A decade after the Great Recession and foreclosure crisis affected millions of Americans, homeownership remains a major way many people hope to build a nest egg and save for retirement.
But, new numbers from the National Association of Real Estate Brokers show the homeownership gap between whites and blacks is growing bigger. Whites are much more likely to own a home than African Americans in cities across the country.
In Dayton, fair-housing advocates say the gap is exacerbated by disparities in home values and lending.
Dayton real-estate broker Veronica Bedell-Nevels has handled properties in Ohio for nearly 20 years. She spends a lot of time on the road.
“I work in Clinton County, down in the Wilmington area, down in Cincinnati, up in Columbus, I work wherever I'm asked to work," she says.
On a cold afternoon, she's where you’d find her most days: in a black SUV that doubles as a mobile office. The back seat is covered with papers, office supplies and snacks for the road.
Today, Bedell-Nevels is in Moraine, on a quiet residential street where small ranch-style homes line up close to the curb, and fenced yards are dotted with colorful children’s toys.
Some of the properties on this street are in visible disrepair, with falling-down porches propped up by plywood.
“This is a predominantly white neighborhood of houses that are humble," she says. "And some houses have been here for 40, 50 years.”
Bedell-Nevels points to one house with white siding that she says illustrates a troubling trend she’s noticed in Dayton’s real-estate market.
“For instance, over here is a little bungalow that's 988 square feet that might sell for $50,000, and you go over to West Dayton and that same bungalow might sell for, if we're lucky $10,000, maybe $15,000 dollars, in the same condition,” she says.
Bedell-Nevels is part of a coalition of realtors called the Greater Dayton Realtist Association, part of the National Association of Real Estate Brokers, one of the oldest and largest African American trade organizations.
"And we have a saying, a slogan, that black homeownership matters," she says.
The disparity in home values and sale prices, Bedell-Nevels says, amounts to modern-day redlining and a pattern of racial discrimination that depresses home values in West Dayton and Trotwood.
“It tells me that just because there are people that are brown or a different color, you think that their houses don't have the same value as people who are poor and white.”
And because banks often don’t lend for lower-valued properties, Bedell-Nevels says many qualified buyers have trouble accessing conventional mortgages in Dayton communities of color.
Depressed values also make it more difficult, she says, for existing homeowners to refinance or sell at a price that preserves their home equity.
"Unfortunately, people who want to buy the house next door can't go get the loan to do it. But then you're told you need to reinvest in your community. And it's like, well, how could we do it when the resources are stacked against us?" says Jamica Garrison, with the Dayton group Neighborhoods Over Politics.
The Reveal investigation
A national investigation by our public-media partners at Reveal at The Center for Investigative Reporting earlier this year found a pattern of mortgage disparities in dozens of cities across the country:
"Fifty years after the federal Fair Housing Act banned racial discrimination in lending, African Americans and Latinos continue to be routinely denied conventional mortgage loans at rates far higher than their white counterparts. This modern-day redlining persisted in 61 metro areas even when controlling for applicants’ income, loan amount and neighborhood, according to a mountain of Home Mortgage Disclosure Act records analyzed by Reveal from The Center for Investigative Reporting," the Reveal researchers write.
Reveal also found evidence suggesting mortgage discrimination in the Dayton metro area:
"In 2016, black applicants were 2.1 times as likely to be denied a conventional home mortgage as white applicants," according to the report.
Read the full report.
WYSO's April Laissle crunched Reveal's Dayton-related data and found more evidence of lending disparities:
- Of the 20 Montgomery County census tracts with the highest loan-denial rates, 14 have majority black populations.
- Of the 20 Montgomery County census tracts with 100 percent loan-approval rates, eight are over 90-percent white.
- In eight Montgomery County census tracts, 100 percent of black applicants were denied loans.
United States Mortgage Bankers Association officials have repeatedly and vigorously denied allegations of unfair lending practices, including in a response to the Reveal investigation.
“While quite informative regarding the state of the lending market,” the records analyzed by Reveal do “not include sufficient data to make a determination regarding fair lending,” the Mortgage Bankers Association’s chief economist, Mike Fratantoni, said in a statement to Reveal.
A complicated problem
“If you talk to anybody in the real-estate business, they'll tell you location, location, location drives the market more than anything else,” says Montgomery County Auditor Karl Keith.
Keith says tax and property appraisers consider a host of interrelated and sometimes subjective factors when determining values.
They typically look for similar, comparable homes within about a half mile, evaluate a community's amenities, proximity to transportation or shopping, for example.
Keith says too many dilapidated properties in a neighborhood, higher-than-average crime rates – or even just the perception of crime – can also play a big role in housing market-price swings.
"It's driven by the perception of the school district and the community that drives what people are willing to pay for them," he says. "And so when you start crossing jurisdictional boundaries you're going to find wide variations in the market value of homes. A lot of that is generated by what school district the home is in."
Lost generational wealth
There’s growing evidence the differences can translate to steep losses over time.
One new Brookings Institution-Gallup study of U.S. census and real-estate data finds owner-occupied homes in majority black neighborhoods are undervalued by an average of $48,000 per home compared to identical homes in majority white neighborhoods.
The losses, according to the analysis, amount to $156 billion in lost wealth the study authors say could be invested in home improvement, education or new businesses instead.
To level the playing field, Dayton advocates have long pushed banks to better serve westside neighborhoods and open more brick-and-mortar branches.
It’s a formula that’s working for Wright-Patt Credit Union, says Chief Lending Officer Eric Bugger.
"We do a lot of lending in West Dayton," he says.
And, without strict mortgage minimums, he says it’s able to consider smaller loans some banks wouldn’t see as profitable enough to take on.
“Not just home loans but small signature loans, vehicle loans, credit cards.”
The credit union follows standard industry underwriting criteria in deciding loans, considering a borrower’s debt, income and ability to repay.
But unlike many traditional banks, it also offers financial education to first-time homebuyers and others looking to improve their credit – a reason commonly cited in loan denials.
And a lot of that education happens in person, Bugger says, with trained staff at neighborhood branches. He says Wright-Patt saw an opportunity to expand an existing branch on the westside after PNC Bank left the Westown Shopping Center in 2013.
“The more we can invest in there with a brick-and-mortar facility specifically serving that area, the more it's going to help that community," he says, "so, it helps those property values and doesn't drag them down.”
Bugger says building relationships with even modest borrowers is a good financial bet that pays off as people build wealth and borrow more money over time.
But the westside still has fewer full-service financial institution branches overall than many other parts of the city.
That could change over the next few years if fair-housing groups get their way.
After officials found lending disparities in Dayton violated the federal Community Reinvestment Act, a national coalition of community groups reached an agreement with some banks, including KeyBank, Fifth Third Bank and Huntington Bank.
Under the terms of the deal, the lenders agreed to open more brick-and-mortar branches, and increase mortgage and small-business lending in historically underserved low and moderate-income neighborhoods.
Read more about the 1977 Community Reinvestment Act.
This story is part of WYSO's Scratch series on innovation, business and the economy.