The ache for home lives in all of us, the safe place where we can go as we are and not be questioned. Maya Angelou
African American homeownership (pictured below) has never breached above 50 percent. Ever. According to HBCU Money data, it would take $14.7 billion in down payments for African American homeownership to just reach 50.1 percent. This is assuming that those 900,000 African American households would only be using FHA at 3.5 percent down. A debatable matter on the risk side that such low down payments would pose to households should the real estate market turn against them in the early years of their ownership. The $14.7 billion could decrease given the geography of African Americans being predominantly focused in the southeastern United States where homes on the whole are cheaper than much of the rest of the country. Using the southeastern median home price in fact would drop the $14.7 billion down to $12.3 billion. How big is this number? African American owned banks (what is left of them) only hold $4.3 billion in assets combined. The approximately 100 remaining HBCUs have combined endowments of around $3 billion. There are 44 people (none of which are African Americans) on the Forbes 400 who are individually worth more than $14.7 billion.
The causes of this are many, but the impact of it has been extremely pointed. In a country where homeownership has significant social and economic value to a group, African Americans have largely been starved of the social and economic oxygen that homeownership prevails and continue to lack the ecosystem necessary to make the sustained push above and beyond what has now become the mythical 50 percent line. But all hope is not lost.
Recently, Carla Holmes, a Norfolk State University alumnae and community banker, sat down for an interview to discuss the history of African American homeownership and more importantly the potential path forward. “I often say that community development found me. I noticed there was a need for education and training in the community and especially in the Black community in moving towards homeownership and understanding more about affordable housing.”
Owning a home is a keystone of wealth – both financial affluence and emotional security. – Suze Orman
Poor people know they are poor. Unfortunately, it is the African American working and middle class who do not know they are also poor. The problematic reality that because you can buy something does not mean you can afford it plagues much of African America’s working and middle class. These tend to be households who have higher education, higher incomes, and higher homeownership rates – but they also tend to have financial net worths that are just as poor as – well, the poor. Why? They tend to be more acutely indebted due to their education, home, car, and consumer poor, just as financially illiterate, and almost always just as asset poor as their poor counterparts in the African American community. However, any conversation about passive or investment income or financial health as a pillar in line with mental health and other priorities of a well functioning household is often met with angst or disgust. The prioritization of asset accumulation over consumption is met with more resistance than Americans against British taxation without representation – and we know how that ended. But not to worry, there seems to be no revolution brewing here (sarcasm). African American wealth accumulation continues to be an afterthought of the African American household. Upper middle class, affluent, rich, or wealthy being a thought of more as something for “others” and not ourselves. The achievement of degrees, a house, cars, and consumption is all we seem to believe life requires. Should times get tough, many within the community will tell you that a second job, a better paying job, or more education is more times than not the answer to a “better” life. Again, wealth and asset accumulation not so much.
How dire is the wealth situation for African America? Bloomberg recently reported that Black-White wealth gap has not budged in the past 40 plus years and is actually trending worse. McKinsey and Company report that nearly 20 percent of African American households have a negative net worth. The National Community Reinvestment Council’s report shows, “African Americans, who in many categories have the greatest gender economic equality, have the greatest gender wealth disparity though still having little wealth compared to Whites. Single Black men’s median wealth was $10,100, compared to Single Black women’s median wealth of $1,700.” An immense issue when one considers that the majority of African American households are headed up by single African American women. One would certainly suggest that because women are the load bearers for raising and providing for African American children and often extended family that this has also severely hampered their ability to accumulate wealth. An issue that is not as prevalent for African American men. None the less, it proves dire for the community as a whole that this is the case. Last but certainly not least (or all), there is the matter that African American homeownership has never breached above 50 percent which for the majority of families serves as the foundation that a lot of intergenerational wealth is built upon.
One of the general wedges to the wealth gap is asset ownership. Two-thirds of African American wealth according to Bloomberg is held in housing and very little in other asset classes like stocks in particular. This has presented an acute problem over the past 70 years as Bloomberg reports, “stocks have appreciated five times as much as housing prices.” However, the complexity of wealth without a conversation around income and disposable income which is income left over after expenses that can be used for savings and investing is vital to the conversation. African American median income is $45,870 according to Statista, the highest it has been in the past 30 years. The problem of course is that it remains the lowest of all four ethnic groups tracked (see graph below) with Latinos, European, and Asian Americans having median incomes of $55,321, $74,912, $94,903, respectively. Unfortunately, there is not a high enough savings rate that could truly overcome this lack of income. Despite the perception, African Americans are savers in line with their European American counterparts. Again, you can not catch up in a race running at the same speed as someone who is 100 yards ahead of you. This is the problem for African America. We are trying to save and invest at the same rate as those who have in most cases six times our wealth. So if home ownership is already our largest asset, then why are we suggesting that African American couples prioritize having two going into a marriage rather than one after they get married?
Every HBCU state except for Pennsylvania offers a homestead exemption. What is the homestead exemption? According to Investopedia, “The homestead exemption is a way to minimize property taxes for homeowners. It is also a legal provision offered in most states that helps shield a home from some creditors following the death of a homeowner’s spouse or the declaration of bankruptcy. The homestead tax exemption can provide surviving spouses with ongoing property tax relief, which is done on a graduated scale so that homes with lower assessed values benefit the most. The homestead exemption is helpful since it is designed to provide both physical shelter and financial protection, which can block the forced sale of a primary residence.” A person or couple can only have one homestead at a time, unless they both enter into the marriage with their own homestead. At which point, both parties are allowed to retain their individual homesteads. This means both properties will be taxed at a reduced rate creating more disposable income. Something they would not be able to do if they simply purchased a second home later in the marriage. What is that second homestead worth potentially?
According to Mortgage Calculator, the average annual property taxes in the United States is approximately $3,800. The homestead exemption typically saves approximately $500 off of that tax bill. That $500 invested annually for 30 years at 8 percent return is worth over an extra $60,000 to a household and that is just the tax savings reinvested. Naturally, the second homestead would be rented out by the couple and used to generate additional passive income. Assuming the couple could generate a profit of $200 per month or $2,400 annually off that second property, they now have $2,900 to invest annually which over the course of 30 years at 8 percent return is worth over $350,000. We have not even added on the building of the equity from appreciation or the extremely low interest rates that accompany homestead properties versus traditional investment properties. Banks are far more likely to see a homestead property as a lower risk than investment properties which they believe a borrower is more likely to walk away from than those that are homesteaded. Equity borrowed from the home could be used to reduce the households general tax bill overall further, leveraged to purchase non-homestead investment properties, or simply borrowed and used to invest in the stock market and because it is seen as “debt” does not carry tax liability on it. In other words, if a couple borrows $50,000 of equity out of their homestead property and make $10,000 on it, then they would only be paying taxes on the $10,000 but you still actually have $60,000 at your disposal. Whereas if you saved $50,000 and then made $10,000 on it, then you would be paying taxes on the entire $60,000. That almost $3,000 per year that would be coming from that property would also be an increase of 6 percent on the African American median income.
In the end of it all, assets and income go hand in hand. The more assets a family has the more income they produce and vice versa. In some ways, it is the epitome of the chicken and the egg conversation. For most African Americans, whom we see are highly unlikely to receive inheritance (see graph above) it becomes all about their family’s initial income and the race to acquire assets. Grievously, far too many African American families get the income and never convert it into assets. Taking advantage of prioritizing this little loophole can provide a family an extra $1 million in asset value and $80,000 in passive income if properly managed. An amount that currently would equal almost two times the African American median income. It is these small decisions that could have a monumental impact on the future of African American wealth and the closing of the wealth gap. In order for this to work as part of an overall strategy, HBCU alumni must prioritize having a sense of urgency about their finances and then be strategic about wealth and asset accumulation before tying the knot.
Every good citizen makes his country’s honor his own, and cherishes it not only as precious but as sacred. He is willing to risk his life in its defense and is conscious that he gains protection while he gives it. – Andrew Jackson
Ukraine has been preparing for years for the eventual invasion that would come from Russia. It has been so even prior to Russia’s invasion and capture of Crimea in 2014. Why? Ukraine’s intelligence for one, President Vladamir Putin’s writings that expressed sentiment that the breakup of the Soviet Union was a great tragedy of the 20th century, Russia’s 2008 invasion of Georgia, and because well that is WHO Russia is and has shown itself to be. It would have been more of a shock were Ukraine to act shocked at Russia invading more than Russia invading. Put another way, if Ike Turner slapped someone and they were surprised, who is crazier – them or Ike Turner?
This seems to be African America always when it comes to European America though. Constantly surprised by consistent behavior. Harlem, Houston’s Third Ward, New Orleans, Compton, Roxbury, so on and so forth. What do all of these have in common? They were once thriving African American strongholds until gentrification. Each time the gentrification wave came, African Americans in those communities were caught off guard, unable and unprepared to launch a counterattack (or offensive).
In a recent article by The New Republic titled, “How the Government Helped White Americans Steal Black Farmland”, in detailed fashion we learned about one of the most vital departments of any country, agriculture, which impacts land, development, life expectancy, water and mineral rights, and so much more was used by the U.S. government through the USDA to spearhead the wealth transfer of African American farmland into European America’s hands. “Black farmers not only lost out on these massive subsidies—they have been effectively disenfranchised within the modern agricultural system. Under conditions of savage oppression, Black families emerged in the early 1900s with almost 20 million acres of farmland and “the largest amount of property they would ever own within the United States,” according to the historian Manning Marable. Since then, they have lost roughly 90 percent of that acreage” says New Republic. According to New Republic, there will be a study put out soon by the American Economic Association’s Papers and Proceedings journal that will value the land lost between 1920 and 1997 at approximately $326 billion. An amount that is equal to over 20 percent of African America’s $1.6 trillion buying power. The $326 billion valuation excludes the 160 million acres that Africa Americans who were enslaved were owed post Civil War from Special Order No. 15 that guaranteed the former enslaved population of around 4 million 40 acres apiece, but was reneged upon by the U.S. government ultimately making the loss arguably worth trillions today. Yes, trillions. The economic loss has had catastrophic social, economic, and political echoing impacts for generations. “Revolution is based on land. Land is the basis of all independence. Land is the basis of freedom, justice, and equality”, Malcolm X said. This alluded to the belief that every revolution was and is about land given that it impacts everything that lays to bear on any group, community, country, and diaspora. African American institutions, especially those focused on agriculture, should have made the protection of African American land a strategic priority.
Enter the 1890 HBCUs, which were created with the Second Morrill Act of 1890. There were 19 HBCUs created under this act (and two HBCUs which were created under the First Morrill Act of 1862, which primarily created HWCU agriculturally focused colleges and universities). For all intents and purpose, 1862 and 1890 colleges and universities were created with an emphasis on agriculture. Tuskegee, through the political clout of Booker T. Washington, is the only private HBCU that has land-grant status. The other two private universities that are land-grant institutions are Cornell and MIT. Among the 1890 HBCUs, they have three of the six HBCU law schools housed at Florida A&M University, Southern University System, and University of the District of the Columbia. Despite this, based on their websites none of three have any focus/concentration on agricultural law. This means that more than likely African American farmers and landowners are in the hands of lawyers who are both non-African American and trained at an HWCU/PWI institution. Given historical behavior, it is not hard to assume that those lawyers do not work in the best interest of our community. It also once again poses the question of the lack of strategy among African America at using its institutions to protect its social, economic, and political interest. Stemming the tide requires a change in HBCU strategy and realizing the purpose of our institutions is to serve and protect the other parts of the African American ecosystem.
There are a few pointed pivots that 1890 HBCUs can do to serve and protect the agricultural interest of African America. First, the three 1890 law schools (FAMU, SUS, and UDC) can create an African American agriculture concentration in their law schools. Again, to be clear, an African American agriculture concentration is not the same as general agriculture, which tends to be from a Eurocentric perspective. Focusing on agricultural law from the African American agricultural perspective and interest is paramount. Secondly, the three 1890 law schools can create a joint organization for African American Agriculture Defense Fund that will serve as a means to fund law defense for African American farmers, lobbying efforts towards African American agriculture, and regional African American agriculture legal research. Thirdly, all of the 1890 HBCUs needs to create master’s programs in agricultural law and policy focused on their respective local, state, and regional geographies. They can then push for alumni to create scholarships that will allow for a pipeline of agriculture majors to pursue law degrees at the three 1890 HBCU law schools. Lastly (but not all), a concerted emphasis on offering courses, lectures, and seminars on the purchase and maintenance of African American land ownership emphasized to students and alumni and available to our entire community.
If HBCUs are not going to be part of the institutional ecosystem built to serve and protect African American interest, then what is their purpose? Without protecting African American land, what little is left of it, then what is to come of African America? Protecting African American land takes more than just HBCUs, it also requires African American owned financial institutions, real estate organizations, families, communities, and more. However, 1890 HBCUs must take the vanguard and protect what we have so that we can start to stem the tide and move the trend upward again. The notion that land theft and assaults have been happening to African America for 100 years and we still have yet to respond with a counterattack or an offensive of our own is telling. HBCUs also are becoming more and more vulnerable to their land and the communities they are in, which are typically African American, being gentrified and the use of predatory land theft and assaults heightened. Howard University, Prairie View A&M University, and Texas Southern University all are witnessing land theft and assaults on the land surrounding their institutions. Unfortunately, there was and continues to be no unified strategic planning to protect them. In Howard University’s case, white residents have even been so gall as to suggest that the school be moved. This is just one example of over a century of attitudes that have helped lead to others justifying land assaults on African American landownership. We know who are our enemies are, we have the intelligence and tools, now is the time to start urgently preparing our troops to defend our lands.
“We need to intentionally invest in health, in home ownership, in entrepreneurship, in access to democracy, in economic empowerment. If we don’t do these things, we shouldn’t be surprised that racial inequality persists because inequalities compound.” – Pete Buttigieg
On the campus of Texas Southern University on November 4th and 5th, the National Association of Real Estate Brokers, an organization representing the interest of African American real estate professionals, hosted a homeownership summit with focuses on not only homeownership, but also student debt, access to credit, and investing. The importance of such an event being held on an HBCU campus can not be understated.
Intertwining African American institutions with each other has long been a struggle for the community’s development with African American institutions often operating on islands instead of a connected ecosystem. Events like NAREB’s Black Homeownership Summit at Texas Southern University helps highlight the power, potential, and scalability of what happens when African American (and Diaspora) institutions work together. What better place to address Black homeownership after all than on the campus of an HBCU? Soon to be African American graduates and professionals will be at the vanguard of trying to close the acute homeownership crisis that African America continues to face (graph below).
One of the keynote speakers at the NAREB Black Homeownership Summit event was Teresa Bryce Bazemore, CEO and President of the Federal Home Loan Bank of San Francisco, speaking exclusively to HBCU Money about the event said, “We need all the parties in the housing finance industry and other stakeholders to collectively work to eliminate the barriers to homeownership. In this new environment, all consumers including Black and Brown people should be able to participate equally in the dream of homeownership. We need initiatives that can help potential buyers with improving their credit, saving for down payments and understanding the entire home buying process from A to Z. We also need to make sure that the lending rules are equitable.”
HBCU Money’s Suggested Five Initiatives For HBCUs Can/Should Be But Not Limited Too:
Making financial literacy a mandatory part of matriculation for HBCU students. This can be done through the financial aid office, workshops, or a class.
Providing HBCU students work study jobs that go into the community at African American K-12 schools and teaching financial literacy.
Partnering with African American owned banks and credit unions. Due to their deposit bases, many African American owned banks and credit unions simply can not participate in the primary mortgage market and there are few to none African American owned non-bank mortgage lenders. This leaves the African American community in an extremely vulnerable position to predatory lending as has been demonstrated and shown time and time again. HBCUs are a key to growing assets within African American financial institutions through students, alumni, and institutionally.
Offering more scholarships for ALL students. Scholarships are purposed to reduce student loan debt, but they are often resigned to high achieving students despite the majority of students being in the middle. This becomes highly problematic for African Americans who usually do not have the familial wealth to assist in paying down or off their student loan debt. HBCUs while cheaper than our PWI counterparts on the whole could be doing even more to reduce the student loan debt burden for African American students by ensuring that any student who is academically eligible has an opportunity to reduce their student loan debt burden. This provides an opportunity upon graduation that more of their initial paycheck is going towards wealth building and potential homeownership rather than debt burden.
Encouraging the use of startups like HBCU Real Estate, who has part of their mission statement to use a portion of their profits to provide down payment assistance for HBCU alumni who seek to purchase primary or investment properties.
Homeownership and real estate ownership have long been a cornerstone to establishing generational wealth in the United States. Despite this, the African American homeownership has never crossed over the 50 percent threshold and according to MarketWatch and has always maintained a 20-30 percentage point gap between African and European Americans. African America’s civilian noninsittuional population as of October 2021 was 33.7 million and its civilian labor force is 20.6 million and the African American labor force 20 and over is 19.9 million. Assuming that 44 percent of the 19.9 million are homeowners (8.7 million), it would take approximately 1.5 million more African Americans to become homeowners to get African America above 51 percent. Based on the most recent data provided by Zillow, the typical value of U.S. homes is $308,220 as of September 2021. Between 1999 and 2021, the median price has almost tripled from $111,000 to $308,220. This means in order for those 1.5 million to acquire homes they would need down payments of approximately $16.2 billion using FHA’s 3.5 percent down financing or $10,800 per potential African American homebuyer. While it does not on the surface seem like a lot to many, that number represents almost 45 percent of the African American median net worth, but a mere 6 percent of European American median net worth.
Just for perspective on that $16.2 billion, there are no African Americans with a net worth more than that, but there are 45 Americans whose single net worth exceeds $16.2 billion. The road to achieving more African American homeownership will be no small task, but events like NAREB/Texas Southern will go a long way in us doing the hard work together, lifting the heavy load together, and ultimately achieving our goal together.
“Without leaps of imagination or dreaming, we lose the excitement of possibilities. Dreaming, after all is a form of planning.” – Gloria Steinem
This year’s American Planning Association in New Orleans was a success for both the organization and for the exposure that a set of Alabama A&M University students (pictured above) received who were in attendance.
American Planning Association’s history dates back to 1978 when the American Institute of Planners and the American Society of Planning Officials merged and decided to move forward under a united banner with the aim of, “organized exclusively for charitable, educational, literary and scientific purposes to advance the art and science of planning and the activity of planning — physical, economic, and social — at the local, regional, state and national levels.” Today, the website states that the organization’s current vision revolves around, “provides leadership in the development of vital communities by advocating excellence in planning, promoting education and citizen empowerment, and providing our members with the tools and support necessary to meet the challenges of growth and change.” Something that is a vital exploration of HBCU towns and surrounding communities who are often highly undeveloped.
Alabama A&M, located in Huntsville, Alabama, like many rural HBCUs is a flagship institution in the halo geography of its location. Huntsville is home to almost 200 000 residents along with a strong NASA presence. affordable housing, the future for Huntsville could be extremely bright – and therefore Alabama A&M impact on the area could also be . However, who will ultimately play a role in shaping Huntsville’s future? Hopefully, with a strong planning program like the one being developed at AAMU, it will be their alumni who will sit in public office and private firms and shaping the future and influence of the city. Ultimately, a benefit to the institutional capital of Alabama A&M University.
The APA annual conferences and workshops provide intellectual discourse on what is shaping communities is often attended by the who is who among public and private interests looking to get a glimpse into the future of how to provide the assets that will allow them to continue to grow and flourish. Given that HBCUs and the towns they reside in, especially in rural areas, maybe the last bastion of fighting gentrification and building sustainable African American communities, it is vitally important for HBCUs, their professors, and students especially continue to be present.
We were able to catch up with Tayla Solomon, a rising junior at Alabama A&M and Urban Planning major with a minor in Political Science, who was one of the Bulldogs in attendance at the conference and got her to share her thoughts on attending:
What made you decide to major in Urban Planning? I decided to major in urban planning when I visited spring ‘16. My college counselor, Paula Dofat, made it possible for me and another classmate to drive to AAMU from Baltimore. I knew I wanted to major in something that not only caught my attention but would be if a great impact to the world in many ways.
Was this your first time attending the APA conference? Yes, this was my first planning conference. I’m excited to start fundraising for the next one.
Was Alabama A&M University the only HBCU present that you are aware of? If so, do you think it is important for more HBCUs to be present in the organization and conference? If so, why? AAMU was not the only HBCU at the conference. But there are a limited amount of HBCU’s that are accredited in urban planning. HBCU’s make up a small number in most conferences and most do not have the funds to participate.
What was the most important take away for you from this conference? The most important thing I took away from the conference was to network. There are thousands of people who share the same interest in you and they are also willing to help you and work with you. Once you step out of your comfort zone you will become unstoppable in whatever you put your mind to.
Did you have a favorite workshop that you attended and what was it on? I cannot remember my favorite one exactly but it talked about making vacation area sustainable for long term housing.
Lastly, what is your dream pursuit within the field of planning? My dream is to ensure better living conditions in impoverished cities. I hope to get a chance to work in every field of planning, mainly housing, environmental, and transportation.
If you want to donate to Tayla Solomon and the other Urban Planning students to attend more conferences, please contact: Ms. Heidi Weaver, Secretary, Tel: 256-372-5426, heidi.weaver@aamu.edu
HBCU Money 