The Plunging Homeownership Rate for African Americans
Remember that great NPR piece about the new data showing a 3 percentage point drop in homeownership rates for African Americans? No one else is likely to remember it either, because NPR didn’t run it. As the subprime crisis continues, with foreclosure rates approaching record level, there has still been little attention given to one of the factors that led to this crisis: the ideology of homeownership.
For years many conservatives, and even some liberals, touted the virtues of homeownership as an end in itself. They argued that this was the way for the poor, and especially minorities, to gain economic security and enter the middle class. This was really bad advice to give people in the middle of a housing bubble.
The rate of homeownership among blacks increased sharply from 1994 to 2004, rising from 42.3 percent in 1994 to 49.7 percent in 2004. In just three years it has now fallen back to 46.7 percent and it is virtually certain to decline further in the next year and a half. In other words, the big push to increase African American homeownership rates was in reality a big push to increase foreclosure rates among African American households, but the ideologues of homeownership were too blind to notice the impact of their policies.
Homeownership can be an effective way to provide good secure housing. It can also be an effective mechanism for allowing families to accumulate wealth. However, this is not true everywhere and always. And it certainly was not true when the house prices were pushed up by a speculative bubble. Millions of moderate income families will face be faced with foreclosure in the years ahead in part because of a housing policy driven by ideology rather than reality.
We can and should try to help moderate income families facing foreclosure. One possible mechanism, is my “own to rent” proposal. But we should also point a finger at the proselytizers of homeownership. If progressives ever pursued a policy of social engineering that had such negative consequences it would be a highlight of political debates for the next 50 years. We should not allow the blunders of the conservative ideologues to be swept quietly under the rug.
was really bad advice
I always have to laugh at the word "homeownership" because only a minority of folks now "own their home;" these days, most remain "home debters" and associate their home with consumption (i.e. a part of the ATM network) then stability (bought, paid-off and secure).
This was really bad advice to give people in the middle of a housing bubble.
it's always been bad advice since home ownership has become a very environmentally destructive behavior that requires "multiple earths" if this stupidity continues.
i.e. not only does sprawl destroy wilflife habitat and farmland, but it requires oceans of fossil fuel (literally) to protect and develop it.
To boldly go...
November 14, 2007 2:31 PM | Reply | Permalink
Um, if you read the news, homelessness is becoming 'equal opportunity'...all this
mortgage larceny crap has jeopardized the future
for millions and millions of people, not just 'african-americans', but ALL americans, white, black, asian, hispanic, male, female, or otherwise.
When you've got assholes like Bill Gates out
there who've decided that they're going to play
funny business with the economy, and government
people that can't pry their fingers off the
'spend' button, there's going to be consequences.
Then you have the real estate globalists, and
the banking loan sharks and the rest of the
charlatans out there, oh and don't forget the
credit card people and the fact that our
country's over 9 T in the red, it's just gotten
STUPID. 10 years ago, you could do something
with 12 dollars an hour. Now, you hand it all
right back out to keep the key to your apartment.
No, this market manipulation crap is very
deliberate, and there's lots of poor people out
there who are less than one paycheck from
disaster, some already tens if not hundreds of
thousands in debt. 'Home equity'. Yeah. Grand
larceny, is more like it. I hope some of their
banks go out of business over all of this.
November 14, 2007 2:51 PM | Reply | Permalink
First, you're describing a reduction in homeownership by Blacks of 3% over a period of 3 years. That's hardly a "plunge".
Of concern, yes, especially considering Blacks have the lowest homeownership rate of any racial group in this report. I would be more concerned about this fact above all others.
Second, how does your analysis account with the fact that Hispanic homeownership rose by 2.7% over the same period, and "All Other Races" increased by 1.9%? At the same time other races were increasing homeownership, Whites apparently decreased at 0.9% over the same period.
Third, I'm sorry, I searched through the report, and I find no mention of foreclosures. How do we know there is a link between the decrease in homeownership and foreclosure? Of course, anecdotally there are plenty of reports of increased foreclosures, but I haven't seen a link yet racially. There is a noticeable rise in home rental over the same period. Regardless, there are no numbers in the report (racial, regional, income, or otherwise) which indicates the foreclosure rates.
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November 14, 2007 3:08 PM | Reply | Permalink
Re: it's always been bad advice since home ownership has become a very environmentally destructive behavior that requires "multiple earths" if this stupidity continues.
This is only true if you purchase a new home in some newly built subdivision that replaced a natural area (OK, we'll we'll extend that to inlcude farmland too). If you buy an existing home in a long settled area you aren't doing any harm. But on the other hand too if you rent an apartment in a new development you are doing the same harm a homeowner in a new develoopment does. It isn't whether you rent or own, but where that matters.
November 14, 2007 3:54 PM | Reply | Permalink
Not to be pedantic but a drop from 49.7% to 46.7% is a 6% not 3% drop in home ownership.
November 14, 2007 3:57 PM | Reply | Permalink
you're just saying that it depends on your reference population. since the number o "household formations" is a favorite statistic of real-estate agents, the 3% number makes sense?
To boldly go...
November 14, 2007 5:41 PM | Reply | Permalink
"It isn't whether you rent or own, but where that matters."
you can read the numbers (source) :
USA, 79 square feet of living space per capita
CHINA, 25 square feet of living space per capita
JAPAN, 37 square feet of living space per capita
SOUTH KOREA, 26 square feet of living space per capita
and people wonder why our C02 emissions are so bad.... i.e. when you have more space, you need more energy to heat and cool it as well as more energy to make "energy efficient windows," etc...
sprawl also leads to more roads (asphalt == oil), police and ambulance (even more oil) and longer phone, power and cable lines (which leads to even more wasted energy).
personally, I'd hope that the democrats stop being stupid and propose that we revert land back to nature so it can be restored to wetlands and wildlife habitat.
I'll admit, I was happy to hear San Francisco's mayor proclaim that: "As long as we're addicted to oil, things like this (oil spills) will happen."
It isn't whether you rent or own, but where that matters.
if people want to buy flats instead of rent them, that's fine with me; that would preserve the tax base while promoting the end of the last generations love affair with building "personal pyramids" to live in.
many of those same folks like to call george bush a "war criminal" but, as I think about it, that's attacking a "straw man." i.e. they could be called "environmental criminals" for not giving a damn about the earth and raping it for their own pleasures...
howerver, folks like al gore-- who use the equivalent of 12 homes worth of electricity a month, would revolt and defend the american way by using enronish accounting tricks that greenwash their personal environmental disasters away.
I agree that the changeover would require resources but what we're doing now is a path to disaster-- any way you look at it, but people like status symbols, even bloody ones.
To boldly go...
November 14, 2007 5:43 PM | Reply | Permalink
It depends on syntax. The number of black homeowners has dropped by 6%. That sentence is more accurate than the use of 3. To use 3 you should then also define the reference population, whereas the sentence I just used assumes an unambiguous reference population.
November 14, 2007 7:32 PM | Reply | Permalink
The issue should not be restricted to the African-American position. Should the left be happy if AAs are losing their homes only at the rate that WASPs are? There is no question that they suffer more, but the issue transcends race,creed,etc. Class warfare is the issue. I wont bother to iterate the reasons why this is happening. We all know them. Given the current situation, how can we make America a country again?
November 14, 2007 7:48 PM | Reply | Permalink
Home ownership certainly is a good thing, relative to being a perpetual source of rent for rentiers.
The housing bubble was inflated to make debtors and renters of "home owners" with the cooperation of the FED, finance sector, and government and quasi-government agencies, which have allowed to the banks and housing sectors to make blockbuster profits and externalize losses onto the public. The public got taken for a ride, coming and going.
The concept of "home ownership" is separate from home size. Yes the McMansions are terrible, but there are plenty of reasonably sized homes also effected by the bubble.
Also, once we switch to renewable energy, there's nothing fundamentally wrong with tract housing, unless one wants giant lawns with pesticides and such. They're not for me, but they can be cleaned up considerably.
November 14, 2007 8:03 PM | Reply | Permalink
It all depends on the "compared to..." qualifier.
It's a 6% decrease compared to the 2004 numbers.
It's a 3% decrease compared to the African-American population as a whole.
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November 14, 2007 9:35 PM | Reply | Permalink
Re: you can read the numbers (source) :
Which has nothing to do with buying or renting. It has to do with how American dwellings are designed and constructed
Re: sprawl also leads to more roads
Agreed, but that too has nothing to do with buying or renting. In principle we could all buy homes but live in fairly compact cities and suburbs rather than far sprawled-out suburbs. The trick would be to get people to redevelop urban land rather than constantly develope farmland out in the boondocks.
November 15, 2007 3:23 AM | Reply | Permalink
If it is class warfare, why did hispanic home ownership increase during the same period?
Jack
November 15, 2007 4:32 AM | Reply | Permalink
the unambiguous construction is "by three percentage points."
November 15, 2007 4:48 AM | Reply | Permalink
"First, you're describing a reduction in homeownership by Blacks of 3% over a period of 3 years. That's hardly a "plunge"."
The 3% was a cherry picked high. a more apple to apples( same quarter or yearly quarter average) comes out around 2.2% a bit above for the first, a bit below for the later.
There is a dramatic drop off of black ownership in 2007 of around 1.3% if this trend continues then there may be a problem But these numbers bounce back and forth as much as a half a point from quarter to quarter.
Jack
November 15, 2007 6:20 AM | Reply | Permalink
yes, rentals can be environmentally stupid too. typically, I associate renting with high density housing but it's by no means a perfect correlation since some people buy high density housing too. and renters rent stupidly big homes. around here, condo conversions let people live in their old apartments for 5 times the price.
to me, it's sad that both the R's and D's supported non-sustainable building practices simply for the money it generated.
November 15, 2007 7:12 AM | Reply | Permalink
"Home ownership certainly is a good thing, relative to being a perpetual source of rent for rentiers."
a home is a depreciating asset. when I see how much people spend on their homes, furnishing them; heating them; caring for the laws; paying interest to the bank; etc..., rent looks like a bargin and, in my case, I also chose to rent a low square footage place.
my grandmother bought her house for $35,000 and now it's worth $500,000; the downside is: she pays $7,000 a year in taxes and, even without a mortgage, her living costs are 4 times higher than mine. I save the difference and feel as wealthy as she is on paper.
"but there are plenty of reasonably sized homes"
based on the "international averages" that I listed, "owned homes" are way too big.
US marketers know that supersizing portions yields a big return; supersizing cars (read SUV's) yields a big return; and supersizing homes yields a big return.
and-- to blunt the immorality of it all, personal comfort and achievement is emphasized over sustainability and the impact on future generations.
"Also, once we switch to renewable energy, there's nothing fundamentally wrong with tract housing"
it depends on the square footage. we know that, like high mpg cars, low square footage homes are also better. additionally, if homes (owned or rented) are in lower density sprawl, they corrolate to more roads, more communting, etc...
"Also, once we switch to renewable energy, there's nothing fundamentally wrong with tract housing"
renewable energies won't help because, for example, people thought that paper usage would go down because of computers but the opposite happened; another anecdote: people usually eat higher quantities of lowfat foods even though that means more calories.
the reason why I'm pro-life is that abstinence is an important (read reduced consumption) for a healthy environment and, unfortunately, it's a difficult ethic for people to attain.
my big beef: because of sprawl, animals, for example, lose their migration routes and the planet loses it wetlands.
maybe government should start requiring an environmental impact statement for every home out there... and give each home an "mpg-like rating."
"but there are plenty of reasonably sized homes also effected by the bubble."
yes, people paid stupid prices for 2 bedroom homes while organizations like Acorn cheered them on. unfortunately for them, people got to see that left leaning housing advocates were a bunch of fools who pushed the ponzi scheme and pushed people and communities into poverty.
To boldly go...
November 15, 2007 8:34 AM | Reply | Permalink
your qualifications are important I think. the NAR (national association of realtors) will use year over year gains when they are bigger and month over month gains when they are bigger, etc...
To boldly go...
November 15, 2007 8:40 AM | Reply | Permalink
at least in my neighborhood, it was ecomonics... the mexican immigrants are very skilled at building homes and went from lower level jobs, like sheet rocking, to building entire homes.
To boldly go...
November 15, 2007 8:41 AM | Reply | Permalink
"There are three types of lies - lies, damn lies, and statistics." - Mark Twain.
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November 15, 2007 9:10 AM | Reply | Permalink
Agreed. That's why I chose the same reference quarter (3Q 2004) for the percentages of Hispanic and "Others". As long as he uses the same metrics throughout, I don't really have a problem. The problem I have with his numbers is that he does not compare African-American numbers with other groups.
The biggest problem I have with this post is that Mr. Baker shows no correlation with African-American homeownership drops with an increase in foreclosures. I'm not denying there maybe be a link, but none of the information he presented really shows it (nor even mentions foreclosures). Or, more importantly to his argument, that there is a disproportionately larger percentage of foreclosures by African-Americans than other groups.
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November 15, 2007 9:12 AM | Reply | Permalink
Well I was trying to help Baker's case. 6 gives more support to the case than 3 below the headline "plunging prices" and given the English syntax it is also more accurate.
November 15, 2007 12:16 PM | Reply | Permalink
when I see how much people spend on their homes, furnishing them; heating them; caring for the laws; paying interest to the bank; etc..., rent looks like a bargin
Re: You still have to heat and furnish an apartment and if you rent a house rather than buy you'll have to care for the yard (and besides some of us actually enjoy gardening)
November 15, 2007 4:41 PM | Reply | Permalink
sorry, but a 3 pp drop in 3 years is a "plunge." Please find another comparable decline in homeownership rates. The numbers do jump around, but I don't think that any serious person would dispute that this number is far more likely to go lower than higher. So, no apologies for the description here. It is accurate.
November 15, 2007 8:24 PM | Reply | Permalink
"You still have to heat and furnish an apartment"
I live in a small studio to minimize the need for heat and furnishings.
i.e. when my friends come over, they sit on lawn chairs. that way, I can reconfigure the space after they leave. i.e. i'm fascinated with how the japenese and europeans readapt their space as needs change during the day.
i.e. my computer and printer are on a utility cart that "moves into my space" when it's needed and "moves out of it" when it's not.
I'm also told that mexican immigrants use bunk beds because they can only afford a one bedroom but, as a result, the environment wins. for whatever reasons, americans want their own bedroom, sewing room and home office so the "american dream" becomes the "american C02 nightmere."
"and besides some of us actually enjoy gardening"
where I live, we have community gardens so "having a yard" isn't a requirement for gardening. at the University of San Diego in La Jolla, I believe that some high density student housing comes with garden plots.
The problem with homeowners is their vanity because "they have to own something." Native Americans, of course, laugh at this "need to own" since our time on earth is transient. Unfortunately, our ecological footprint is not.
To boldly go...
November 16, 2007 9:27 AM | Reply | Permalink
You say tomayto. I say tomahto. And no, I don't see a 3% point drop in 3 years a "plunge."
Let's look at the percentage point movements based on 2Q numbers... -1.7, -0.8, -0.9.
Also, there's that little bit of fine-print at the bottom of the table...
I don't deny that the numbers have the possibility to go lower. I just deny there is a plunge - an emotionally loaded term with no quantifiable definition, in my opinion.
I also would still like to hear how, if rising home ownership rates equated to rising foreclosures for minorities (I'm expanding over your comments regarding just African-Americans), that Hispanics and "Others" rose over the same period? Why White home ownership decreased over the same period?
And also, I would still like to see the foreclosure rates by race.
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November 16, 2007 11:25 AM | Reply | Permalink
On a recent visit I learned that a much smaller percentage of the population in Germany own homes than is the case in the US. Renting there is more the norm and there is no housing shortage. Community gardens and public parks also seem to be prevalent and these appeared to be in active use, as opposed to here, where people have large yards for show but hardly ever are seen in them.
Does anyone know more about what government policies or other reasons are responsible for this?
November 17, 2007 7:55 PM | Reply | Permalink
Re: I live in a small studio to minimize the need for heat and furnishings.
You can do that, but taking a vow of poverty as you seem to have done isn't practical for most people, especially people with children. All in all I reject lifestyle fascism whether it comes from the Left or the Right. If I want to have mad sex with my (same-sex) lover, or with twenty same sex lovers it's nobody's business but my own, and ditto if I want to (and can afford to) to live like God on a holiday.
Re: Native Americans, of course, laugh at this "need to own" since our time on earth is transient. Unfortunately, our ecological footprint is not.
Everything in this world in transient-- everything. Some old song claimed that "nothing lasts forever but the Earth and sky", but the song was wrong: even Earth and sky will not exist forever. And again: poverty, like celibacy, may be a very fine thing for those who chose monastic vows, but I have not and have no desire to live like a monk.
November 19, 2007 3:45 PM | Reply | Permalink