Left behind

We're all vaguely aware that there's a disparity in wealth between whites and blacks.  How serious is it?

According to an article in today's Seattle Times, the median net worth of a white household in Seattle is $456,000.  Of an Asian household?  $446,000.  How about a black household?  That would be -- drumroll -- $23,000. 

That's not a typo.  That's twenty-three thousand dollars.

How could this be?  The article discusses a number of statistics.  The disparity in home ownership is the biggest factor in differentiating black (and Hispanic) households from white and Asian.   Seattle's black households have among the lowest rates of home ownership in the nation -- 28 percent, compared with 64 percent for white households.  Combine that statistic with the fact that the median net worth of families that own their houses is $898,000, while for families that rent it is $36,000. 

The effect of home ownership on net worth dwarfs the impact of other criteria such as education and age of the household members. 

The article offers no solutions to the problem, but -- as realtors happily tell us -- owning a home is the best and most certain investment a young person or persons can make.   A renter, even a renter with a high income, is apt to blow his paycheck, month after month, or to make unwise investments.  The homeowner not only has made an investment that, historically, appreciates nicely over time (and, in Seattle's market, has appreciated spectacularly over the past couple of decades), but is required to invest a certain amount of his income each month toward reducing his mortgage debt.

Obvious advice to renters, whatever their race, is to invest in residential housing if they plan to stay in the Seattle area for any appreciable period of time.  Unfortunately, the price of a house, any house, in Seattle and its neighboring suburbs is at an historically high level relative to average salaries in the area -- although it has declined slightly over the last few months.  A large number of Seattle homeowners find themselves happily occupying houses that they could never afford to buy at present prices. 

They lucked out.  They were in the market for a house when houses were far more affordable. 

Now, even if prospective home buyers have a salary high enough to afford a house of some sort, they face a market where few people are selling.  At any price.  Homeowners can't afford to sell, because -- unless they're leaving the area -- they would have a hard time finding another desirable house to buy.  This is true whether they are young and at a stage where they would be selling a starter home and buying a larger one, or if they are near retirement and interested in downsizing.

I see no solution, really, either from an individual's point of view or from the community's point of view.  Land is scarce in Seattle.  Some efforts are being made to up-zone certain areas of Seattle to allow more multiple family residences.  But these efforts result in strong neighborhood resistance, and, in any event, are usually intended to increase rental housing, not home ownership.

Strengthening government mortgage programs would help blacks and other low income buyers to get a foot in the door, as would programs to help first time buyers pay a down payment.  These programs would be more effective, obviously, in areas where housing is more available and less expensive than it is in the Seattle area.

As the middle class owners of existing houses die or move elsewhere, it seems inevitable that they will be replaced by employees of companies like Amazon, the highly skilled and highly paid technical workers who are becoming an increasingly dominant portion of Seattle's population. Seattle houses will thus increasingly be owned by citizens with the highest incomes, which, at present at least, means whites and Asians.

The result will be an even larger gap in net worth between whites and Asians on the one hand, and blacks and Hispanics on the other.