The Homeownership Boom and Bust for Blacks and Hispanics

A recent report from the Pew Hispanic Center looks at homeownership in the United States, and not surprisingly, finds huge differences in the ownership rates for whites and non-whites:

The boom-and-bust cycle in the U.S. housing market over the past decade and a half has generated greater gains and larger losses for minority groups than it has for whites, according to an analysis of housing, economic and demographic data by the Pew Hispanic Center, a project of the Pew Research Center.

From 1995 through the middle of this decade, homeownership rates rose more rapidly among all minorities than among whites.

But since the start of the housing bust in 2005, rates have fallen more steeply for two of the nation’s largest minority groups — blacks and native-born Latinos — than for the rest of the population.

Overall, the ups and downs in the housing market since 1995 have reduced the homeownership gap between whites and all racial and ethnic minority groups. However, a substantial gap persists. As of 2008, 74.9% of whites owned homes, compared with 59.1% of Asians, 48.9% of Hispanics and 47.5% of blacks.

The article on the report not only discusses homeownership rates, but it also looks at factors that affect homeownership, including the use of subprime loans.

The report itself, Through Boom and Bust: Minorities, Immigrants and Homeownership, can be found here.

Quality of Life, by Race and Gender: the Human Development Index

How do you measure the quality of life in broad terms for nations, or large groups within nations?

Most quantitative measures of quality of life are based on standard of living statistics, which in turn are based mostly on income or other purely economic factors.

A group called the Human Development Project (the Project) finds fault with that approach, saying that other measures are needed to truly understand how well people are living:

The indicators most frequently deployed in evaluating public welfare-GDP, the Dow Jones and NASDAQ, consumer spending and the like-only address one aspect of the American experience.

The human development model emphasizes the broader, everyday experience of ordinary people, including the economic, social, legal, psychological, cultural, environmental processes that shape the range of options available to us.

This approach has gained support around the world as a valuable tool in analyzing the well-being of large population groups.

The Project has developed a rating system called the Human Development Index which measures achievement in three basic categories:
• long and healthy life (as indicated by life expectancy at birth)
• access to knowledge (indicated by al degree attainment and school enrollment)
• decent standard of living (indicated by median earnings)

By applying these measures, the Project has developed the following Human Development Index scores for the United States, by race and gender:

American Human Development Index (HD) Rankings by Race and Gender, 2005

* Enrollment can exceed 100% if persons 25 years old or more are enrolled in school.
Source: The Measure of America: American Human Development Report 2008-2009

Of note:

National Urban League: Evolve or Die

In the wake of the mortgage meltdown, many (overwhelmingly conservative and Republican) critics have tried to make scapegoats out of “unqualified minority home purchasers” in general, and the Community Reinvestment Act, in particular. The CRA is a federal law which was designed to expand home-ownership for minorities in light of a long history of discriminatory lending by American banks.

This idea has been debunked as being wrong and even offensive. Marc Morial, who heads the National Urban League, gave compelling testimony before the Senate last week in which he defended the CRA, and decried that black borrowers were the subject of “blame the victim” attacks.

I hoped that Morial’s remarks, which I heard on C-SPAN radio, might be put on YouTube so I could post it to this blog. No such luck.

I thought that maybe the NUL website would have a transcript of his testimony, parts of which I could cut and paste onto this blog. No such luck.

What’s up with that?

In times like these, groups like the NUL should be taking advantage of modern communication tools, like YouTube, to spread its message. But that doesn’t seem to be happening.

Recently, I’ve been reading the book The Practical Progressive: How to Build a Twenty-first Century Political Movement by Erica Payne. Payne makes the comment:

After the defeat of Republican Barry Goldwater in 1964, conservative philanthropists began to build a set if ideologically-aligned institutions-academic centers, think tanks, legal advicacy institutions, watchdog groups, single issue groups, community organizations and media vehicles-to change the intellectual and political climate of the country.

In the last 40 years, this “infrastructure” has supported and promoted conservative ideology so effectively, that it ultimately assured its political dominance.

In 2002 progressives began to wake up to this enormous structural disparity. We began to understand that our candidates are losing not because they were bad candidates but because they were structurally outmatched.

We were sending David to fight Goliath without a slingshot. So we began to build new institutions outside of politics and to transform old organizations to meet the challenge.

Payne’s book contains profiles of several dozen progressive organizations, such a ACORN and ColorOfChange.org, which are part of the new “progressive infrastructure” that is working for positive change in our society.

The NUL was conspicuously absent from the groups which are included in the book. Apparently, it is not sufficiently transformed to be considered a reliable force among the network of progressive groups.

I’ll discuss this some more in a follow-up to this post. But the point I want to make now is this: It’s past time for groups like the NUL to evolve into effective 21st century vehicles for African American advocacy. That’s not just my opinion; the belief is widespread among many observers in the black community. Reportedly, the membership in these organizations is declining, and their reputation is taking a hit as well.

I’m not expecting the NUL or other older black groups like the NAACP or SCLC to change overnight. But is it too much to expect that these groups use Internet platforms like YouTube to capture and publish their message en masse? If they’re unable to do basic tasks like that, then real change within these organizations is going to be a long time coming.

Reversal of Fortune: The Economic Downturn for Blacks Under George Bush

Are you better off now than you were before George W. Bush took office? No. Heck no.

In an earlier post, I pointed to statistics which showed how the American economy deteriorated during the George Bush administration. But that looked at the overall economy. It didn’t focus on how the economic condition of African Americans was affected during the Bush era.

That focus is provided in a briefing paper from the Economic Policy Institute titled Reversal of Fortune: Economic gains of 1990s overturned for African Americans from 2000-07. The paper details how poorly African Americans have fared since Bush took control of the economy from Bill Clinton:

On all major economic indicators—income, wages, employment, and poverty—African Americans were worse off in 2007 than they were in 2000. Although the American economy has grown signifi cantly since 2000, African Americans have not shared in America’s prosperity. The current economic downturn and the subprime mortgage crisis bode ill for the immediate future for African Americans.

Overall, the economic condition of African Americans has worsened since 2000. Wage growth for the median black worker has stagnated, incomes and employment have declined, and poverty has increased. This Briefing Paper shows:

• African American median family income declined by $404 or 1% between 2000 and 2007. Th is is the first decline in black median family income in a business cycle of this length since World War II. Single, African American, maleheaded families saw the largest percentage decline—9.1%—in median family income.

• Worker productivity grew 19.2% between 2000 and 2007, but wage growth for American workers generally and African American workers specifically has stagnated. For black workers 25 to 54 years old, the median black weekly wage fell 0.6% from 2000 to 2007.

• The African American unemployment rate increased by 0.7 percentage points between 2000 and 2007, while the employment rate shows a 2.4 percentage-point decline, or three times the number not working indicated by the change in the unemployment rate.

• The black home ownership rate, after increasing to 49.1% in 2004, dropped to 47.2% in 2007. Because the foreclosures from the housing crisis have continued into 2008 and will likely continue into 2009, the African American home ownership rate is also likely to decline into 2009.

• The tight labor market of the late 1990s led to the largest decline in African American poverty since the 1960s. From 1989 to 2000, the black family poverty rate fell by 8.5 percentage points. In contrast, from 2000 to 2007, the African American family poverty rate increased 2.8 percentage points.

• Crime and criminal justice policies are increasingly entangled with the economic outcomes of African Americans and particularly of black men. If one adjusts the employment rate of African American men by counting men in prison as non-working, the already low African American male employment rate drops by about 3 percentage points.

This paper was released in mid-September, and pre-dated the economic crisis that led to the so-called Wall Street bail-out bill. Many experts are saying that economic conditions will probably worsen in the next few months.

There’s an old saying that “when white America catches a cold, Black American catches pneumonia.” If white America goes into a recession… will black America go into a depression? We’ll see…

Meltdown: Black Home Ownership Takes a Perilous Drop

In a briefing paper titled Reversal of Fortune, the Economic Policy Institute details how the economic gains made by African Americans in the 1990s were overturned during the Bush era. The paper is required reading.

One of the more striking examples of black America’s economic downturn is the depressed rate of black home ownership as a result of the subprime mortgage crisis.

Source: Economic Policy Institute

As described in the paper, we may be seeing a historic loss wealth of black wealth that could continue into next year:

For most Americans, their home is their most important source of wealth. From 2000 to 2004, it appeared that African Americans were making progress in wealth-building. The home ownership rate for African Americans increased from 47.2% in 2000 to 49.1% in 2004. But this increase was short lived. In 2007, the black home ownership rate was back down to its 2000 level of 47.2%.

African Americans were disproportionately involved in the subprime mortgage market and those mortgages have had a high rate of foreclosures. Many subprime mortgages were made to refinance existing loans, and thus it is not only homes purchased during the housing bubble that are at risk.

Since the foreclosures have continued into 2008 and will likely continue into 2009, the African American home ownership rate is also likely to decline into 2009.

The impact of the housing crisis extends to African Americans who were not subprime borrowers. Home owners who merely live in communities with a high rate of foreclosures will likely see the value of their homes decline. High levels of foreclosures lead to increased vandalism and crime and declining tax revenues for communities. Renters who are renting a foreclosed property face possible eviction.

When one calculates the combined effect of all of these wealth-sapping factors, it is clear that we are witnessing a historic loss of wealth among African Americans.

MUST READ! The American Prospect, October 2008 Issue on Race and the Economy

I want to give my readers a Buy recommendation for the October 2008 issue of American Prospect magazine. It contains a Special Report insert titled The Color of Opportunity – Narrowing Racial Divides and Expanding Prosperity for All that is required reading.

The American Prospect is a progressive magazine that covers political, economic, social, and cultutral issues. Thanks to the support of several foundations, the Prospect has prepared a detailed review of the economic state of Americans in general and African Americans in particular. Thankfully, they’ve made the Special Report available on-line.

This graphic shows several of the articles in American Prospect’s Special Report on race and economics.

The tone of the Special Report is set by the lead piece “The Economic Crisis in Black and White,” which states:

Today, the U.S. economy is facing one of its greatest challenges in decades. The recent seven-year economic expansion netted a record for producing the fewest jobs since Herbert Hoover was president. The median income for American households has not kept up with inflation. So as the economy slows, households are in a weaker position than they were when the expansion began in 2001.

Yet, while the economy has failed American workers — generating more inequality than growth, more debt than income — discussing solutions to America’s economic woes rekindles America’s racial cleavage. White voters are asked to weigh issues such as trade and its effects on wages and jobs, or the complications of providing health care and its effects on take-home pay and retirement benefits, or the rising costs of college tuitions on their children’s futures.

But black voters are too often given a lecture on presumed black pathologies — a lack of interest in education and the skills needed to compete, a weak sense of family, and high criminal proclivities.

One could easily assume that white America was doing fine, and if black America would only get its act together, black Americans would be doing just as well. You might almost believe that the hundreds of thousands of jobs America has lost in manufacturing in the last seven years were only lost by lazy, poorly educated African Americans too busy having babies to get the skills to keep their jobs. You might almost believe that gas and food prices were rising only for black Americans, preventing only their wages from keeping up with the rising costs of living.

This bifurcation in the discussion of America’s economic woes blocks identification of the true similarities and differences among workers of different races. The usual frame leads African Americans to experience white views as insensitive to their plight — while for whites it dangerously masks the broader rise in economic inequality.

Whites too easily see the black economic condition as the result of failing lifestyles, not a failing economy. Blacks too easily put the blame on either their own shortcomings or on discrimination.

Properly understood, what has befallen the black community should be viewed as water coming into the steerage section of an ocean liner — special problems for those getting wet but a clear sign the entire ship is in trouble. The current debate on black pathologies is delaying a call for getting out the lifeboats and ensuring a fair distribution of those lifeboats — and building a more sea-worthy ship for the next voyage. So far, the result has been, as with the Titanic, lifeboats for the rich in first class.

The articles in the Special Report are well written, informative, and enlightening. This is must reading, especially given the increasingly held view among experts that the American economy is going to get worse before it gets better.

Obama Campaign Addresses Black Economic Issues; Did You Hear About It?

{Hats off to the South Florida Times, an African American news source, for the article referenced below.}.

Some observers of the Obama campaign complain that it is not doing enough to speak to the specific concerns of the black community.

But what if the campaign was speaking to the concerns of the black community… and nobody knew it?

Consider this article in the South Florida Times, in which the Obama campaign does speak specifically to African American economic issues. I don’t recall any reporting of this in the mainstream press. But then, this is not of real interest to the “general public”:

Black unemployment in the United States reached 10.6 percent last month, up from 9.7 percent in July and an average of 8.8 percent during the first quarter of 2008, according to the Bureau of Labor Statistics.

On Tuesday, Sept. 9, the Obama campaign seized on the statistic to attack both the Bush administration and the John McCain campaign.

The McCain campaign in Florida did not respond to a request for comment.

“I wish we could say that reaching 10.6 percent is the highest unemployment we’ve had under this administration,” said former Bill Clinton administration Labor Secretary Alexis Herman during a conference call with members of the black press Tuesday. “But we’ve actually seen rates as high as 11.5 percent.’’

Herman and other surrogates said economic issues would take center stage in an Obama presidency, and they assailed what Herman called “a constant economic deterioration for the African-American community” under George W. Bush. The overall unemployment rate rose to 6.1 percent last month, with unemployment for whites at 4.9 percent and for Hispanics at 7.7 percent.

“We’ve actually lost more than 500,000 jobs in the African-American community,” since Bush took office in 2001, including 55,000 jobs since December 2007, Herman said, citing U.S. Department of Labor statistics and contrasting the grim numbers of what she called record low unemployment, “the lowest since the Department of Education began collecting the data” during the Clinton years.

“The fact is that when you look at the unemployment numbers” under Bush, she said, “we have lost good jobs in our community, particularly in construction and manufacturing, where we are disproportionately employed. Any attempts to continue to open the doors of the middle class and to move us up the economic ladder really have been stopped dead in its tracks by this administration.”

Herman said that by contrast, Obama has proposed increasing the minimum wage from the current $6.55 to $9.50 by 2011, which she said would disproportionately help black women, plus a “long-term plan to target urban areas” for economic development, rebuilding the infrastructure of American cities, ending tax breaks for employers who ship jobs overseas and providing tax breaks for companies that create jobs in the U.S.

It is worth noting that the comments from the Obama campaign on the black economy were made around the same time as the “lipstick on a pig” controversy. Guess which of those two news stories was widely reported, and which was not?

I encourage you to go the South Florida Times’ website to read the rest of the article, and browse through the site’s other contents as well.