No matter when black Americans decided to buy a home during the volatile 2000s, they lost wealth, according to a study released Wednesday. The Johns Hopkins University study, published in the journal Real Estate Economics, ;looked at first-time homebuyers at different points in the 2000s. It found that during the housing boom years of 2005 to 2007, white people who were buying their first house ;saw their wealth increase 50 percent, or an estimated $24,000. In contrast, the ;wealth of black first-time homebuyers dropped 47 percent, or nearly $17,000, during the same period. Black homebuyers also suffered more after the housing bust in 2007. First-time …
No matter when black Americans decided to buy a home during the volatile 2000s, they lost wealth, according to a study released Wednesday.
The Johns Hopkins University study, published in the journal Real Estate Economics, ;looked at first-time homebuyers at different points in the 2000s. It found that during the housing boom years of 2005 to 2007, white people who were buying their first house ;saw their wealth increase 50 percent, or an estimated $24,000. In contrast, the ;wealth of black first-time homebuyers dropped 47 percent, or nearly $17,000, during the same period.
Black homebuyers also suffered more after the housing bust in 2007. First-time white homebuyers lost 33 percent of their net worth ;from 2007 to 2009, compared with a 43 percent loss of net worth for new back homebuyers over the same period.
For white homeowners who bought in 2007, it would take anywhere from three ;to 32 years for them to recoup their investment, the study projected. However, the numbers for black homeowners who bought in 2007 were bleaker, ranging from seven ;to 74 years.
“We used 2005 as the height of the boom. The point of the paper is that black first-time homebuyers lost regardless of when they purchased their homes.” ;Sandra Newman, one of the study’s co-authors, told The Huffington Post.
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Newman and ;C. Scott Holupka, the study’s other co-author, believe that their research shows that contrary to conventional wisdom, good timing does not guarantee that buying a home will pay off.
“They say that in real estate timing is everything, but blacks had a loss across the decade — even when their purchase time was impeccable,” Newman said in a statement. “They would have done better if they’d stayed renters.”
Instead, the neighborhoods in which black and white homeowners chose to buy their homes made the biggest difference in the outcome of their home purchases in the 2000s. Black homebuyers were more likely to buy homes in predominantly black neighborhoods where housing prices were ;lower. Those prices were also less likely to rise because of issues like declining homeownership.
Newman and Holupka analyzed data from the Panel Study of Income Dynamics. ;They ;focused on first-time home purchasers in particular because over 60 percent of first-time buyers are low- or moderate-income earners.
“For moderate and lower-income households, the home is the main asset. The main wealth that they have,” Newman noted. The researchers used household net worth and household wealth interchangeably as terms in the study.
Black Americans were disproportionately targeted by predatory subprime lending ;in the lead up to the housing meltdown of the 2000s, one of the factors that contributed to more than 240,000 blacks losing homes they had owned.
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Originally from:
Black Americans Lost Money After Buying A Home, Even In Boom Times
