President Joe biden took another step toward addressing the persistent discrimination in housing and business that has prevented generations of black Americans from creating wealth that can be passed on to future generations.
The Biden administration announced Tuesday that it is launching a cross-agency effort to tackle unfair valuations for homeowners of color and tackle inequality in the real estate industry. Secretary of the United States Department of Housing and Urban Development Marcia Fudge was chosen to lead 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 country’s most prosperous African-American communities at the turn of the 20th century.
On May 31 and June 1, 1921, white residents bombed and burned the community, killing around 300 blacks, destroying dozens of homes and businesses, and leaving around 10,000 residents homeless. The destruction came after a white woman falsely accused a black man of assault.
“Because wealth disparities compound like an interest rate, the divestment in black families in Tulsa and across the country throughout our history is still strongly felt today,” the White House said. in the fact sheet she published. The administration pointed out that black American families only had an average of 13 cents in wealth for every dollar held by white families.
“The Biden-Harris administration announces new measures to help close the racial wealth gap and reinvest in communities that have been left behind by failed policies,” he said.
Coming at a time when it appears the nation is more ready to heed its legacy of racism, the initiative has been greeted with optimism in some quarters.
“He’s got a lot of bite because Biden says so at this particular moment,” says Donnell Williams, president of the National Association of Real Estate Brokers, an organization for black real estate professionals. “The black community is holding Biden accountable now.”
While details of the initiative were slim, other highlights included investing billions of dollars in community infrastructure projects, creating a tax credit to attract development to income areas. low and moderate levels and the provision of subsidies to local governments that provide more affordable housing. .
The challenge of leveling the playing field when it comes to valuation is that many older homes and neighborhoods were designed with the opposite goal in mind. Redlining was a federally sanctioned policy that effectively separated the nation by race at the turn of the 20th century. People of color were not allowed to settle in white communities and were often relegated to areas with a stock of cheaper and less pleasant housing, often on smaller lots. These neighborhoods have also traditionally been deprived of resources, such as access to quality public transport, attractive shops and other amenities. Unwanted features such as waste facilities or power plants were generally found in these communities, which had no political voice to protest.
What this means today is that homes in traditionally black communities may not be as desirable as those in white communities, even though they are of comparable quality, due to their location.
Even in predominantly white or mixed-race neighborhoods, there were high profile cases black homeowners having their home valued less than they thought it was worth. When a white friend posed as an owner for further appraisal, these owners said, their ratings increased dramatically.
The disparity in valuation by race is “definitely an issue,” says Williams, who is also a real estate broker with Destiny Realty in Morristown, NJ. “If the property is not appraised you have an impact on the loan you wanted to get to open a small business, your kid has to get a loan to go to college. If our properties are not assessed, there is nothing else we can do. We are always late.
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. His client was trying to refinance his property.
“He was worried that he wouldn’t get as much value for his house to do the refinancing,” says Williams. “The fear is real. “
Addressing the problem is a crucial step, say housing experts.
“Putting more spotlight on discriminatory assessments and providing more standardization and guidance to provide more transparency to the process could help improve the process,” says Realtor.com® Senior Economist George ratiu. “There’s no guarantee that will change, but talking about it will push us in the direction we want to go.”
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He also believes the federal government’s plan to offer tax credits to encourage developers to rehabilitate existing homes and build new homes in low-income communities could work. This reduces the financial risk for these businesses of spending more on new home construction than they can bring to the market if the tax credit covers the difference.
It’s “a worthwhile effort,” says Ratiu. “It’s been a problem for decades.
Racial equity has been at the center of Biden’s administration. Shortly after taking office, he gave the order to advancing racial equity and called on federal government agencies to correct policies that harm communities of color. He also acknowledged that federal, state and local governments were directly involved in creating racist housing policies that still hurt black Americans today.
In his budget proposal last week, Biden proposed creating a $ 100 million initiative to provide increased down payments to those looking to relocate to richer communities. This could help borrowers who receive Federal Housing Administration loans make down payments of up to 10%.
Biden also plans to provide more funding for education and fair housing enforcement. It also intends to create and preserve more affordable housing and offer housing certificates to more low-income tenants.