A great deal of attention is being paid, and justly so, to the stubborn disparities in income between whites and blacks, both nationally and here in Durham. Median family income nationally (2014) was $71,300 for whites and $43,300 for blacks. Some attribute the differences to differences in education, age and labor force experience; others to discrimination, both current and past. Both arguments have some explanatory power.
Far more shocking, however, is the racial disparity in wealth. In 2015, white families had median (half above, half below) family wealth of $171,000, while black families had only $17,600.
Let’s put this another way, just to let it sink in: the white/black income advantage is 7/4, but the wealth advantage is 10 to 1. Other studies have put the wealth disparity as high at 20 to 1.
One reason for the gap is the racial disparity in homeownership. Home equity makes up a significant part of family wealth, particularly for those in the lower half of the wealth distribution. Here, too, we find racial differences. Seventy three percent of whites owned a primary residence, against 45 percent for blacks. This difference surely helps explain why only 9 percent of whites had zero or negative net worth, compared to 19 percent of blacks.
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For most of us, our own experience confirms what the statistics tell us. Making monthly mortgage payments disciplines us to save. We can, over time, put both savings and sweat equity into improving, even expanding, our home. Pride of ownership (not to mention fear over what the neighbors might say) cause us to maintain the property. Most important, in a fast growing city like Durham, we can participate when “gentrification” occurs, rather than be victims of it.
Many years ago, when I was a graduate student, I spent three years interviewing residents of extremely low income housing in the U.S. and in Latin America. I learned two things. First, you could afford to put only a few people into “safe and standard” new housing units – for the same amount of money you could help 10 times as many people build their own houses. They might start as shacks made of scrap lumber and corrugated iron, but over time many places became established neighborhoods. Second, people wanted to own, even if a shack, rather than pay rent for a better unit owned by the government.
Now consider some of the “affordable housing” policies pursued over the past decades by the Durham City Council and which some well-intentioned candidates in the recent election intend to pursue into the future: new or substantially rebuilt units for Durham Housing Authority (expensive units, no equity); getting developers to set aside a fraction of units for lower-income people, often in conjunction with building around future light-rail stations (expensive units, no equity); working with Community Land Trust to build new houses (expensive units, most equity increase retained by CLT).Meanwhile the city inspects housing and each year scores of dilapidated structures are torn down and lost to the housing stock.
What are some alternatives?
When the city works with Habitat for Humanity it gets new units at a fractionof the price and the new residents get immediate and potentially growing equity. Working with housing improvement groups like Rebuilding Together, donated materials and volunteer labor can help homeowners, many of them elderly, remain in their houses and have equity that can be transferred to their children. Preservation Durham's Preservation Equity Program helps up-fit homes of existing owners in historically black neighborhoods so that they can remain in a safer home and build some equity.Property tax “circuit-breakers” allow low-income homeowners to postpone the ever increasing burden of annual taxes until their house is sold, building equity for owners and their heirs.
The fact is that Durham has a housing stock that could serve many of its residents, if only we could give them a bit of help to keep it up. In my ideal scenario, we would also coordinate with The Coalition to Unchain Dogs (now “Beyond Fences”) to build free yards for residents’ pets and with Keep Durham Beautiful to plant trees to shade homes and save energy.
This approach to affordable housing would not only improve the housing stock, but would take a major step toward reducing our scandalous racial wealth disparity. Let’s abandon our beautiful middle-class dream of a tiny number of brand new, rental units favor of a gritty, Durham-like policy of helping people fix up what we have, and keep ownership of it.
Robert G. Healy, an economist, has taught land use policy at Duke’s Nicholas School of the Environment since 1986.