African Americans Losing Financial Ground
Today is a free foreclosure-prevention workshop, sponsored by the city of Orlando, received only six people. Orange County foreclosure rate has shot up to 70 homeowners a day. “If they do not have the sense to show up and get out of trouble, something is very wrong,” City Commissioner Daisy Lynum said at the workshop at the Northwest Community Center in Pine Hills. “I get a call every day regarding foreclosure.” While the housing crisis has cut across all incomes and ethnic groups, it has hit the black community especially hard where home ownership is lower and home equity has become the main source of wealth.
In metro Orlando, 74 percent of white families are homeowners, compared to only 47 percent of blacks. Studies show that whites have 90 percent of the wealth. But when home equity is subtracted, the wealth of blacks drops to 1 percent.
“It has a deeper impact for African-Americans because property is a primary and historic basis of wealth. They don’t have a business to pass to the next generation,” Lynum said.
The Economic Policy Institute found that for blacks the median income was $11,800, compared to $118,300 for whites. Subtract home equity, and black have only $300 in net assets, while white have about $36,100. These numbers indicate that most black families are low income, no life insurance, no savings, no retirement, and no investments. They may have car loans and credit card debt however, which reflects negative net worth.
Since the housing market crisis, blacks have begun to lose the wealth they had gained in 1992. The gap is expected to increase as the subprime lending market has crashed, causing many black families to lose the homes, they were finally able to afford.
“Subprime lending has been a mechanism for African-Americans to become homeowners. This was one way for African-Americans to gain some access to wealth,” McCarthy said. “Now the reverse is going to happen.”
Add to the mortgage crisis the rising cost of living — $4-a-gallon milk, and gasoline headed the same direction — and the economic gains blacks have made in recent decades could well disappear.
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