1/Here's a thought I had about the white-black wealth gap, and how it's affected by white flight, segregation, and all that stuff.
First, check out the numbers. White people have a LOT more wealth than black people, even once you break it out by education level.
First, check out the numbers. White people have a LOT more wealth than black people, even once you break it out by education level.
2/For most people, wealth is going to be heavily concentrated in their houses. The middle class, in particular, has a lot of its wealth in housing. bloomberg.com/view/articles/…
And lots of people have *no* wealth outside of their primary residence.
And lots of people have *no* wealth outside of their primary residence.
3/White people have a much higher homeownership rate than black people - around 70 percent to 40 percent. In fact, white high school dropouts have higher homeownership rates than black college grads.
That's a big part of the story, right there.
timesnews.net/Business/2018/…
That's a big part of the story, right there.
timesnews.net/Business/2018/…
4/But I bet that it's not the whole story. I bet that white homeowners' home values, on average, are substantially higher than black homeowners' home values.
Part of that will be because white people tend to have higher incomes and buy more expensive houses, BUT...
Part of that will be because white people tend to have higher incomes and buy more expensive houses, BUT...
5/Part of it is probably due to the location of the houses. White people tend to own homes close to other white people (segregation).
Because both white and other people value houses in white neighborhoods highly, this will push up the prices of white people's houses.
Because both white and other people value houses in white neighborhoods highly, this will push up the prices of white people's houses.
6/Consider white flight, into a mostly-white exurb. Each time a white person moves into the exurb, that increases the value of a house in that exurb to any other white person who wants to flee to a mostly-white exurb.
And that gets capitalized into home values.
And that gets capitalized into home values.
7/A simple way of putting this is: Racism IS wealth.
The desire of some white people to live near to (exclusively) other white people makes all of them willing to pay more for each other's houses, pushing up each other's wealth.
The desire of some white people to live near to (exclusively) other white people makes all of them willing to pay more for each other's houses, pushing up each other's wealth.
8/OK, but what would happen if a bunch of the white people in a mostly-white neighborhood decided to move out? Could they all sell their houses for a profit at once? Who would they sell them TO?
The answer: Black people.
The answer: Black people.
9/In the white flight of the 1960s, many black people paid premium prices for houses in mostly-white neighborhoods. Realtors famously encouraged white residents to sell, so they could pocket this premium.
10/Research shows that a lot of white people search for housing in mostly-white neighborhoods, but black people tend to search for housing in neighborhoods considerably whiter than they ones they end up living in: ncbi.nlm.nih.gov/pmc/articles/P…
11/In other words, the "racism premium" for housing in mostly-white neighborhoods theoretically allows white people to repeatedly extract wealth from black people by continuing to move to new mostly-white neighborhoods, and charging black people a premium to move in.
12/Now, quantitatively, I don't know how big of a deal this is. Theoretically this can happen, and it fits with a bunch of observations about housing markets and search patterns. But it might be a small effect overall. So I don't know.
It's just worth pointing out.
It's just worth pointing out.
13/But there's also a ray of hope here. Since the 1990s, white people - and Americans in general, actually - have been showing a preference for more diverse neighborhoods. Specifically, neighborhoods with more black residents.
bloomberg.com/view/articles/…
bloomberg.com/view/articles/…
14/If fewer and fewer white people desire to flee from black and other minority residents, that will decrease the price premium in mostly-white exurbs, and increase the price of homes in more diverse neighborhoods.
Which will at least slightly help the racial wealth gap.
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Which will at least slightly help the racial wealth gap.
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15/Oh, and here's some quantitative support for the idea that even among homeowners, there is a big black-white racial wealth gap:
Missed that tweet before!
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Missed that tweet before!
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