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Home Ownership Is Not "Acting White"

This blog entry is dedicated to Bob "Treebob" Williams, who gave Black Man Not Blogging (BMNB) the gentle nudge to buy his first home.  Rest in peace, Bob.

Sadly, there are many characteristics that my people write off as "acting white":  Being intelligent, speaking English well, doing well in school, having good credit.  But there's one that strikes fear in my heart for the next generation:  Home ownership.

The Housing Bubble and the Great Recession resulted in lots of African-Americans losing their homes.  Many of us have written off home ownership, thinking of the whole real estate market as being shady (and there's something to that; more on that later) and of home ownership as being beyond our reach and for white folks.

The reason this scares me is that the gains we as African-Americans made in home ownership in the late '90's and early 2000's won't be regained if we as a people simply write off home ownership.  Why does it matter?  Because a home is the largest intergenerational wealth transfer that most people make.  Because home ownership often sets the stage for paying for a child's education.  Because home ownership can be part of the portfolio of assets that pay for retirement.

Watching us turn away from home ownership reminds me of an episode of "Sex in the City" when Carrie Bradshaw receives notice that her apartment building is going co-op.  She's been given the opportunity to buy her apartment.  One would think that Carrie, with her love of Manolos and all things luxe, wouldn't sweat buying her apartment.  She does, though, because she can't afford it.  So she writes off home ownership until, over lunch with Miranda, Samantha and Charlotte, she discovers that they are all home owners. The vulnerability that Carrie felt -- that she could be out on the street at the whim of her landlord -- was palpable.  In the end, Charlotte sells her wedding ring to loan Carrie the down payment on her apartment.

Home buying doesn't normally occur this way for black folks.  That doesn't make it any less important.

The reason why I harp on this so much is that I wonder, "What will average African-Americans have to hand down to their children if they don't buy homes?" True, you will, on average, experience a higher rate of return from investing in stocks than in investing in real estate.  And I don't consider home ownership to be a true "investment."  But home ownership doesn't require the same level of expertise required to pick stocks, and it is highly subsidized by the government because of the mortgage interest deduction, and even more so if you are a veteran and qualify for veterans' home loans.  You have to live somewhere -- why not own what you live in?

I'm not concerned about the wealth gap between African-Americans and whites for wealth's sake.  I'm concerned about it because wealth means freedom.  The more money you have, the more choices you can make about your life -- whether to go to college, where to live, what to do for a living.   The ability to transfer wealth between generations is the basis for that economic freedom.  Home ownership is part of the wealth transfer.

Yes, the Housing Bubble housing market was shady.  Yes, Wells Fargo, Bank of America and other financial institutions conspired to put African-Americans in subprime loans.  Yes, we need to be smarter the next time around.  But you don't throw out home ownership entirely because you got burned.  It's not about you.  It's about the generations to come behind you.

Home ownership starts with an intention.  The intention leads to a plan -- improving your credit, saving your money, having a stable job.  It requires sacrifice -- fewer shoes, fewer Xboxes and flat screen TVs, more savings.  And it may require flexibility -- if you live in a high cost area, you might have to buy somewhere more affordable -- like Texas.  Instead of a house, you might have to start out with a condo.  Instead of new construction, you might have to start with a fixer-upper and watch home improvement shows and how-to videos on YouTube.  You might have to buy your house with other relatives, maybe with two or more families.  You might have to buy in a not-so-great neighborhood and convert your local school into a charter school.  But over time, the appreciation in value that normally occurs with home ownership  (Real Estate Bubble notwithstanding) will inure to your benefit and the benefit of your children and their children.

What scares me now is that there are real estate investment firms that are buying up unfinished lots and building new homes solely for the purpose of renting them.

Not selling them.  Renting them.

This phenomenon is playing itself out in Atlanta, and it looks like it's targeted toward African-Americans who want to live in a new house and can't afford to buy where they want to live.  It's like real estate crack -- once you get that high of living in a brand new home that you rent, you're not willing to make the long-term sacrifice to buy a home that you can actually afford and trade up later.  It's like trading off long-term financial benefit for short-term real estate euphoria.  And we're falling for this real estate okey-doke yet again. 

People, let's not fall for this again.  The only thing renting a house does is make the owner of that house richer.

And, for the record, home ownership is not acting white.  My parents owned their home.  My uncles and aunts owned their homes.  My grandparents owned their homes. 

Wouldn't it be a shame if the pre-civil rights, "Jim Crow" generation of African-Americans transferred more wealth to us through home ownership than we transfer to the generations following us?


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