That the last 12 months have been extremely difficult probably goes without saying, but there are many who believe that society, for all its difficulties during 2020, has gone awry somehow, that it no longer provides the opportunity to thrive whatever their background.
It’s a perspective that new research from Dartmouth College supports. It highlights how many Americans are struggling to pay their bills, with these challenges often stratified along racial lines, with Black homeowners twice as likely to lose their homes than white homeowners. The authors argue that this is often because of the lack of financial support from extended family, and the higher rates of poverty across family networks.
The researchers believe their work is the first to explore how resources among the extended family networks of homeowners affect the chances of them sustaining homeownership.
Income dynamics
The researchers gathered data from the Panel Study of Income Dynamics between 1984 and 2017. This data allowed them to track families across several generations, including the wealth of a homeowner’s family and that of their extended family members who live elsewhere. They were particularly keen to understand the numbers of those living at or below the poverty line. Lastly, they explored some of the trigger events, such as unemployment or the development of a disability, that might impact one’s income.
“Owning your own home in the U.S. has long been associated with achieving the American dream. Historically however, African American households have been excluded not only from the homeownership market but also from neighborhoods due to persistent racial segregation and discrimination,” the researchers explain. “White owners have accrued more wealth from their homes than Black owners, whose neighborhoods are often subjected to systemic racist practices that restrict the potential benefits of homeowning for Black owners. Our study shows that Black homeowners are much more vulnerable to losing their homes than similar white homeowners, in part because they have less kin wealth to draw upon while being much more likely to have impoverished relatives to aid in their housing situations.”
The data revealed that the relatives of Black homeowners living outside the home had a net worth of around $133,000 on average. This compared to the figure for white homeowners families of around $442,000. What’s more, 24% of the extended family of Black homeowners lived in poverty, compared to just 6% of white homewoners.
“Our homeownership exit data show that having extended family who are at the poverty level can be a burden, just as wealthy extended family can be a resource,” the researchers say.
The data reveals that roughly 20% of the homeownership exit gap between Blacks and whites is attributable to this network wealth differential, with a roughly 50/50 split between wealth and poverty. The remaining 50% of the homeownership exit gap can be attributed to personal wealth, income, and employment status, and the various trigger events that contribute towards financial hardship.
“To help reduce racial inequalities in transitions out of homeownership, policies designed to reduce racial discrimination in lending practices and programs targeted to sustaining ownership should be implemented,” the researchers conclude. “We know that these types of housing policies have major impacts on peoples’ lives and can benefit underserved and vulnerable populations, including African Americans, Latinos and immigrants.”
