president Joe Biden Taken another step to address the persistent housing and business discrimination that is preventing generations of black Americans from building wealth that can be passed on to future generations.
The Biden government announced Tuesday that it was launching an interagency effort to tackle unfair ratings for colored homeowners and tackle inequality in the real estate sector. Secretary of the United States Department of Housing and Urban Development Marcia Fudge was tapped to guide the initiative.
The move comes a century after the Tulsa Race massacre led to the destruction of that city’s Black Wall Street, one of the nation’s wealthiest African American communities in the early 20th century.
On May 31 and June 1, 1921, white residents bombed and set fire to the community, murdered an estimated 300 black people, destroyed numerous homes and businesses, and left about 10,000 residents homeless. The destruction came after a white woman falsely accused a black man of assault.
“With wealth differentials compounded like an interest rate, divestment into black families in Tulsa and across the country is still being felt strongly throughout our history,” the White House said in the leaflet published. The government pointed out that black American families only own an average of 13 cents in wealth for every dollar that white families own.
“The Biden-Harris government announces new steps to address the racial wealth gap and invest in communities left behind by failed policies,” it said.
At a time when the nation is apparently more ready to reckon with its legacy of racism, the initiative has met with optimism in some circles.
“It has a lot of teeth because Biden says it at that particular point,” says Donnell Williams, President of the National Association of Real Estate Brokers, an organization for black real estate professionals. “The black community is now holding Biden accountable.”
While details of the initiative were sparse, other highlights included allocating billions of dollars to community-run infrastructure projects, creating a tax credit to encourage development in low- and middle-income areas, and providing grants for local governments creating more affordable housing.
The challenge in aligning the margin of appreciation is that many older homes and neighborhoods have been designed with the opposite goal in mind. Redlining was a federal government-sanctioned policy that effectively segregated the nation by race at the beginning of the 20th century. People of color were prevented from moving to white communities and were instead often delegated to areas with cheaper, less attractive housing stock, often on smaller lots. These neighborhoods have also traditionally been starved for resources such as access to quality public transport, attractive shopping, and other amenities. Undesirable features like landfills or power plants typically ended up in these communities that did not have a political voice to protest.
This means today that because of their location, houses in traditionally black communities may not be as desirable as those in white communities, even if they are qualitatively comparable.
Even in predominantly white or multiracial neighborhoods, there have been highly publicized cases of black homeowners whose homes were valued less than they believed they were worth. When a white friend posed as a homeowner for a subsequent valuation, these homeowners reported their valuations rose significantly.
Racial estimation differences are “undoubtedly an issue,” said Williams, who is also a real estate agent at Destiny Realty in Morristown, NJ. “If the property is not valued, you are influencing the loan you wanted to get for starting a small business, your kid has to take out a loan to go to college. If our properties are not valued, there is no other thing we can do. We’re always behind. “
Williams had a client last year who asked a white friend to come over to his house and pretend to be the owner before an appraiser came over. His client tried to refinance his property.
“He was afraid that if he refinanced he wouldn’t get that much value for his house,” says Williams. “The fear is real.”
Solving the problem is a critical step, say housing experts.
“Bringing discriminatory reviews into the limelight and providing more standardization and guidance to make the process more transparent could be one way to improve the process,” says Realtor.com® Senior Economist George Ratius. “There’s no guarantee that this will change, but talking about it will propel us in the direction we want to go.”
He also believes the federal government’s plan to offer tax breaks to encourage developers to renovate existing homes and build new homes in lower-income communities could produce results. This reduces the financial risk for these companies of spending more to build new homes than they can get in the market with the tax credit covering the difference.
That is “a worthwhile effort,” says Ratiu. “It’s been a problem for decades.”
Racial justice was a focus of the Biden government. Shortly after taking office, he issued orders promoting racial justice and directed federal agencies to establish guidelines that harm color communities. He also acknowledged that federal, state, and local governments were directly involved in creating racist housing policies that continue to harm black Americans today.
In his budget proposal last week, Biden suggested creating a $ 100 million initiative to provide increased down payments for those looking to move to more affluent communities. This could help borrowers receiving Federal Housing Administration loans make down payments of up to 10%.
Biden also plans to allocate more funds for the education and enforcement of fair housing conditions. He also wants to create and maintain affordable living space and make vouchers available to more low-income tenants.