Does Homeownership Really 'Drive' the Black-White Wealth Gap?
According to a new paper from the Samuel DuBois Cook Center on Social Equity at Duke University: Not really.
In this report, authors William Darity Jr., Darrick Hamilton, Mark Paul, Alan Aja, Anne Price, Antonio Moore, and Caterina Chiopris set out to debunk a number of myths about this racial wealth gap—and its fixes. Improving financial literacy, elevating educational achievement, increasing savings, and encouraging entrepreneurship may be helpful, but ultimately insufficient, they argue; these solutions place the brunt of the responsibility on black Americans, to correct a problem they did not create.
But bridging the homeownership gap is a long-touted piece of the solutions puzzle. In 2017, in an article for The New York Times Magazine, sociologist Matthew Desmond wrote: “Differences in homeownership rates remain the prime driver of the nation’s racial wealth gap.” And research by various public policy organizations and housing experts appears to back this up. Technically, they’re not wrong: Housing market conditions and policies do worsen economic inequality. But what the authors of the Duke University paper take issue with is the implication—or perhaps more accurately, the inference—that the homeownership gap causes the wealth gap. They write:
The word “drive” suggests a causal link between homeownership/home equity and the generation wealth. However, a major flaw in this reasoning is that, by definition, homeownership/home equity is a component of wealth. Hence, the statement that “homeownership drives wealth” is equivalent to saying that “wealth drives wealth.”
Read the full article here.