Hitting the Money Spot 

Creating Black Generational Wealth

Celebrating Juneteenth

“The very serious function of racism … is distraction. It keeps you from doing your work. It keeps you explaining, over and over again, your reason for being

Toni Morrison

 

Real Estate and Home ownership is one of the ways in which most Americans have acquired generational wealth. Black Americans came to this continent where their bodies were the commodities used  as currency. They were denied access to land and the economic power that it brings. Black people were promised 40 acres and a mule after the Emancipation Proclamation. This promise has never been fulfilled.

 

The proportion of land owned by Black Americans has actually shrunk in the last 100 years. In a 1998 report,  the U.S. Department of Agriculture concluded that Blacks faced discrimination ranging from The New Deal and USDA discriminatory practices dating from the 1930’s to 1950’s . The faced mid century era exclusion from  legal, title and loan resources. Blacks faced terrorism from Whites who would bomb, lynch, rape and murder them if they were perceived as too prosperous. The terror that reigned on Blacks in this country during the Red Summer was just a repetition of what Blacks had experienced earlier but in a compacted period of time. Instead of the terror being disbursed over a 10 year period of time, it was inflicted in less than 5 years.  The  terror inflicted upon Blacks the five years after World War I and World War II was due to Black people returning from fighting a war for this countries independence and demanding to be included in it’s economic success.

 

The Discrimination in home ownership after World War II also impeded the acquisition of wealth. All across America, exclusionary zoning and restrictive covenants in the deeds kept Blacks out of many neighborhoods. In the absence of such legal constraints, real estate brokers, insurance agents and bankers colluded to keep Black people in poverty areas. Black were denied home , home improvement  and business loans due to redlining.  The FHA drew a red line around black neighborhoods. The National Association of Real Estate Boards explicitly instructed their members to keep Blacks out of White neighborhoods. The appraisal manuals told realtors to stay away from inharmonious racial groups. In one group of 67,000 mortgages insured by the G.I. bill less than 100 went to Blacks. 

 

In 2017, the racial homeownership gap was at it’s highest level for 50 years, with 79.1% of White Americans owning a home compared to 41.8% of Black Americans. Black homeowners are suing because their home is appraised at a higher level if the Appraiser comes to the house and believes the owner is a White person.

 

Economists state that intergenerational transfers during the parents lifetime and after their death account for at least half of the average American family’s wealth. Black families need to parlay more of their money into productive assets that build wealth rather than wasting it on assets that deplete resources. Spending money on depreciating assets drains the resources and leaves nothing to pass on to the next generation. 

 

Racism will continue to exist and the new Civil Rights Movement is about Creating Generational Wealth to pass on to the next generation. Real Estate is one of the best ways to do this. When you own your own abode, you can handle life’s ups and downs with less trauma. The key to acquiring real estate is to make the decision that you want to invest whatever funds you have into appreciable assets instead of depreciating assets. 

 

Real Estate is easily transferable to succeeding generations. Set up a trust to hold your real estate assets and upon the death of the grantor, ownership automatically transfers through the trust. Real Estate conveyances at death are much less complicated than other business agreements. Real Estate is a proven commodity. There are years when real estate decreases in value, but in the long term, real estate constantly appreciates and real estate generates consistent income.

 

It is easier in this country to qualify for a $60,000 car loan which is a depreciable asset than it is to qualify for a $60,000 piece of real estate. Black people must learn to persevere and focus on the appreciable asset that will not only serve the current owner but subsequent generations. The other issue which has to be addressed is the upkeep of real estate in order to maintain it’s value. The first step is to purchase real estate as a homeowner and then to acquire real estate as an investor.