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.

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.