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Black Homeowners are Hurt
Most by Neighborhood Segregation
WASHINGTON D.C. - - The Brookings Institution Center on Urban and Metropolitan
Policy today released, "The 'Segregation Tax': What Racial Segregation Costs
Black Homeowners," a report which examines homeownership as a wealth creation
tool for different ethnic and racial groups in the nation's 100 largest metropolitan
The report, written by David Rusk, former mayor of Albuquerque and author of several
books on regionalism, finds that after equalizing for income, black homeowners had
substantially less value in their homes than white homeowners. Home value and equity
are the typical American family's most important financial asset, and often the
only vehicle for passing wealth to children and grandchildren. In recent years,
federal policies have focused on increasing the percentage of Americans who own
homes - particularly minorities, since their homeownership rates have lagged behind
those of whites. While homeownership has increased for all racial groups, it is
not clear whether homeownership has increased the assets of all minorities equally.
The report's key findings are:
According to Rusk, as more and more white homebuyers
shunned increasingly black neighborhoods, demand for housing and price competition
were reduced in those neighborhoods, home values were depressed, and the "segregation
tax" grew. Rusk further contends that eliminating the "segregation tax"
requires stable, integrated neighborhoods. The report offers the following policy
recommendations: (1) amend zoning ordinances to include more low and moderate income
homes; (2) rethink school enrollment policies to achieve economically balanced student
bodies; and (3) vigorously enforce fair housing and fair lending laws.
Home values for black homeowners were 18 percent
less than values for white homeowners. For every dollar of income, white homeowners
owned $2.64 worth of house. By contrast, black homeowners owned only $2.16 worth
This gap in home values, or "segregation
tax," results primarily from a high degree of racial segregation in neighborhoods.
The higher the segregation, the wider the home value gap; conversely, the lower
the segregation, the narrower the gap.
Black homeowners in metropolitan areas in the
Midwest were subject to a higher "segregation tax" than their counterparts
in other parts of the U.S. Racial segregation was found to be the highest in metropolitan
areas in the Midwest.
Both black and white homeowners were hurt by high
levels of racial segregation. For example, a closer examination of Philadelphia
census tracts reveals large drops in the ratio of home value-to-income for all homeowners
as the percentage of minority residents increased.
"In addressing these disparities," said Bruce Katz, Director of the Brookings
Urban Center, "state and local governments need to recognize the pervasive
role of race in shaping metropolitan growth patterns and undertake sustained efforts
to give African-Americans and other minorities greater access to educational and
economic opportunities that create long-term wealth."