In majority-black neighborhoods all across the country, homes are being undervalued by $48,000 per home on average – which adds up to a cumulative loss of $156 billion for the black community nationwide, according to a recent study by the Brookings Institute.
The study, titled “The Devaluation of Assets in Black Neighborhoods,” was released in November.
“There is a strong and powerful statistical relationship between the share of the population that is black and the market value of owner-occupied homes,” the report stated.
Overall, the Brookings study found that homes in neighborhoods where the share of the population is 50 percent black are valued at roughly half the price as homes in neighborhoods with no black residents.
The local nonprofit Metropolitan St. Louis Equal Housing & Opportunity Council (EHOC) wanted to see if the St. Louis real estate market mirrored the Brookings Institute’s findings. EHOC collected examples of recent home sales in St. Louis city neighborhoods and St. Louis County municipalities of similar median income, but that differ on majority-white or majority-black status. They found that there is significant evidence of this systemic undervaluation of property in majority-black areas in the St. Louis region.
In one example, EHOC compared two homes that sold last spring – one in the 54-percent-white Carondelet neighborhood and one in the 85-percent-black West End area. The median household incomes of the areas were comparable, both around $30,000. The home in Carondelet, at 415 Bates St., had 2,000 square feet and was built in 1904; it sold for $43,500. The West End house, at 5159 Cates Ave., was 1,794 square feet and built in 1903; it went for $25,000 – almost $20,000 less.
“Even when looking at similar-sized homes in neighborhoods with similar average incomes, homes in black neighborhoods are valued and sold at prices far less than homes in comparable white neighborhoods,” EHOC stated. “This represents a significant loss of household wealth for our region’s black households.”
In EHOC’s report, titled “Zip. Race. Discrimination: Different Codes, Same Story,” the group makes several other comparisons in home values and paired up the following neighborhoods: Hi-pointe versus the Gate District, Patch versus Baden, Shrewsbury versus Black Jack City, Maplewood versus Dellwood, and Green Park versus Cool Valley.
EHOC explained that these property-value disparities widen the wealth gap between black and white households. EHOC stated that property values are the leading indicator for a neighborhood’s economic longevity. Property taxes, which are based on a home’s value, are linked to a community’s public services, including the local school district.
“Home ownership is a cornerstone of the American Dream and an important vehicle for how families accumulate wealth and pass financial security down to younger generations,” according to a statement by EHOC. “How is a family’s ability to accumulate wealth sabotaged when their chief investment is systematically under-valued by insurers, lenders, and real estate agents?”
See EHOC’s study “Zip. Race. Discrimination: Different Codes, Same Story” at https://tinyurl.com/EHOC-disparity. See the Brookings Institute study at https://tinyurl.com/Brookings-disparity.