White Denial and Black Middle-Class Reality – Part 2

Denial is a fixture of contemporary racial discourse. Reflecting segregation and the entrenched nature of white privilege, the efforts to deny through citing a mythical black middle-class, as if the black middle-class reveals some post-racial reality, defies the facts on the ground. It defies the realities of America’s housing situation.

Housing

A 2012 study entitled, Price Discrimination in the Housing Market, found that like the poor paying more for various goods and services, the black middle class pays more for a home:

No matter what the ultimate reason for the price premium, our results imply that systematic, robust racial differences in the price paid to buy a home – on the order of 3 percent on average in multiple major US markets – persist to the present day, long after many of the most overt forms of institutional discrimination have been eliminated. Considering the average purchase price paid by a black homebuyer in our sample is $177,000, this translates to an average premium of about $5,000 per transaction, a substantial amount given the average income of black households in these cities.

The costs of racism on the black middle-class are evident in the difficulty in securing home loans. For African American joining and remaining part of the middle-class is a precarious and difficult task because of racism. According to a report in the New York Times, black homeowners otherwise eligible for traditional fixed rate 30-year mortgages often had subprime loans. In NYC, it “found that black households making more than $68,000 a year were nearly five times as likely to hold high-interest subprime mortgages as whites of similar or even lower incomes. (The disparity was greater for Wells Fargo borrowers, as 2 percent of whites in that income group hold subprime loans and 16.1 percent of blacks).”

Additionally, Joe Weisenthal, with Did Racist Subprime Lending Cause The New York Foreclosure Crisis? notes that according Housing and Urban Development Secretary Shawn Donovan, “Roughly 33 percent of the subprime mortgages given out in New York City in 2007, Mr. Donovan said, went to borrowers with credit scores that should have qualified them for conventional prevailing-rate loans.” Differential access to different types of loans has huge financial cost. “These practices took a great toll on customers, Weisenthal notes. “For a homeowner taking out a $165,000 mortgage, a difference of three percentage points in the loan rate — a typical spread between conventional and subprime loans — adds more than $100,000 in interest payments.” As noted in the article, the prospect of paying an extra 700 dollars a month over 27 years highlights the financial cost and burden resulting from subprime loans.

Housing discrimination in all its forms demonstrates the precluded benefits of middle-class status to many African American families, but the ways in which racism is shrinking the size of the black middle-class. Evident in foreclosures, the resulting lost wealth, and the overall financial burden of racism, a Black middle class is bound to be fundamentally different from a white middle class.

The consequences of these historic and ongoing practices of discrimination are clear. “Segregation of neighborhoods and communities often means, for African Americans, less access to schools with excellent resources, key job networks, quality public services such as hospital care and quality housing,” writes Joe Feagin and Kathryn McKinney in The Many Costs of Racism. “The later factors, less access to quality housing, also limits the ability of African American families to build upon substantial housing equity, a major source for the wealth passed along by families for several generations.” These are the costs of racism for all African Americans.

Continue reading @ Dr. David J. Leonard: White Denial and Black Middle-Class Reality – Part 2.