Community Generational Wealth Starts at Home

by Sherrell Dorsey | February 21, 2023

​​For many Americans, purchasing a home is not only about establishing roots in a community, but it’s also a step towards building generational wealth.

However, barriers exist and, for Black Americans in particular, homeownership dreams have been historically diminished or denied and their neighborhoods and communities devalued.

Ayesha Selden grew up in the '80s in a Philadelphia neighborhood which she describes as, “The kind of neighborhood where you played outside at your own risk. It was rough, however, it was just walking distance to downtown Philly.”

When Selden was nine years old, her mother purchased a small home where she, her sister and grandmother lived until her mother married and decided to sell the home. At this same time, Ayesha was moving on to begin her studies at nearby Temple University, but she advised her mom not to sell — Selden had a feeling the house would be worth more in the future. 

Selden was correct in her housing market predictions. By the time Selden was 24 and able to purchase her first home, she’d been priced out of the neighborhood she grew up in. The neighborhood, revitalized with green space, is now seen as desirable for its walkability and proximity to downtown. Selden says the house her mom once owned is worth over $600,000. Her mom had sold it in the late '90s for just under $40,000.

Selden, now a successful certified financial planner, private wealth advisor and real estate investor, tells her clients and followers on social media to “not sell grandma’s house” in an effort to protect Black communities against housing instability and focus on ownership. “I knew our communities would turn,” Selden reflects. “The only way we get out of the rent being too high, is through ownership.”

Unfortunately, Selden’s experiences are not unusual. Her advice to Black communities to maintain prior generations’ assets to build wealth is wise. What's more, it could take root for more people as lasting efforts to address these inequities by changing policies and lending practices to create more equitable access to homeownership.

A young couple moving items into their home.

Black homeownership historically

A 2015 Social Science Research Council report commissioned by the ACLU notes that the 2008 crisis all-but wiped out the gains of homeownership amongst Black Americans that hadn’t been seen since the 1960s. Compounding that, the current pandemic has exacerbated housing instability for Black families across the country.

However, this inequity is not just the result of economic ups and downs over the last few decades.

“Because of anti-Black legislation, many Black residents or residents of Black majority neighborhoods of the past could not pass on wealth to their children, and those children could not pass on wealth to their children,” explains Dr. Andre Perry, a senior fellow at the Brookings Institution.

Dr. Perry’s research points not just to barriers to homeownership, but also to how Black homes in Black neighborhoods are often devalued by as much as 23%, or about $48,000 per home, resulting in about $156 billion in lost equity.

“It goes without saying, we also need to remove the dredge of racism that extracts wealth from those neighborhoods: like bad appraisal practices, bad real estate agent behavior and predatory lending,” Dr. Perry says.

Two young girls run through stacks of moving boxes.

Policy plus affordability

Dr. Perry’s proposals for equity around homeownership also include the creation of new mortgage products that will enable low-income renters to purchase low-priced homes. “There are thousands of homes throughout the United States that are priced below a point that a bank will back with a mortgage,” Dr. Perry states. “So, we need to figure out ways to enable low-income renters to move into those homes.”

Alternative credit scoring systems may also help, Dr. Perry contends. “When you don't have wealth, it's much more likely you'll fall into debt, and that's one of the reasons why Black people, in general, have lower credit scores, is because we have lower wealth historically,” Dr. Perry explains.

Dr. Perry notes that a comprehensive approach is not focused only on individual homeownership alone. “We need policies that really revisit how we got out of the Great Depression, [where] we invested in people in the form of low-interest loans and down payment assistance. But we also need to invest in place. Many of the areas that Black and brown people live in have been, and are impoverished, because of a lack of investment in those areas,” Dr. Perry says.

Access to home loans 

Homebuyers’ access to homes that are affordable goes hand in hand with access to home loans that can help them finance their purchase.

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Homebuyers’ access to homes that are affordable goes hand in hand with access to home loans that can help them finance their purchase.
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While efforts to make capital more accessible to Black citizens seeking to purchase is key, it also requires a community. Selden even suggests that new homeowners “house hack”: rent out a spare bedroom to help with payments and find unique ways to use their homeownership to help put others in a position to buy a home of their own.

“Group economics will give [Black people] the ability to accomplish more together than individually. We need to make sure that we put [Black communities] in a position to win,” says Selden.

Family Home Selling Mortgage
Sherrell Dorsey

is founder, and CEO of The Plug, the go-to business media and insights platform examining the Black innovation economy. You can view more of her work at tpinsights.com.

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