black zip codes: $60,656
- Typical property values in predominantly non-Black zip codes: $255,403
- Percent difference: 321%
Image Credit: DepositPhotos.com.
8. Philadelphia-Camden-Wilmington, Pennsylvania-New Jersey-Delaware-Maryland
- Typical property values in predominantly Black zip codes: $154,024
- Typical property values in predominantly non-Black zip codes: $690,475
- Percent difference: 348%
Image Credit: DepositPhotos.com.
7. Buffalo-Cheektowaga-Niagara Falls, New York
- Typical property values in predominantly Black zip codes: $74,839
- Typical property values in predominantly non-Black zip codes: $350,361
- Percent difference: 368%
Image Credit: istockphoto/Hsa_Htaw.
6. Milwaukee-Waukesha-West Allis, Wisconsin
- Typical property values in predominantly Black zip codes: $97,536
- Typical property values in predominantly non-Black zip codes: $470,030
- Percent difference: 382%
Image Credit: benkrut / istockphoto.
5. Bridgeport-Stamford-Norwalk, Connecticut
- Typical property values in predominantly Black zip codes: $185,050
- Typical property values in predominantly non-Black zip codes: $970,175
- Percent difference: 424%
Image Credit: Wiki Commons.
4. Miami-Fort Lauderdale-West Palm Beach, Florida
- Typical property values in predominantly Black zip codes: $269,128
- Typical property values in predominantly non-Black zip codes: $1,556,398
- Percent difference: 478%
Image Credit: THEPALMER.
3. Toledo, Ohio
- Typical property values in predominantly Black zip codes: $43,750
- Typical property values in predominantly non-Black zip codes: $255,827
- Percent difference: 485%
Image Credit: Mshake / istockphoto.
2. Kansas City, Missouri-Kansas
- Typical property values in predominantly Black zip codes: $75,707
- Typical property values in predominantly non-Black zip codes: $466,458
- Percent difference: 516%
While the average property value in non-Black zip codes is approaching half a million dollars, those in Black zip codes don’t even top $100,000. Property values in Black neighborhoods are just a fifth of those in non-Black areas.
Image Credit: istockphoto.
1. Flint, Michigan
- Typical property values in predominantly Black zip codes: $32,563
- Typical property values in predominantly non-Black zip codes: $242,693
- Percent difference: 645%
Flint, Michigan, is probably best known for its water crisis that began in 2014. Its housing disparities, however, should also be noted. Flint tops the list of worst housing inequality with homes in predominantly non-Black zip codes valued at more than six times higher than those in predominantly Black ones.
This article originally appeared on ListWithClever.com and was syndicated by MediaFeed.org
Image Credit: LindaParton / istockphoto.
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