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Home ownership has been an important vehicle in creating a solid white middle class, but it has not done the same for most black homeowners, because blacks and whites buy homes in very different neighborhoods. Research shows that homes in majority black neighborhoods do not appreciate as much as homes in overwhelmingly white neighborhoods. This appreciation gap begins whenever a neighborhood is more than 10% black, and it increases right along with the percentage of black homeowners. Yet most blacks decide to live in majority minority neighborhoods, while most whites live in overwhelmingly white neighborhoods.
Her article probably should be titled "How Not Investing Keeps Blacks Poorer Than Whites"
The places with the highest home values- Southern California, New York, Washington D.C. etc. generally have the most poverty. High home values are only good for the people who already own homes, and then, only if they cash out and then buy/rent something cheaper, or if they tap into the equity and invest that money wisely (e.g. starting a business).
Low housing prices are good for people looking to buy and trying to establish themselves because they eat up less income. She says that home prices are lower in black neighborhoods even when accounting for income. If home prices are lower in a black neighborhood relative to income, that leaves them with more disposable income, which should leave them more money to put into equities, securities, and other investments.
She goes on to say:
Quote:
This leads to my final point: While many whites are comfortable investing in the stock market, most blacks are not. White middle-class families are more than twice as likely to own stock as black middle-class families.
It seems as that is the cause more than lack of home appreciation. Primary residence homes are generally very poor investments, and really shouldn't even be considered as such. They're very rarely a good way to generate wealth outside of certain circumstances. They're more like a forced savings account that you live in.
So, what you're saying is that blacks are able to buy homes in their neighborhoods for less than whites can. Seems like a pretty good deal for black people...the white guy gets scr*wed again.
It seems as that is the cause more than lack of home appreciation. Primary residence homes are generally very poor investments, and really shouldn't even be considered as such. They're very rarely a good way to generate wealth outside of certain circumstances. They're more like a forced savings account that you live in.
You were arguing earlier that Housing prices only matter when you cash out then you bring up stocks.
Or it could be like here, where the well to do, started buying slum properties on the east side, totally tearing down the dilapidated structure then building a McMansion. This has cause property values sky rocket, pushing the poor right out of the area because of the big jump in property taxes.
A lot with a house bought for $48,000 is now a McMansion, valued at over $700,000
A quote from the article in your post "...most blacks decide to live in majority minority neighborhoods...".
This statement is true as I've read that statistic before. Their decision to buy real estate in areas with lower performing schools and higher concentrations of poverty is the cause for the lack of appreciation on that investment. If an investor buys real estate in an undesirable location, that investor gets inferior appreciation, if any at all. No surprise there.
Failed on two counts
1) Blacks buying homes doesnt make them poorer than if they hadnt. While it might make them less rich than had they bought homes in a different neighbhorhood, this doesnt mean they are poor. In fact since those other more expensive homes, cost more, and you pay interest on it, one might understand that you are supposed to buy lower priced homes and then move up as you pay the first ones down in order to save money.
2) The only reason why homes cost what they do in "black" neighborhoods is because of crime, and a lack of jobs. Thats not because their black, but because we hear so many people whine that we need to provide these people with handouts.
Tell me what neighborhood has prospered due to a large number of handouts and I'll conceed I'm wrong.
First all, I don't post article based on a certain political affiliation, especially since this article doesn't have one. Second of all, I'm conservative and there is a lot of truth in what is being stated here. I do not agree with the equal income portion having lower housing value, which is why I said, I agree with most, not all of the article. I agree with you that they missed the point of why those values are down. I think the emphasis on education, which ultimately impacts school performance is important too. All things equal, do we black communities value education to the same degree as white communities? I have lived enough in both environments, to know that generally they do not.
Last edited by Oldhag1; 04-08-2014 at 08:05 PM..
Reason: Removed deleted quote
So, what you're saying is that blacks are able to buy homes in their neighborhoods for less than whites can. Seems like a pretty good deal for black people...the white guy gets scr*wed again.
I think a point was made in some of the comments that you may pay less for your house but you often will have to be pay more in taxes, more for insurance (higher crime rate) and your property value doesn't appreciate as much as it would in a mostly white neighborhood which is really the biggest reason why buying in black neighborhoods does not work. I mean you can buy cheap, but if the value doesn't go up, then when you go to sell, you are hurting yourself ultimately.
I think a point was made in some of the comments that you may pay less for your house but you often will have to be pay more in taxes, more for insurance (higher crime rate) and your property value doesn't appreciate as much as it would in a mostly white neighborhood which is really the biggest reason why buying in black neighborhoods does not work. I mean you can buy cheap, but if the value doesn't go up, then when you go to sell, you are hurting yourself ultimately.
no, they dont pay more for taxes or insurance.
They might pay a higher rate as a percentage value of the property, but thats because properties there tend to be vandalized more, burned down more, need more cops for police, and because the property values are so low, the only way to fund all of this is through a higher tax rate.
In the end though, the property taxes are still cheaper which is why they buy them to begin with.
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