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Homeownership: a foundation for wealth

Black Enterprise, July, 2003 by Earl G. Graves, Sr.

Three million more African American homeowners; an additional $760 billion in home equity value. That, according to Fannie Mae Chairman and CEO Franklin D. Raines, is what we could gain by achieving racial equality in housing in America. These figures leave little doubt that African American homeownership must be the foundation and the focus of our efforts to close the black wealth gap.

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This is why providing useful tools, information, and inspiration on home buying is a top priority of BLACK ENTERPRISE magazine and our Website, www.blackenterprise.com. Unlike renters, those who own homes are investing in a tangible asset offering benefits beyond mere shelter. A home can appreciate in value over time, be sold at a predictable price to a reliable market of potential buyers, and provide significant tax advantages, including mortgage interest and property tax deductions. A home can serve as a foundation of positive net worth for its owner. Moreover, a home is one of the few assets available to the average, working American that can be used to leverage capital. According to Fannie Mae, Americans withdrew about $80 billion in equity wealth out of their homes in 2001 alone. This money was used to launch businesses, finance educations, pay down debt, cover household expenses during periods of unemployment, and otherwise sustain our ailing economy.

That said, the benefits of homeownership go far beyond net worth statements and real estate valuations. Owning a home offers a sense of pride, security, and enfranchisement that is quintessential to our stake in the American dream. As the owner of a number of homes in a variety of communities over the years, I can personally attest to the nearly indescribable positive impact of ownership on me, my family, and our quality of life in the communities in which we've lived. There is something powerful in having a real stake in your community; to be able to make changes in your property that not only please you but have the potential to increase your property's value; to not be at the mercy of a landlord, but to have the option of generating additional income by becoming one yourself. Compare any neighborhood of homeowners to one of renters with comparable household incomes. It will be obvious which neighborhood invests more time and energy into improving and protecting the health and safety of its neighbors, the effectiveness of its schools, the consistency of its public service delivery, the level of its political and social activism, and its overall quality of life. I don't have to tell you which community is more likely to be taken for granted, exploited, or dismissed by politicians, government agencies, and businesses.

We need to think about this the next time we want to give our children (or ourselves) a major gift, whether for college graduation, a wedding, or just to lend a helping hand. Instead of a $50,000 wedding ceremony, a $25,000 car, a $10,000 vacation, or a $2,000 shopping spree, what if you put that money toward a down payment on a new home? This gift is not just for a reason, a season, or a lifetime, but for several lifetimes. It can truly serve as a foundation of multigenerational wealth for your family.

We must confront and overcome all obstacles, including the effects of past restrictions on African American property rights and the persistence of housing discrimination today, to increase the proportion of black homeowners. We can no longer leave billions of dollars on the table.

Homeownership: a foundation for wealth

Black Enterprise, July, 2003 by Earl G. Graves, Sr.

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