Homeownership: Path to Equity
Last June when I began working on an article for my local trial lawyer association magazine, The Verdict, I found myself drawn to learn more about institutional racism and its adverse effect on building generational wealth.
June is National Homeownership Month and homeownership is a common way create and protect wealth. I love using my financial coaching services to prepare clients for purchasing their property. I’m not just a budget coach that gives debt elimination advice so that my clients can experience debt free living. I know firsthand how homeownership protected my family from rising rents. The 1 bdr apt that we last rented in 2009 for $950 is currently $2550. That savings provided us the flexibility to continue to contribute to our emergency fund and boost our retirement savings while building equity in our tax-advantaged home. This is just one of the many reasons that I am an advocate of financial literacy.
The murder of George Floyd became the catalyst for many people in the US and around the world to learn about the historic and current treatment of Black people and their financial stability. One of the events that became more widely known is the Tulsa Race Massacre because of the recent 100-year anniversary. The Tulsa Race Massacre resulted in unquantifiable economic losses in the area known as Black Wall Street. There were nearly 100 other massacres in the U.S. as well as countless documented and undocumented terroristic acts committed by the government, corporations and individuals that stole, diminished or prevented wealth from being created and/or passed down.
Considering National Homeowner Month and the ever-present battle for Black people in the US to take advantage of the primary strategy of homeownership to build wealth, my focus of this post is on EQUITY.
In society, equity is the fair treatment, access, opportunity, and advancement for everyone while identifying and eliminating the barriers that prevent full participation by some groups.
Home equity is the value of a homeowner’s interest in their home which means that the lower your mortgage balance, the higher your equity.
After WWII the middle class was emerging and growing in large part due to the influx of veterans using their GI benefits to buy their homes with government subsidized financing. The home equity created from these friendly mortgage terms went on to help those families and their descendants pay for college, fund down payments, set up businesses and allow for a dignified retirement.
For all homeowners, equity is created through time, money and improvement projects. For Black homeowners, protecting equity has its challenges. That equity can be erased by racist appraisers not assigning full value to a home if they perceive that it’s owned by Black people or if it’s in a Black neighborhood.
Our capitalistic culture has taught us that time equals money. Juneteenth becoming a national holiday highlights another example of stolen time which affects the opportunity to build wealth. It took about 2.5 years for the news to reach the enslaved because enslavers chose to ignore the law so that they could continue to build their own wealth.
Compound interest can’t work its magic if every generation is starting over or not able to start at all.
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