Tue July 26, 2011
Wealth Gap Rises Nationally and in Austin
A recent Pew Research Center analysis of federal data found that the wealth gap between whites and African American and Hispanics is at a 25 year high. Nationally, the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households. The study also found that minority families were hit harder by the recession:
From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.
The study said that the primary cause for the "erosion" of household wealth across all groups was the housing crisis.
Donald Degollado of Frameworks Community Development Corporation, a local nonprofit that counsels homeowners on debt and loans, said Austin is no exception.
“We’re seeing it on our day-to-day practical level where we’re seeing a disproportionate number of minorities who are African American or Hispanic that are coming through that and facing foreclosure,” Degollado said.
And, he said the homeowners facing foreclosure who are black or Hispanic typically have homes that are valued at about 70% of their white counterparts.
Degollado said many minorities buy homes in starter-home or new-home communities, where the foreclosure rate historically is higher. That means that even if a family can afford their home, if the bank forecloses on a house down the street and sells it at a fraction of its value, the value of their home drops too.