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Chloe b.@2x

Home Ownership Will Not Save Black Women

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I’ll be damned if I’m not saying Madam President come November 2020. The fact that I can say this is really a testament to the women who have paved the way and the black women who have consistently done their part in voting booths. In fact, we should take more time to celebrate black women for their ability to require candidates to more rigorously fight for us. Just as we show up consistently, we are looking for someone to show up for us.

Both Elizabeth Warren and Kamala Harris are showing up for us. At least for now. Being that Harris is one of us, I want to use this as an opportunity to better define what “showing up” rigorously really looks like.

After Harris’ shining moment in the first democratic debate, she posited two new policies. First, in an effort to show she sees us, she put forth a $100 billion plan to invest in black homeownership as a solution to the racial wealth gap. Then, Harris called for reforming how credit scores are calculated by including rent, cell phones and utilities. While both are well intended, only one of these plans will effectively liberate black women from the grips of the ever-widening wealth gap.

Wealth inequality is real, it’s crippling, and it’s distributed heavily across racial and gender lines. When we fail to look at issues that affect our communities through intersectionality, black women will be rendered invisible. Our multi-dimensionality is why the wealth gap is the most severe, pervasive, intractable and damaging inequality facing black women. We are both black and women. And both demographics struggle with homeownership because of how policies have morphed from protecting us to profiting off of us.

Homeownership is not the pathway to wealth. Ownership is. After slavery ended, land and homeownership were how black families accumulated wealth. But, Jim Crow and other racist policies made mortgage lending a primary market for perpetuating and monetizing white supremacy. This is still true today, as the 2008 financial crisis wiped away nearly $100,000 of a black households wealth.

There are two fundamental issues. The first issue is that homes and lands are illiquid assets. The wealth gap is so crippling because black women do not have enough current wealth (liquid assets) to help us survive and thrive through our day to day. We cannot convert the value of our homes into cash overnight in case of an emergency. I understand that we need to have solutions that address intergenerational wealth, but as a financial advisor we often say we need to think about current wealth before we think about legacy wealth.

The second issue is not that we aren’t becoming homeowners, it’s that the real estate industry (backed by and in partnership with the finance industry) has been able to legally code the value of our mortgages (the securities interest in our properties) in a way that protects them and provides longevity to their wealth. Not ours. Private corporations are able to turn our illiquid assets into liquid assets through securitization. We get stuck with more liabilities and illiquidity, thereby providing the conditions to perpetual inequality.

But, if we look at Harris’ second plan, we begin to see how that could help us. According to a recent report, we would lose the opportunity to accumulate nearly $250,000 of wealth in our lifetime with a below average credit score.

Our credit scores are calculated by an algorithm. It takes into account how often we pay our bills on time (credit history), how much we put on our credit cards (capacity), and our age (credit history) among other things. Currently though, the algorithm only recognizes payments made for your mortgage, not paying your rent. It recognizes paying your credit cards on time, not paying your cell phone bill or water bill.

Given that black women are more likely to have cell phone bills than a mortgage, the way our credit scores are calculated is inherently biased. Reforming this policy will boost our credit scores and restore our ability to accumulate more wealth.

With higher credit scores, we also are more likely to receive lower interest rates. The effect interest has is significant because that ties into our liabilities, which lower our net worth (wealth).

The fact that we are discussing radical policies like the aforementioned or canceling student debt is more than exciting. It’s paramount, especially since black women are now going to college at a higher rate than their counterparts. But, we must continue to push the rigor of our representatives’ policies because if they get it wrong, we have the most to lose. We need not be rendered invisible because they don’t understand intersectionality. We do what we do best. Show up. Speak out. And demand we be heard.

 Chloe McKenzie is a wealth literacy expert and leader for wealth justice. Chloe advises institutions and Fortune 500 companies on how to fight for wealth justice by showing them how to prioritize and serve disadvantaged communities traditionally exploited and overlooked by the industry. She is also the founder of BLACKFEM, INC., a 501(c)(3) nonprofit with a mission to  transform school-based learning so that girls of color in underserved communities are empowered with skills, habits, and resources to build and sustain wealth.

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My resources do more than just build wealth literacy; they aim to impart wealth-building capability. All of my resources are culturally responsive, translated in Spanish and French and accessible for individuals with learning differences or disabilities.

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