How to Make the Housing Market More Equitable – The Wall Street Journal

The homeownership rate among Black households remains stubbornly low, even as the overall U.S. homeownership rate has risen in recent years. That is a key reason why Black families have a median net worth well below that of white households.

Even for families that do own homes, the benefits of homeownership arent equally dispersed. Andre M. Perry, a fellow at the Brookings Institutions Metropolitan Policy Program and scholar-in-residence at American University, has quantified some of that divide in an effort to shrink it in the future.

Mr. Perrys research with colleagues has shown that houses are underpriced in majority-Black neighborhoods, a process he calls devaluation. That can lead to lower property-tax revenue to fund local schools and infrastructure in those neighborhoods and reduced wealth and discretionary income for Black families. In his book, Know Your Price: Valuing Black Lives and Property in Americas Black Cities, which came out in May, Mr. Perry argues that racism contributes to the devaluation of assets, including homes, in majority-Black cities.

Mr. Perry spoke with The Future of Everything about the long-term effects of the gap in housing values, how to increase the Black homeownership rate and whats next for majority-Black cities.

We really wanted to see the impact of race on home price. And we controlled for education, crime, walkability, all those fancy Zillow metrics. And what we found is homes in Black neighborhoods are underpriced by 23%, about $48,000 per home. Cumulatively thats $156 billion in lost equity. In fact, $156 billion is the equivalent of 4.4 million new businesses, based on the average amount Blacks use to start up their firms. The $156 billion would have paid for more than 8 million four-year degrees, based on the average cost of a public four-year degree. Those are real material losses that were experiencing when we talk about devaluation. When people have this narrative in their mind that the conditions of Black neighborhoods are a direct result of the people in them, they wrongly discount the policies that created a lack of investment in those communities.

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How to Make the Housing Market More Equitable - The Wall Street Journal