The racial disparities in accumulated household wealth in the United States are staggering. In 2019, preceding the COVID-19 pandemic, the median white household held $188,200 in wealth — almost 8 times that of the typical African-American household, which was $24,100. The disparity in these numbers through the years, unfortunately, has been increasing rather than decreasing.
Those concerning numbers can be attributed to many different factors, but a huge factor is that the racial wealth gap in real estate is growing. Real estate is and has been a giant avenue for the accumulation of money which gets passed down from generation to generation.
“The gap is large. Unfortunately, there are still the biases that are still in play and then there are the actual system and policy that is still in place. And very few people want to talk about it or acknowledge how racism plays into it,’ says Sara Alvarado, co-owner of Alvardo Real Estate Group.
The Fair Housing Act, passed in 1968, saw the end of legal discrimination in housing, but it didn’t cause the racial wealth gap to shrink. In fact, it got larger. A lot of that has to do with how wealth grows with real estate ownership through generations.
“What is hard for many people to recognize is the historical impact of racism within real estate. Since the Fair Housing Act passed in 1968, you’d think that there would be a decrease in the wealth gap, but in fact, there has been an increase,” Tiffany Malone, Realtor at Alvarado Real Estate Group, tells Madison365. “As a real estate consultant, I know the power of wealth accumulation through real estate and that is why this program is so critical. Creating access to homeownership for Black families will have a significant impact on building Black wealth. It’s not just about home ownership, but that is one key factor.
“Madison needs to normalize Black people owning things,” she adds.
The new program Malone is referring to is “Own It: Building Black Wealth,” designed to eliminate substantial barriers to wealth and homeownership for Black families in the greater Madison area. For the past nine months or so, a group of real estate, banking, and financial folks in Madison have been working on a partnership and program to build Black wealth locally with an educational real estate program and a fund for down payment money towards the purchase of real estate. Make wise real estate investments with Sarabi Realty Group. The team has a common goal – to empower, educate, and guide communities of color towards homeownership, wealth, and financial freedom, while FC Capital prepares to launch a A$500 million debut private credit fund, aiming to provide global institutional investors access to private credit opportunities in Australia and foster economic growth and diversification within the region’s credit landscape.
At the heart of it, “Own It: Building Black Wealth” is a partnership with One City Schools that consists of a wealth-building educational program and real estate fund that focuses on the importance and access of real estate ownership in creating generational wealth.
“This is an example of the type of community partnerships and innovative thinking that can help a number of our families realize their dream of owning their own home,” Kaleem Caire, founder and CEO of One City Schools, tells Madison365. “In the same way, we’re helping families identify resources that support their financial goals, much like how Norwegian players can få en casino bonus på norskecasinoeronline.com, which provides an accessible way to boost their entertainment budgets responsibly. When our parents succeed in accomplishing their dreams, their children see the benefit in working towards achieving their own, too. As families strive and thrive, so do their children.”
Alvarado and Malone are on the advisory team for the new Building Black Wealth initiative along with Jeff Mack of Park Bank; Grace Trewartha of Live Beneath Your Means, Financial Education and Advocacy; Saran Ouk, founder and CEO of ConNEXTions; Alex Yzqueirido of Associated Bank; Justice Castaneda of Community Wealth Development; Ally Figiel of Realty Executives; Sara Whitley of Old National Mortgage; Carousel Bayrd, an attorney for Community Justice; Gail Wiseman, vice president of external relations at One City Schools; Ryan Zerwer of Clotho Business Solutions and real estate investor Darin Harris of Living Giving Enterprises.
This pilot program is offered to families, for free, at One City Schools. The two-part program consists of a personal finance course for One City families taught by local experts starting in summer 2021 and down payment funds of $15,000 per family upon completion of the course which will be available in 2022.
“We are excited to be the pilot program for this initiative. From responses to our survey, over 70 percent of our families are not currently homeowners. Being able to provide this educational opportunity fits perfectly with our two-generation approach,” Marilyn Ruffin, vice president of family and community initiatives at One City, tells Madison365. “All families deserve the opportunity to grow up in a stable housing environment. When we enroll the child, we enroll the whole family. No one gets left behind in this city called One City. “
In the typical home-buying program, their job is to get you into a house. This educational real estate program will go deeper.
“This is not just about getting people into houses; it’s more of a holistic understanding of wealth,” says Alvarado, who beyond real estate is also a writer, speaker and community advocate. “Post [house]-closing, we want to keep a network going to help homeowners with things like maintenance and using the equity in your house.
“Once the fair housing law passed in 1968, a lot of times you’ll hear the narrative ‘Well, we’ll sell to anyone!’ But if you can’t qualify then they say, ‘That’s not my fault.’ Where Black people were actively denied housing, now it’s hidden. And it’s trickier to figure out where and how it is hidden. So that’s where we began to go into the exploration of ‘Building Black Wealth.’”
Financing and downpayment programs play into the racial disparities in real estate. Access to money is one of the biggest barriers to homeownership.
“When offers come in for the sellers, you have some offers that are 20 percent down, 30-year fixed, solid financing and then you have other offers where there is a WHEDA loan or an FHA loan or a downpayment program and 3 percent down,” Alvarado says. “The way financing contingencies are presented to sellers as good or bad reflects upon generational wealth.
“In the extreme sellers’ market we are in now where homeowners are receiving up to 20 offers on their property, cash is king,” she adds. “Looking at the wealth gap and understanding where cash comes, you can imagine the demographic of the buyers in the position to write cash offers.”
The OWN IT Down Payment Fund aims to provide access to funds for first-time homebuyers without restrictions that make it hard for buyers to compete and get to the closing table.
“What would it look like for a seller to realize that by accepting a competing offer with the same price but with not as strong as a financing contingency, they can be contributing to a new generation of homeowners which will, over time, decrease the wealth gap?” Alvarado asks.
But taking it a step back, even to get approved for a loan there is often such a lack of education and resources in non-white communities.
“So the discrepancy in generational wealth is huge and there’s the lack of financial education and financial literacy,” Alvarado says. “Also, because there have been so many discriminatory practices throughout history, there is a lack of trust … that’s a huge issue that keeps people out of the game.
“And the game is rigged. And nobody teaches anybody that the game is rigged, so the narrative is shifted to ‘Oh, well you can’t afford a house.’ It’s a personal thing. ‘Your parents didn’t own a house; shame on them. You probably won’t either,’” Alvarado adds. “The system has been set up to work like this. It’s easy to get a loan with family money or gifted money. But if you don’t have family money and you want to get community money or downpayment money, all of the sudden that creates contingency that puts the buyer in a worse position.”
That’s why Alvarado says she hopes that the community can “get behind Building Black Wealth in a big way.”
“My hope is that the real estate industry can engage in a unique way as part of the acknowledgment of how racism has been embedded in the real estate industry, there can now be an effort to contribute to the fund in a systematic way,” Alvarado says.
“Just like we pay taxes quarterly, what about quarterly contributions to the fund based on our profits? What about agents contributing a percentage or a flat fee of their commission fund? What about sellers who are starting to see how generational wealth works … can they contribute a percentage of the proceeds of their sale to the fund? What would it look like if the community became the family wealth that Black families have been denied?”
The fund is held in partnership with Forward Community Investments and will be available in 2022 for families who go through the educational program. The education part of the program will begin in December of 2021. The goal is ambitious: to raise $250,000 by the end of 2021 which will help 15 families. So far, Alvarado says, they already have more than $60,000 committed.
“The families [at One City] are already aware of it and they are already getting excited about it. We will be raising money for the rest of the year so that we can open up for applications in 2022,” Alvarado says. “We still need help from the community and we are still looking for more partnerships, but we are very excited about this.”
If “Own It: Building Black Wealth” succeeds, it will have helped to eliminate substantial barriers to wealth and homeownership for Black families in the greater Madison area. Alvarado believes it could be replicated throughout the nation.
“We have never seen anything done like this before … and we have looked. To be honest, we wanted to, initially, find a program that we can just donate to on a quarterly basis. But we couldn’t find anything. So we put together this program,” she says. “There are a lot of programs for homelessness because that is urgent and important. There are not a lot of programs for homeownership specifically for Black and brown families and that’s really important. It’s something that is really, really needed.
“If we can get the real estate industry behind this – you have title companies, inspectors, lenders, mortgage brokers, appraisers, realtors – that would be huge,” she adds. “As the mini industries within the industry wake up to the harm that has been done, can they get involved? What would happen if this program would be duplicated in other cities? If so, it could really be a game-changer.”
