Homeownership Gap For People of Color in Wisconsin Is Big; Communities and nonprofits are trying to shut it down

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For Greg Lewis the home was beautiful. The cozy and inviting two-bedroom Milwaukee home had a finished basement, two and a half car garage, an attached apartment, and a yard.

He had kept an eye on it for 42 days only to learn that the appraisal or valuation of the property was lower than he expected. Lewis thought it would cost about $ 100,000 as another house on the same block sold for $ 130,000. However, the estimate was only $ 90,000 – meaning banks have limited borrowing money to buy the home.

He blames racism for the difference. And he’s not alone. Experts and some homeowners say historical racism continues to play a role in lowering the value of black-owned homes, especially in black-majority neighborhoods.

“Some houses can be beautiful houses and the valuation falls short and then you have to deal with it because they find out that a Black person owns them and sells them,” said Lewis, who had to watch the house to buy.

Owning a home enables families to preserve and grow wealth, increase their borrowing capacity, and reduce housing costs. Lower valuations are one of the many wealth creation barriers black Americans face.

Wisconsin has one of the lowest black home ownership rates in the country; only 26 percent of black residents own their own house, compared to the white home ownership rate of 72 percent.

Experts say historical, discriminatory practices like redlining – areas where banks refused to lend money – and racial bargaining bans selling to black buyers have combined with modern racism and overall lower incomes to disadvantage black Americans and affect their ability to buy a home.

Lewis has now stopped looking for an apartment because he has been outbid so many times.

“It took a lot away from me,” he said. “I was depressed. Finding a house is really painful, and at the end of the day you want to find something that suits you, something you like, so that’s the hardest part.”

The National Association of Realtors found in a 2019 study that owning a home remains elusive for many black buyers, with 43 percent of black households able to buy the home at typical price compared to 63 percent of white households.

The Center for Responsible Lending also found that it would take a black household with national median income 14 years to save on a 5 percent mortgage down payment and closing costs for a mid-price home – and 11 years for a Latino family – while it takes a white middle-income family nine years to amass the same amount of money.

From homeless to homeowner

Sheila DeCuevas, a mother of four, struggled to find a home for 11 years because she could not save enough money for a deposit or qualify for a loan.

“There have always been problems qualifying for any type of loan or traditional credit or any type of program so we have had a really hard time finding someone to help us,” she said.

DeCuevas has rented for years without feeling safe after becoming homeless with her then 2 year old son. “A lot of people don’t understand because they have stable lives, but getting a place of your own brings peace of mind to many people,” she said.

DeCuevas eventually partnered with Acts Housing of Milwaukee, which helps low-income families buy and furnish their own homes. DeCuevas said Acts Housing improved her financial literacy and enabled her to buy her own home.

“My elder is already talking about ‘buying my own house’ so don’t think about renting it,” said DeCuevas, who now works as the Acts Housing office coordinator. “They don’t think about making other people rich, they want to make themselves more stable and wealthy.”

Home ownership spin-off effects

Home ownership is an important measure of the standard of living in many ways. Often times, the home is a family’s greatest asset and a source of wealth for present and future generations. Home ownership also provides housing stability that can help children get better at school and provide other benefits. It’s a benefit that too many blacks don’t enjoy.

Kurt Paulsen, an expert on housing affordability at the University of Wisconsin-Madison, said little progress has been made in increasing black home ownership, which is 44 percent nationwide, compared with 74 percent for whites.

“Nationwide, black home ownership is still not where it should be, and in some ways has not improved much since the Fair Housing Act of 1968,” Paulsen said.

Although racial housing discrimination is illegal under the Fair Housing Act, Paulsen says that mortgage lenders sometimes refuse black households loans – or charge higher interest rates – because of lower incomes and higher debt-to-income ratios.

Kacie Lucchini Butcher is a public history project leader at UW-Madison researching housing inequality. Butcher highlighted the alarming impact of low home ownership rates among blacks, including the ability of such families to build intergenerational wealth.

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At the national level, the average white household has a net worth of $ 171,000 – ten times the net worth of an average black household of $ 17,150. And in Milwaukee, black Americans are financially worse off today than they were 40 to 50 years ago, said Marc Levine, professor emeritus of history, economic development and urban research at UW-Milwaukee.

Butcher said, “If home ownership continues as it has, and if access to housing continues, we will only see a worsening of wealth inequality and poverty. One of the best ways to fix this is to accommodate everyone. “

Historical barriers to home ownership

Building intergenerational wealth isn’t the only challenge facing black Americans.

UW Madison professor Kris Olds, an expert on urban planning and gentrification, said housing affordability remains a major concern across Wisconsin, especially Madison.

“One of the problems in Madison is that so much of it (apartments) is being distributed to single-family zoning districts, and it’s pretty expensive to access,” he said.

Paige Glotzer, assistant professor of history at UW-Madison and author of a book on the history of housing discrimination, said bias still pervades the housing market in sometimes unobtrusive ways.

Glotzer said a house owned by blacks or in a black neighborhood will be worth less than the exact same house in a mostly white neighborhood, and “it’s sometimes hard to see because you can always give a color-blind reason why one takes away value from a house. “

Levine found that a black Milwaukee household with incomes over $ 100,000 is twice as likely to live in a concentrated poor area as a white household with incomes under $ 10,000 a year – meaning even a high income does not protect black Wisconsinites from discrimination in housing.

Redlining explained

“African Americans are more likely to buy cheaper homes in segregated neighborhoods because of historical segregation patterns,” Paulson said.

A major reason for segregation in housing is the redlining that began with the Home Owners’ Loan Corporation in 1932 – when the Great Depression plunged America into a real estate crisis.

The federal government has issued bonds to refinance most of America’s mortgages. The government developed standards for refinancing mortgages and residential areas by color coding geographic areas based on risk factors. Green indicated the least risk. All-black and neighborhoods with “discordant racial groups” were given the color with the highest risk – red.

Redlining is “a close cooperation” between white federal politicians, planners and developers, said Glotzer.

“Redlining was actually a form of credit discrimination,” she said. “There are huge hurdles to getting access to credit, capital, money and good banking that are still a huge determinant of how people can live around the issue of racism.”

There are many efforts to build home ownership

Several public institutions and nonprofits are working to help black Wisconsin residents become homeowners.

“There have been a lot of prejudices preventing black people from buying their own homes,” she said. “But there is a lot more education and a lot more resources now in 2021 … and Take Root offers that,” she said.

A recent analysis by the Wisconsin Policy Forum found that the city of Milwaukee spent $ 26.4 million between 2014 and 2018 to help existing homeowners renovate their homes, but comparatively less – $ 3.5 million – for increasing home ownership. The city also spent $ 19 million to expand the supply of affordable housing. The think tank suggested that Milwaukee could better focus its efforts – spread across 20 residential programs without a single director – to raise the level of home ownership and affordable housing in the city.

“Everyone should own a home”

One resource is the Wisconsin Housing and Economic Development Association, founded by the Wisconsin Legislature in 1972, with assets of over $ 2 billion, and serving as a lender to citizens in need of affordable housing finance. The organization made 2,680 loans totaling $ 366 million to first time buyers and working families in fiscal 2020.

Joaquin Altoro, CEO of WHEDA, said financial institutions are increasingly identifying potential owners of paint and helping them buy homes. “I’m not trying to change racism, I can’t do that alone,” he said. “But I can change the fact that we bring one, two, three homeowners into a neighborhood.”

Lewis said he is looking forward to the day he can finally buy a house – and potentially pass that fortune on to his family.

“I think everyone should own a house,” he said. “This is a beginning to build generational wealth for blacks.”

Reporter Zhen Wang contributed to this story, which was produced as part of an investigative reporting class at the University of Wisconsin-Madison School of Journalism and Mass Communication under the direction of Dee J. Hall, editor-in-chief of Wisconsin Watch. The nonprofit Wisconsin Watch (www.WisconsinWatch.org) works with WPR, Wisconsin PBS, other news outlets, and the UW-Madison School of Journalism and Mass Communication. Any work created, published, published, or distributed by Wisconsin Watch does not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.



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