A shattered foundation: black homeowners are underwater

From the Washington Post online:

African Americans for decades flocked to Prince George’s County to be part of a phenomenon that has been rare in American history: a community that grew more upscale as it became more black.

The county became a national symbol of the American Dream with a black twist.

Families moved into expansive new homes, with rolling lawns, nearby golf courses and, most of all, neighbors who looked like them.

In the early 2000s, home prices soared — some well beyond $1 million — allowing many African Americans to build the kind of wealth their elders could only imagine.

But today, the nation’s highest-income majority-black county stands out for a different reason — its residents have lost far more wealth than families in neighboring, majority-white suburbs.

And while every one of these surrounding counties is enjoying a strong rebound in housing prices and their economies, Prince George’s is lagging far behind, and local economists say a full recovery appears unlikely anytime soon.

The same reversal of fortune is playing out across the country as black families who worked painstakingly to climb into the middle class are seeing their financial foundation for future generations collapse.

Although African Americans have made once-unthinkable political and social gains since the civil rights era, the severe and continuing damage wrought by the downturn — an entire generation of wealth was wiped out — has raised a vexing question: Why don’t black middle-class families enjoy the same level of economic security as their white counterparts?

...The recession and tepid recovery have erased two decades of African American wealth gains.

Nationally, the net worth of the typical African American family declined by one-third between 2010 and 2013, according to a Washington Post analysis of the Federal Reserve’s Survey of Consumer Finances, a drop far greater than that of whites or Hispanics.

The top half of African American families — the core of the middle class — is left with less than half of the typical wealth they possessed in 2007. The wealth of similarly situated whites declined by just 14 percent.

Overall, the survey found, the typical African American family was left with about eight cents for every dollar of wealth held by whites.

Not only is African American wealth down, but the chances of a quick comeback seem bleak. Just over a decade ago, homeownership — the single biggest engine of wealth creation for most Americans — reached a historic high for African Americans, nearly 50 percent.

Now the black homeownership rate has dipped under 43 percent, and the homeownership gap separating blacks and whites is at levels not seen in a century, according to Boston University researcher Robert A. Margo...
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Link: http://www.washingtonpost.com/sf/investigative/2015/01/24/the-american-dream-shatters-in-prince-georges-county/