The Devaluation of Assets in Black Neighborhoods: The Case of Residential Property

The Devaluation of Assets in Black Neighborhoods: The Case of Residential Property

Owner-occupied homes in African-American neighborhoods are undervalued by $48,000 per home, on average, compared with comparable homes in other neighborhoods, which translates to a cumulative loss of $156 billion in potential wealth accumulation, a report from the and Gallup finds. The report,  (28 pages, PDF), found that in U.S. metropolitan areas, homes in neighborhoods that are at least 50 percent African American are valued at roughly half the price of those in neighborhoods with few or no black residents, with a strong correlation between a higher percentage of African Americans and lower median market value. Moreover, the negative consequences of segregation such as school quality do not fully explain the lower values in African-American neighborhoods: even when comparing homes of similar quality in neighborhoods with similar amenities, those in majority African-American communities have a valuation almost 23 percent lower, on average, than those in non-black communities. The study found that metro areas with lower home values in African-American neighborhoods — including Bridgeport-Stamford-Norwalk, Connecticut; Charleston-North Charleston, South Carolina; Savannah, Georgia; Hilton Head Island-Bluffton-Beaufort, South Carolina; and Youngstown-Warren-Boardman, Ohio — are more segregated and generate less upward mobility for the children who grow up in those communities, whereas children from low-income families in metro areas where homes have higher values achieve higher incomes as adults. 

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