Charlene CrowellColumnistsFinancial Literacy

Is MLK’s Dream Being Denied or Deferred?

Disparities in Housing Perpetuate Racial Wealth Gap

Once again, the only federal holiday honoring a person of color will be celebrated across the nation. The 38-year span of Dr. Martin Luther King Jr.’s life continues to be remembered and revered. Since his tragic death, time has shown he was also prophetic.

“Change does not roll in on the wheels of inevitability but comes through continuous struggle,” said Dr. King.  “And so, we must straighten our backs and work for our freedom. A man can’t ride you unless your back is bent.”

From voting rights to desegregation in public accommodations, transportation and employment, Dr. King’s Baptist cadence resonated with a generation to champion what was wrong, and to also speak up for what is right. In that noble pursuit, he came in 1964, the youngest person to become a Nobel Peace Prize Laureate.

Yet in 2020, much of the hard-won rights championed by Dr. King championed are under attack by the very governments charged to enforce both laws and regulations. Especially for Black America, rollbacks of much-needed programs jeopardize access to basic life needs such as nutrition, safe water, legal justice, and housing itself.

The irony is that the enactment of the historic 1968 Fair Housing Act followed less than a week after Dr. King’s assassination in Memphis. Hence, as we honor Dr. King, we are also called to continue progressive efforts to better include all of the Americans whom historically have been locked out or left out when it comes to housing: people of color, women, families, people with different physically challenged and all who still suffer the insidious nature of housing discrimination.

As the number of homeless Americans now number more than 560,000, Rep. Maxine Waters, chair of the House’s Financial Services Committee, has added homelessness and homeless prevention to the committee’s 2020 priorities.

“Homelessness affects the very fabric of our communities,” Waters said. “When I speak to families in my district who are dealing with homelessness, I see the toll this housing insecurity is taking on them, including their children, who can’t concentrate in school because they’re sleeping in a car at night. … We need to do more if we are going to address the rental housing and homelessness crisis: we need to preserve the affordable housing that we have, and we need to increase investments in programs that develop new housing or provide rental aid. We know what the solutions are to this problem; we just need the political will and resources.”

While lawmakers debate the appropriate federal commitment to affordable housing, consumers are increasingly financially challenged to keep a roof over their heads.

For the past 30 years, the National Low Income Housing Coalition has annually published Out of Reach, which tracks the cost of rental housing across the nation. According to its 2019 report, the average monthly fair market rent for a two-bedroom or one-bedroom home is $1,194 and $970 for a one-bedroom unit.

“[L]ow wages, wage inequality, racial inequities and a severe shortage of affordable rental homes leave too many vulnerable people unable to afford their housing,” the report stated. An average renter must work 52 hours per week to afford a modest two-bedroom apartment

Consumers seeking to transition from renters to homeowners face another daunting challenge. According to the National Association of Realtors, the median existing-home price for all housing types in October was $271,300, up 5.4% from November 2018 ($257,400), as prices rose in all regions. That means a 10% down payment for a median-priced home would require $27,130. Moreover, a 20% down payment, which would remove the added cost of private mortgage insurance would be double in cost – $54,260.

According to calculations by the Center for Responsible Lending (CRL), nationwide it would take 14 years for a prospective homebuyer earning the national median income to save a 10% down payment for a median-priced home. But for Black and Latino households earning the median income, the number of saving years expands to 21 and 17 years respectively to amass a 10% down payment on that same-priced home.

 “When the president asks, what do African-Americans and minorities have to lose? How about affordable, quality housing and a shot at the American dream,” queried Congressman Emanuel Cleaver in a Jan. 9 Politico article. 

Ample research documents how far the nation has yet to travel when it comes to housing, homeownership, and the still-widening racial wealth gap.

A new report released days before the 2020 King holiday, “States with the Most Racial Progress” (January 2020) by WalletHub.com names and ranks states with the best and worst disparities in housing segregation, as well as wealth and employment. This research found that DC (District of Columbia), Illinois, Louisiana, Michigan, Ohio, Pennsylvania, and Wisconsin were each among the 10 states with the worst housing segregation. When wealth and employment were ranked by state, these same states along with Minnesota were also among the worst ranks of the nation.

“Volumes of research have shown that when people from diverse backgrounds are together in school, neighborhoods, or workplaces everybody wins,” said Meera E. Deo, a law professor with Thomas Jefferson School of Law and one of the report’s authors. “Making the unfamiliar more familiar means everybody wins.”

“An obvious advantage of living in an ethnically diverse city is increased intergroup contact,” added co-author Kelln Li, a Ph.D. and assistant professor of sociology at California State University’s Dominguez Hills campus. “Such interaction might happen at various layers of the city: among students in school, or neighbors living on the same street.”

“Thanks to this opportunity to get to know people who are unlike us, research has shown reduced prejudice, stereotypes, or negative attitudes across people of different ethnic or cultural background,” Li concluded.

Comments by the St. Louis Fed Center for Household Financial Stability would appear to have reached similar conclusions through its independent findings as well.

“We find that families who are thriving tend to be white, college-educated and/or older,” said the St. Louis Fed. “We find that families who are struggling tend to have one or more of these characteristics: Black or Hispanic; no four-year college degree; and/or younger. We also find that many families across the board are striving for more economic security.”

For these reasons and others, it does not make sense for the Trump administration to suspend rules and data mapping tools that alert communities to potential fair housing violations. Yet, on Jan. 6, HUD proposed suspending its Affirmatively Furthering Fair Housing (AFFH) rule that provides HUD program participants with a planning framework and data tools to enable them to take meaningful actions to overcome historic patterns of segregation and foster inclusive communities free from discrimination.

This year, it would be prudent to ask: What happened to the Dream Dr. King had to make America’s promises of freedom, justice, and equality — true for all peoples? And its corollary: What are we prepared to do about it?

“Discrimination in housing is not a thing of the past, it is ongoing and real,” said Nikitra Bailey, an executive vice president with the Center for Responsible Lending. “Low-income communities and communities of color now more than ever need the government to provide them with critical tools to combat discrimination in housing and the insidious harms that result. Instead, we have seen HUD, under the current administration, do the opposite.”

Charlene Crowell is the Center for Responsible Lending’s communications deputy director. She can be reached at charlene.crowell@responsiblelending.org. 

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