We know that owning a home creates wealth. And we know how to make homeownership a reality for millions more people. It’s time to scale up what works in order to close the staggering racial wealth gap and increase financial security for all Americans.
In 1980, Self Help founder Martin Eakes and his colleague Bonnie Wright held a bake sale in the town of Halifax, North Carolina. This “capital campaign” raised a whopping $77 to put toward launching their vision: a new credit union to increase economic vitality in their community by lending to underfunded entrepreneurs—namely, local women and people of color who were overwhelmingly rejected for loans by mainstream lenders.
Today, some 30 years later, I frequently cite Self Help as one of the most encouraging leaders in the effort to make the dream of homeownership a reality for thousands of Americans who have historically been excluded. To date, they’ve leveraged over $4.5 billion in financing to turn low-income residents, especially people of color, into successful homeowners.
Their entrée into mortgage lending came after a few years of small-business lending, when Eakes and his team came across a mind-boggling statistic. “We discovered that black and Latino families had one-tenth the family wealth that white families had,” Eakes explained in an interview with the Mary Reynolds Babcock Foundation. “And that single fact, in my view, is perhaps the most unacceptable fact in the modern U.S. economy.” Eakes realized they couldn’t achieve their goals without pivoting their work to address this reality.
In my previous post on homeownership, I discussed the critical importance of wealth for helping families maintain stability through life’s inevitable financial ups and downs, and enabling them to invest in their futures. My claims aren’t out of left field; these dynamics are widely understood and accepted. So it’s all the more troubling that, despite this knowledge, the staggering racial wealth disparity that Eakes uncovered isn’t just a disturbing quirk of North Carolina. It exists at a national scale, and it’s continuing to worsen.
There are countless ways to slice it. For example, for every $15 of wealth held by the typical white family, a typical black family has just $1. For Latino families, the ratio is about $13 to $1. Then there’s fact that black and Latino two-parent families have less wealth than white single parents. Or that black and Latino students must not only graduate high school but also college to attain the same wealth of white high school dropouts.