Ten years after the Great Recession

Research has shown that ten years after the Great Recession, its negative effects continue to impact a huge part of the population. The Great Recession has left deep scars, not only regarding employment and income, but wealth and housing as well (Aja et al., 2014). However, the detrimental effects were not experienced equally by all racial and ethnic groups. Ten years after the Great Recession, the rich are getting richer and the poor are getting poorer. For example, reports show the housing recovery has been the most successful in wealthy areas and slowest in the poorest areas. Ten years after the Great Recession, some wealthy families saw the prices of their homes increase, and they had access to cheap credit. On the other hand, African American and Hispanic families not only lost their homes, but also suffered from low credit scores, resulting in an inability to purchase property, seek employment, rent, obtain cheaper auto insurance premiums, or fulfil everyday household obligations. Vulnerable families are being forced to live in high-rent properties exploited by investors (Lowrey, 2017). The recovery did not successfully benefit vulnerable families, particularly those of color. African American and Hispanic families are still “under water” some ten years after the Great Recession of 2007-2009. As has been stated in earlier chapters, African Americans are much more likely than Whites to have the bulk of their wealth tied up in a home. They were more likely to have risky mortgage loans, to be targeted by predatory lenders, charged higher interest rates, and more likely to lose their home. The Great Recession widened the racial wealth gap that remains unaddressed ten years later. It is doubtful if African Americans will ever recover. In addition to benefiting little from the recovery efforts, African Americans are now facing the added challenges of high home prices and high rents (Williams, 2018).

The effect of the financial crisis on home ownership among African American families ten years later

In their published research, “The Great Recession, education, race, and homeownership,” Famighetti and Hamilton (2019) highlight the importance of the impact of the Great Recession on the reduction in wealth, especially within the context of the loss of equity in home ownership. The net worth of the average household decreased by $50,000 or 40 percent (Mui, 2012). Findings show that the persistent disparities in home ownership actually worsened after the recession. African American college graduates are also experiencing more barriers to obtaining housing. Research by Hamilton, Darity, Price, Vishnu, and Trippett (2015) found that African American college graduates have less wealth than those households maintained by a person who does not have a high school education. The historical racial disparities in home ownership, including the wealth accrued through it over many generations, keeps an unequal housing market in place. Even African Americans with higher education are not spared from wealth disparities connected to homeownership (Hamilton et al., 2015).

African Americans have experienced the most significant drop in home ownership. Since 2001, the African American homeownership rate has dropped more than any other racial or ethnic group, consisting of a 5 percent decline for black families in comparison to a one percent decline for white families. Research shows that the subpopulation of African Americans who have lost the most in relation to other racial and ethnic groups are homeowners between the ages of 45 and 64. These are homeowners who not only lost their homes as a resulting of the 2008 financial crisis, but ten years on are unable to purchase another home as they approach retirement (Goodman, McCargo, & Zhu, 2018). The prospects for homeownership among African Americans and the opportunity to pass on wealth to future generations appear dismal and out of reach for this population. Homeownership rates are said to be at levels close to those before the Fair Housing Act of 1968. Even worse, unless one's credit is near perfect it has become far more difficult to quality for home mortgage loans. This new practice has impeded some 6.3 million mortgage loans between 2009 and 2015 (Goodman et al., 2018), forcing foreclosed homeowners into a rental market that has a set of economic problems of its own. Today’s problem is centered on the fact that families who are not in a financial position to buy another home ultimately become renters in a market where rents have increased significantly (Abare, 2018). High rent makes it difficult to save up for a down payment on a house. So we see that families whose homes were taken due to bad financial practices are the same families who continue to suffer greatly because of high rents and the financial inability to return to the home ownership market.

According to US New Civic Report (Milligan, 2018) a half century after the Fair Housing Act became a civil rights landmark, multiple studies show housing in America is nearly as segregated as it was when LBJ enacted a law designed to eliminate it. African Americans still lag far behind Whites in home ownership, a key asset in building middle-class wealth.

At the same time, the institutional problems the Fair Housing Act was designed to solve - inequality in mortgage lending and homeownership, as well as real-estate agents steering black home buyers to certain neighborhoods and landlords who avoid renting to minorities - haven’t gone away. Limited access to housing in stable, middle-class neighborhoods, analysts say, has had a negative impact on everything from the quality of education black children receive to the health and longevity of their parents.

(Milligan, 2018)

Hamilton et al. (2015) note a number of factors affecting the ability of African Americans to succeed economically. FHA loans were less available to Blacks, especially in the Jim Crow South. Redlining - the practice of refusing to rent or provide home loans to African Americans seeking to move to certain neighborhoods - was also problematic for Blacks. Wealth is a huge factor in home ownership, which has been referenced throughout the book. The Urban League report (Milligan, 2018) shows a large disparity in home ownership, with African Americans at 58 percent of parity with Whites. Public policy, says Hamilton et al. (2015), has, in the past, helped to create a white middle class, but done little to nurture a black middle class. Since the Great Recession, the racial wealth gap continues to widen between African Americans and Whites. With lower earnings, higher home prices, and higher rents. Blacks are at risk of being left farther behind than they were before the Great Recession.

 
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