Abstract

Homeownership has long been the cornerstone of wealth accumulation for the vast majority of households. However, the distribution of wealth is starkly divided along racial and ethnic lines, with the average non-Hispanic White household holding more than ten times as much wealth as the average Black or Hispanic household. These differences can in part be explained by differential access to credit and homeownership for these groups. This chapter begins by reviewing the historical legacy of past discrimination in the mortgage and housing market, and shows how this legacy persists today in shaping unequal returns to homeownership. It then argues that the erosion of the social safety net, coupled with financial deregulation and the increasing complexity of financial instruments, has made homeownership a riskier investment than in the past. As a result of these factors, homeownership alone remains an empty promise for closing the racial and ethnic wealth gap. A more ambitious federal homeownership policy is needed, one that recognizes the cumulative disadvantage Blacks and Hispanics face in the housing market and that is structured to ensure that the benefits and risks of homeownership are more evenly distributed.