Homeownership gap for people of color in Wisconsin is wide; communities, nonprofits try to close it | Milwaukee Neighborhood News Service
Gaby Vinick and Alexa Chatham (Wisconsin Watch)
June 17, 2021
ToGreg Lewis, the home was beautiful. Cozy and inviting, the two-bedroom house inMilwaukee had a finished basement, two and a half car garage, an attachedapartment and a yard.
Hehad his eyes set on it for 42 days, only to learn that the appraisal, orvaluation of the property, was lower than he expected. Lewis thought it wasgoing to be about $100,000, as another house on the same block sold for$130,000. Yet the appraisal only came in at $90,000 — meaning banks would belimited in how much they could lend him to buy the home.
Heblames the difference on racism. And he is not alone. Experts and some homeowners say historic racism continues toplay a role in depressing the value of Black-owned homes, especially inmajority-Black neighborhoods.
“Somehomes can be beautiful homes and the appraisal comes in short, and then you gotto deal with that because they find out that it’s a Black person that owns itand is selling it,” said Lewis, who had to take a pass on buying the house.
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Owninga home allows families to preserve and grow wealth, increases their capacity toborrow and lowers the cost of housing. Lower appraisals are among many barriers to building wealth faced by BlackAmericans.
Wisconsinhas one of the lowest Black homeownership rates in the country; just 26% of Black residents own
their own homes, compared to the white homeownership rate of 72%.
Expertssay that historic, discriminatory practices such as redlining — areas wherebanks refused to lend money — and racial covenants, which banned sales to Black buyers,have combined with modern-day racism and overall lower incomes to disadvantageBlack Americans, hurting their ability to buy a home.
Lewishas now stalled his house-hunting, discouraged by being outbid so many times.
“Ittook a lot out of me,” he said. “I went into a depressive state. Looking for ahouse is really excruciating, and at the end of the day, you want to findsomething that fits you, something that you like, so that’s the hardest part.”
TheNational Association of Realtors found in a 2019 study that owning a home remains elusive for many Black buyers, with 43% of Black households ableto buy the typically priced house compared to 63% of white households.
The Center for
Responsible Lending also found it would take 14 years for a Black household atthe national median income level to save for a 5% mortgage down payment andclosing costs for a median-priced house — and 11 years for a Latino family —while a white median-income family needs nine years to accumulate the sameamount of funds.
From homeless to homeowner
SheilaDeCuevas, a mother of four, struggled to find a home for 11 years, unable tosave enough money for a deposit or meet financial requirements for a loan.
“Therewas always problems with qualifications for any type of loan or traditionallending or any type of program, so we had a really tough time trying to getsomeone to help us,” she said.
DeCuevas rented for years without feeling secure after experiencing homeless with her then-2-year-old son. “A lot of people don’t understand because they have stable lives, but acquiring your own place brings peace of mind to a lot of people,” she said.
DeCuevaseventually worked with Acts Housing of Milwaukee, which helpslow-income families purchase and fix up their own homes. DeCuevas said ActsHousing improved her financial literacy, allowing her to buy her own home.
“Myoldest is already talking about ‘When I’m buying my own house,’ so they’re notthinking about renting,” said DeCuevas, who now works for Acts Housing as anoffice coordinator. “They’re not thinking about making other people wealthy,they want to make themselves stable and more wealthy.”
Homeownership’s spinoff effects
Homeownershipis a key metric for standard of living in several ways. Homes are often thelargest single asset a family owns, providing a source of wealth for currentand future generations. Homeownership also provides housing stability, whichcan help children do better in school and provide other benefits. It is abenefit that too many Black people do not enjoy.
KurtPaulsen, a University of Wisconsin-Madison expert on housing affordability,said little headway has been made in increasing Black homeownership, whichstands at 44% nationally compared to 74% for whites.
“Nationwide,the Black homeownership rate is still not where it needs to be, and in someways, has not significantly improved since the 1968 Fair Housing Act,” Paulsensaid.
Althoughhousing discrimination based on race is illegal through the Fair Housing Act, Paulsen said mortgage lenderssometimes deny Black households loans — or charge higher interest rates — dueto lower income and a higher debt-to-income ratio.
KacieLucchini Butcher is a public history project director at UW-Madison whoresearches housing inequity. Butcher emphasized the alarming implications oflow Black homeownership rates, including the ability of such families to buildintergenerational wealth.
Nationally,the average white household has a net worth of $171,000 — 10 times higher than
the average Black household’s net worth of $17,150. And in Milwaukee, Black Americans areworse off financially today than they were 40 to 50 years ago, found Marc Levine, UW-Milwaukee professoremeritus of history, economic development and urban studies.
SaidButcher: “If homeownership continues in the way that it does, and if access tohousing continues in the way it does, we are just going to see a continuedexacerbation of wealth inequality and of poverty. One of the best ways to fixthis is to get everybody housing.”
Historical barriers to homeownership
Buildingintergenerational wealth is not the only challenge Black Americans face.
UW-Madisonprofessor Kris Olds, an expert on urban planning and gentrification, saidhousing affordability remains a huge problem across Wisconsin, especially inMadison.
“Oneof the problems in Madison is so much of it (housing) is allocated to singlefamily zoning districts, and it’s quite expensive to access that,” he said.
PaigeGlotzer, assistant professor of history at UW-Madison and author of a book onthe history of housing discrimination, said bias still permeates the housingmarket in sometimes inconspicuous ways.
Glotzersaid a house owned by Black people or situated in a Black neighborhood willappreciate less in value than the exact same house in a majority whiteneighborhood and, “It’s sometimes hard to detect because you can always give acolorblind reason why you’re taking away value from a house.”
Levinenoted that a Black household in Milwaukee with an income over $100,000 is twiceas likely to live in a concentrated poverty neighborhood as a white householdwith income under $10,000 a year — meaning even a high income does not insulateBlack Wisconsinites from housing discrimination.
Redlining explained
Generationsafter the 1968 Fair Housing Act was enacted, white and Black homeownershiprates and conditions remain miles apart. This is especially true inMilwaukee, one of the country’s most segregated major cities.
“AfricanAmericans are more likely to buy lower-priced homes in segregated neighborhoodsbecause of historical segregation patterns,” Paulson said.
Amain reason for housing segregation is redlining, which began with the Home Owners’Loan Corporation of 1932 — when the Great Depression thrust America into ahousing crisis.
Thefederal government issued bonds to refinance the majority of Americans’mortgages. The government developed standards for which mortgages andneighborhoods it would refinance by color coding geographical areas by riskfactor. Green indicated the lowest risk. All-Black and neighborhoods with“inharmonious racial groups” were assigned the highest risk color — red.
Redliningwas “a close collaboration” between white federal policymakers, planners anddevelopers, Glotzer said.
“Redliningwas actually a form of lending discrimination,” she said. “There are hugehurdles in terms of getting access to credit, to capital, to money and to goodbanking that is still very much a huge determinant of how people can live. Andthat is, and continues to be, very much something really based on racism.”
Efforts abound to build
homeownership
Severalpublic agencies and nonprofits are working to help Black residents of Wisconsinbecome homeowners.
Real-estateagent Mo Simmons, who is helping Lewis buy a home, belongs to Take Root Milwaukee, a consortium of 50 communityorganizations, neighborhood groups, HUD-certified housing counseling agencies,real estate agents and lenders that helps residents buy, keep or fix a home.
“There’sbeen a lot of biases that have kept Black people from being able to obtainhomeownership,” she said. “But there’s now, in 2021, a lot more education and alot more resources …  and Take Root isproviding that,” she said.
Arecent Wisconsin Policy Forum
analysisfound that between 2014 and 2018, the city of Milwaukee spent $26.4 million tohelp existing homeowners fix up their properties but comparatively less — $3.5million — on increasing homeownership. The city also spent $19 million onexpanding the amount of affordable housing. The think tank suggested thatMilwaukee could better focus its efforts — spread across 20 housing programswith no single director — to boost the level of homeownership and affordablehousing in the city.
‘Everyone should own a home’
Oneresource is the Wisconsin Housing and Economic Development Association (WHEDA),created in 1972 by the Wisconsin Legislature, which holds over $2 billion inassets and serves as a lender for state residents in need of affordable housingfinancing. The organization issued 2,680 loans — totaling $366 million — tofirst-time homebuyers and working families in the 2020 fiscal year.
Joaquin Altoro, CEO of WHEDA, said increasingly, financialinstitutions are identifying potential owners of color and helping them buyhomes. “I’m not trying to change racism, I can’t do that by myself,” he said.“But I can change the fact that we put one, two, three homeowners in aneighborhood.”
Lewissaid he looks forward to the day he can finally buy a house — and possibly passthat asset along to his family.
“Ithink everyone should own a home,” he said. “That’s a start to building somegenerational 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, Wisconsin Watch’s managing editor. The nonprofit Wisconsin Watch (www.WisconsinWatch.org) collaborates with WPR, Wisconsin PBS, other news media and the UW-Madison School of Journalism and Mass Communication. All works created, published, posted or disseminated by Wisconsin Watch do not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.