Self-Segregation Causing a Rift in Net Worth?

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(I was debating on writing this for a client but it IS very controversial and in the end, my client felt uncomfortable with the topic even though they agreed to everything written. I'll leave the article as is and let you weigh in on this. I'm not an agent currently so I feel somewhat in the clear just talking about it. But would love to know your feedback on this interesting topic and something that is very fresh in today's society)

Black net worth is generally lower than white net worth... yup, I said it. But I didn't say it, an article in CNN recently stated that African-American wealth is not protected by homeownership. Black people who purchased their first home between 2000 and 2010 have actually lost more equity than white people who bought in the same time frame. 

Why is this?Self-Segregation Causing a rift in net worth

A Professor of policy studies at John Hopkins University ran a report and found stark racial differences. African-Americans who purchase their first home between 2003 and 2005 suffered a 23% loss in net worth however in the same period, the net worth of white first-time homebuyers jumped as much as 50%. Net worth of white first-time home buyers increased by an average of $24,000 while net worth of black first-time homebuyers decreased by nearly $17,000. After 2009, net worth for black first-time homebuyers decreased 43%, compared to only 33% for white  homeowners. While this is primarily dealing with real estate worth, net worth generally includes assets such as retirement savings and earnings, minus any debt owed against those assets.

The racial wealth gap is nothing new in the United States; where the median wealth for white families is approximately $134,000 compared to blacks and $11,000 and Hispanics at around $14,000. African-Americans tend to accumulate wealth connected to the value of their home.

Without touching too deeply into the PC-Realm, the main reason that African-Americans lost more wealth on their home is that they purchased homes in a black majority community experiencing high rates of foreclosure and declining rates of home ownership.

So, in our "equal housing" world where we are not allowed to steer anyone to a particular community or not, is it appropriate to suggest articles such as this, stating that  buying in a primarily black community may not be the best option for resale value and equity? Where does the term "steering" come into play? Would we serve our African-American clients better by suggesting a home in a primarily white community for reasons of equity and net worth?

It's an interesting topic, especially for real estate agents whose primary job is to work for the benefit of our clients to the best of our ability.  Would we be harming our clients by not suggesting this type of statistic?

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ActiveRain and SEOTammy Emineth is an expert in custom content and original articles for blogs, website, press releases and more. Contact me anytime and feel free to subscribe to this blog to stay up to date on my latest blogs and informative information. Email me or contact me for Real Estate Website Marketing and SEO Content Writing.

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Lauren Kimsey 10/16/2015 01:21 AM
  2. TENNESSEE HOME TEAM 10/17/2015 02:58 AM
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Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

It is much more so that people who buy property in low income neighborhoods are going to be buying less valuable homes.  As a result the homes are going to appreciate less over time.  And the reality is that in many low income neighborhoods, a higher proportion of minorities live there.  Low income residents will have low net worth too.  

Oct 17, 2015 03:45 AM #71
Tammy Emineth
Personal SEO - Website SEO and Real Estate Marketing - Marysville, WA
Content Marketer, SEO Teacher, Website Fixer

Thank you for all the very good thought-provoking ideas here! I have read them all. I appreciate your comments and your ability to keep things clean. Love it! 

Oct 17, 2015 04:27 AM #72
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

Yes, you can present the numbers, educating  the client. This is the difference between being a real estate consultant vs. a real estate sales person

It may be the client likely  ask you to interpret the data.  How you deal with that, IMHO,  is   to continue to encourage the client to make an informed decision. Get them to do research. 

My observation, not judgment, is that realtors often like to give opinions :) 


Oct 17, 2015 04:41 AM #73
Jon Quist
Tucson's BUYERS ONLY Realtor since 1996

Taboo subject. I let my buyers tell me what they want, and I go find it. The primary color here is not black, not white, but green. That's what dictates areas of interest here.

BTW, if ANYONE diverges into areas of race, religion, etc., they get kicked to the curb. That is very offensive to me, and against the law.

Oct 17, 2015 04:44 AM #74
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Interesting topic, thanks for writing it. Just about everything in life has unintended consequences.

Oct 17, 2015 04:55 AM #75
Rose O'Reilly Sievers,CRS,SRES
Carlsbad, CA

Tammy, only you could address this topic without getting in trouble.  Several years ago, I had a walkin Buyer who indicated he was interested in looking at homes.  I pulled up a list of homes based on his requirments.  This gentleman was black and asked to view several homes.  As we drove to the homes, he asked if he could tape our conversation, I said sure.  He asked me if there was black people in this neighborhood, and I stated, there is a blend of families who live here. He seemed satisfied with my answer.  I told him about the Schools, and Club facilities,  We went back to my office, and he ssaid he be in touch.


Needless, to say he didn't buy a  home.  I have worked with all nationalities and haven't had a problem in finding them a home based on their affordability per the bank qualifications.


Oct 17, 2015 05:15 AM #76
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Thank you for stepping out and bringing this to our attention.  Does not surprise me.

Oct 17, 2015 05:38 AM #77
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Tammy, thank you for bringing us to THINK. Your focus as I understood it was how do we best serve the consumer. If we have done our research carefully and we see that a particular area is not producing ROI that is to their benefit then do we tell the consumer. What if we don't and they come back and charge us with not disclosing pertinent information. What if we "steer them" from an area that we think is not to their best interest an then the market in that area turns upward?

There are many questions we should find answers for. I think agents should have a good talk with their Broker as they seek direction.

Very stimulating article, THANKS

Oct 17, 2015 06:48 AM #78
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

You are brave to write and post this blog. It brings up interesting topic of discussion.  As an agent, we can show people facts about home values via resale, days on market, history, etc.

Oct 17, 2015 07:32 AM #79
Ernest Villafranca
Better Homes and Gardens Real Estate - Oakland, CA
3923 Grand Ave. Oakland CA, 510-418-9443

Best way for most people to build wealth is through real estate and education, that is, buy a house and get a college degree.

"Blacks who purchased their first homes between 2000 and 2010 would have been wise to hold on to their money instead," said CNN Money. Yes, minorities got hurt then.

But CNN Money did not say that minorities should forget about homeownership and be renters forever, right?





Oct 17, 2015 10:58 AM #83
Thessy Onyenedum
Atesa Properties, Inc - San Diego, CA

Great provocative article, Tammy. All real estate is local.  I work with many African-American buyers in San Diego City and County, and Los Angeles County. I do not find my buyers wishing to live in any one race dominated community. They have children and are looking to have them go to great schools.  African-Americans are looking for homes in neighborhoods they can afford.  African-Americans have more income today and will buy from communities that meet their needs. Here in San Diego, they live in diverse communities, whether coastal or inland.  There might be fewer of them living in very high end places like La Jolla, but some live there.  Our work as realtors is to have our clients qualified,  and help them buy homes in the communities they love and desire.

Oct 17, 2015 01:10 PM #84
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Tammy Emineth just wondering if there were some numbers for immigrants. I have seen usually, immigrants do well in this department.

And interesting topic for discussion for sure.

Can we share this stats with African American families? I guess, they are well aware of it - to best of my knowledge.

Oct 17, 2015 03:49 PM #85
Kathy Judy
Tri-Cities Real Estate retired - Ontario, OR

Even though I am in a rural area I deal with this all the time. Substitute Hispanic for African American.  One way to do this is to emphasize esale value.   I want to sell houses that my clients can resell without losing money within 5 years.  (needless to say I didn't achieve this very well during 2003-2007 but out area didnt have the big swing up or down).   I undersand well that you don't want your family to have to be on display all the time as the "example".  The best places have a mix of everything -- ethnicities, ages, religions etc.  They will hold their values may notppreciate as fast as others but will hold and gradually increase.  where there are alleys I drive them with my clientst.  That can tell you a lot. 

Oct 18, 2015 07:25 AM #86
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

I am an equal opportunity agent!  I serve anyone needing an agent that approaches me;)  I am honest with my clients and do share the financial vitality of different neighborhoods- that is my job!

Perfect example- the city of Ferguson (yes- that Ferguson) is a  beautiful neighborhood- most of you don't know this but the riots took place in a 4 block span.  The only people that would not buy there are out of towners- Thank you media...  that is another story.  The housing is more affordable than other places but it has a small town feel in a city.  They have their own downtown with tons of little shops.  Let me word that differently- The housing is not too expensive that you will be house poor.  You still get community, supportive families, and pride of being part of that community. 

Just to be sure this is clear- I do not violate any laws or rules regarding race creed or religion, etc...  but I do make all of my clients aware of equity growth in different places.  Some grow quicker than others- and some will fall faster than others.

Oct 19, 2015 12:51 AM #87
Karen Pannell
Real Living / Home Realty - Owensboro, KY
Owensboro KY Real Estate -270-903-2167 Homes, Cond

Great job Emily.  The CNN article makes a valid point, however.  I would not point this out to my prospects.  I find that most buyers have an idea of where they want to live- be it close to work, close to family, etc.  And although it is a violation of our Fair Housing laws to "steer" prospects, the first thing many ethnic buyers want to know is "where are my people"?  Not because they dislike those who are not of their origin, but for practical reasons.  Many people value the contribution their culture will make to the lives of the children, more than building their net worth.  When we are asked that question (and no one comes out and asks it directly) we simply have to give our pat answer that "responding to such a question could be misconstrued as a violation of fair housing laws" and leave it at that.  CNN may not "get" that some people build their wealth in ways other than dollar and cents.

Oct 19, 2015 01:41 AM #88
Candace Breen
Carma Real Estate Community - East Providence, RI

Thanks for the article. I, an African American, have experienced this. Not thrilling at all.

Oct 19, 2015 02:07 AM #89
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

This is always I difficult subject.  I let people tell me where they want to live and try to find them a house there.  I find that Black, like all of us, want nice homes in nice communities, but they also frequently will want a neighborhood with more black people in it (not all black but certainly racially mixed).  I sold a home to a mixed race couple in a more upscale commuity and they were concerned how they would be received.  I told them truthfully that people were more concerned about how they kept their home and they lived rather than their color.
In my opinion the best community around here to make money in real estate is a local community that has had a large influx of Black people when the crash came.  Yes sadly it was a lot of renters and their was a sharp increase in issues in the community.  I have had some difficult run in's with some some Section 8 renters (white by the way).  However, in addition to there were many Black buyers.  The community will go through gentrification I think and many of those black people will earn a lot of equity.

Oct 19, 2015 04:30 AM #90
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I would never suggest that a buyer buy any least not based on race, religion, etc. If I were asked about the appreciation of different neighborhoods and how they compare, I would give them the data. It's not going to be my home, it's going to be theirs. It's their goals and sense of home, not mine. 

Oct 19, 2015 10:00 AM #91
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I do think this was an interesting discussion and you're brave to post about it. 

Oct 19, 2015 10:01 AM #92
Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN

Hi Tammy - Thanks for opening up to discussion. I refuse to mention any of the protected classes. Meaning everyone who isn't a white male, but I think it's wrong that we can't talk about it.

Who made up this rule anyway, and what good has it done. We have become so PC that we can't even answer important questions for our customers.

I look forward to the day when mortgage docs don't ask about race or religion. At that point I'll know we are on the right track.

As far as investing goes, I suspect a lot of it has to do with education.

Oct 20, 2015 01:55 AM #93
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