Wednesday, February 4, 2015
What Happened to all the Wealthy Black Families in PG County, Maryland? -- Many of Their Homes Are Now Underwater
Prince George’s County is the second-most populous county in Maryland and is the highest-income majority-black county in the nation. In the 1990's, many African-Americans flocked here, bought homes and expected to be able to increase their wealth as the community became more upscale and home prices soared in the early 2000's. Then the bottom dropped out of the housing market, creating a disastrous financial situation for many black families.
How black families were affected
While it is true that the housing market is recovering and home values are slowing going up, for this majority-black community, it's a different story. The Washington Post reports that the recovery for black families is much slower. But it's not just in Prince George's County where they have the highest foreclosure rate in the District; it is happening all across the country in predominately black neighborhoods. Why?
The gap in wealth between blacks and whites
For most of us, the biggest financial asset we have is our homes. Buying a home is a good investment, and the longer you own it, the more wealth you build. But as the housing industry recovers, there is a big difference now between blacks and whites and the amount of wealth they have accumulated from their homes. According to the Washington Post who researched information from the Federal Reserve’s Survey of Consumer Finances, the net worth of African American families nationally declined by one-third between 2010 and 2013, much more than the net worth of white and Hispanic families. They are now underwater.
Owing more than homes are worth
Being underwater means they are sitting on homes that are worth less than what they owe, erasing their equity and wealth. According to a federal survey, in 2013, 1 in 7 African Americans owed more on their mortgages than their homes were worth, compared to just 1 in 18 white homeowners. So, what is the reason for the difference? According to experts, while white neighborhoods will draw both black and white home buyers, predominately black neighborhoods will draw mostly blacks, which makes demand smaller and drives prices down.
The bottom line is that blacks who bought in good faith, paid their mortgages on time, and did everything right, are being disproportionately affected due to race. It's just not fair.
To read more, visit www.washingtonpost.com/sf/investigative/2015/01/24/the-american-dream-shatters-in-prince-georges-county/