Community Development Financial Institution (CDFI), The Change Company, announced the release of the newly sponsored Brooking Institute report, “Homeownership, racial segregation, and policy solutions to racial wealth equity,” that provides an empirical analysis of racial segregation across several cities in the U.S. including disparities in homeownership, home valuations, and access to banking services.
“There’s no denying that a racial wealth gap exists in this country, but to fully address the problem we must acknowledge the depth of its roots,” said The Change Company founder and CEO, Steven Sugarman. “The findings in this report can aid in our work to level the playing field for Black, Latino, and underserved communities by helping bring social and racial equity to banking and lending services across the country.”
Authors of the report, Andre Perry and Dr. Rashawn Ray, identify a number of factors that are holding back the Black community, especially when it comes to building generational wealth. Policy solutions are needed to promote access to fair mortgages and loans as well as basic banking services, and prevent discrimination from affecting appraisals and credit scoring. A major factor in wealth disparity is access to banking services, with 46% of Blacks and 32% of Hispanics considered unbanked or underbanked, which limits options for saving, investments, loans, and other financial services.
Even Black families who own homes face an enormous disparity in home valuations when comparing majority-Black neighborhoods to minority-Black neighborhoods. Homes in predominantly Black neighborhoods are valued at $48,000 less than predominantly white neighborhoods — the cumulative loss of all Black homeowners in this country is $156 billion. This impacts resale value, refinancing opportunities, and other strategies to build wealth through homeownership.
“This report confirms what we already knew – that equal access to homeownership has yet to be achieved in this country,” said Reverend Everett Bell Jr., chair of The Change Company community board. “The Change Company exists in part to address that very issue. Investing in research and identifying policy solutions that increase access for Black Americans and other underrepresented groups to fair mortgages, appraisals, underwriting practices, and access to critical banking services is of the utmost importance to The Change Company. As a CDFI, our primary goal is to uplift communities that traditional financial services neglect. To do this at scale and build a roadmap for change, we need to better understand the economic, social and historical inequities that have led us to where we are today and build solutions that will brighten the future for generations to come.”