The housing crash slammed black homeowners disproportionately, and the ripple effects could last generations

By now it’s a familiar story that the Great Recession impacted almost everyone in America. Even those who were lucky enough not to lose their jobs likely saw the value of their house plummet. The lost wealth from the Recession’s impact on home equity will reverberate across generations.

But here’s what may not be familiar: This lost-wealth effect was much, much worse for black homeowners than for white ones.

A new report from the ACLU shows what racial inequality looks like in the housing market, and how it’s expected to get worse over the next two generations.

A big part of the problem is that white homeowners saw a recovery much sooner than their black counterparts. White homeowners’ wealth stabilised after 2009, while black homeowners continued seeing a decline. As you see in the chart at the top, black homeowners actually saw their wealth grow slightly more on a percentage basis from 1999 to 2005. But when it fell, it fell much harder.

The ACLU explains that this is bad for two reasons. First, there’s the obvious reason: It’s bad that black homeowners lost more of their home equity than white homeowners.

But second, when the housing crisis hit, black homeowners had a greater percentage of their wealth tied up in home equity, so a bigger portion of their wealth took a hit. Add that to the fact that black homeowners’ home prices didn’t recover as quickly, and you’ve got an increasingly grim story that’s going to affect Americans for generations into the future:

Among the sample of people who owned a home at some point between 1999 and 2011, home equity is a more significant proportion of total wealth for blacks than for whites. As such, a typical black household that was subject to a toxic mortgage had fewer resources to fall back on when home values plummeted and interest rates skyrocketed, compared to the typical white household. The significant losses in wealth experienced by black households will likely create ripple effects, hampering the ability of the next generations of black households to catch up to whites in terms of total wealth and home equity values.

This is a projection of what that effect looks like for the children and grandchildren of today’s homeowners:

The dotted lines are where the home equity gap would have been without the recession. The bold lines are what the gap is expected to look like with the way the recession went.

This isn’t what equality in America looks like. There’s little question that this is unfair. The question is what are we going to do about it.


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