Choosing a Good Real Estate Investment

I really love my house. I love the view of the downtown skyline, the location, and the roof deck with the hot tub. But financially speaking, the most important aspect of my neighborhood is that I’m the only Black homeowner on my street.

I know that my intro makes me sound like a first class Uncle Tom, but this is more of an observation of the housing market than a racial identification or preference for White people. In fact, race is really only a symptom of the broader issue affecting my apparent fear of minorities moving into my neighborhood.

I want my property value to increase. It’s really that plain and simple. And in America, housing is more classist than it is racist. But it just so happens that wealth in America is disproportionately held by the White majority. So having White neighbors becomes a simple matter of economics as to how property value is affected.

The 2004 Urban League’s “Black America” report showed that there is a major disparity between Blacks and Whites in the area of home ownership and economic parity. Specifically, the report found that Blacks generally have about 73% the earning power of Whites. The report also found that Blacks are denied mortgages and home improvement loans at twice the rate of Whites.

Another consideration is the phenomenon of “White Flight”. I happen to live in the City of Cincinnati. While there is a lot of development and growth in some of the Cincinnati suburbs (particularly Mason and Westchester), I think that the most sweeping changes are happening right now in the city. In the midst of these changes comes the controversy of gentrification.

Some argue that gentrification is good because it improves otherwise impoverished communities. Others argue that gentrification results in the displacement of lower income, usually minorities, who may have been living in the communities for generations.

One solution offered for gentrification is to create “Mixed-Income Communities”. Although this solution sounds absolutely swell on paper, in practice, there’s not much hope. The truth is that wealthy people don’t like to live near people who aren’t wealthy. And wealthy people have the means to live wherever they want. Therefore, in order to attract people with higher earning power to the city, gentrification is inevitable.

Referring back to the figure of 73% earning power for Blacks, the likelihood of White Flight leads directly to the realization that as a community becomes more Black, and less White, the earning power of potential home buyers begins to decrease by about 27%. Additionally, according to the U.S. Census Bureau (2002), the Midwest is only 18.1% Black. The result is that the homeowner is left with a much smaller pool of people, with less earning power than the White majority, as potential home buyers.

Interestingly, this construct contributes to the wholesale abandonment of Black communities by its potential leaders. It is literally too costly for many people who are from a predominantly Black community to stay there once they’ve achieved the means to leave.

Sadly, I am a representative of this trend. When I was very young my parents lived in the City of Buffalo. Eventually, White Flight took hold and property values began to freeze. They moved to the suburbs and have enjoyed appreciation of their suburban home of over 200%. Now, as an adult, I live on the fringes of the Black community on a predominantly White street. And at the not-so-far back of my mind, I know that the general ingress of White faces and egress of Black faces is a positive indicator as to the value of my home. It can be called classism, self-segregation, defacto segregation, gentrification, or various other terms. To me, it’s just a sad socioeconomic reality. For Black people, social mobility is tantamount to breaking the glass ceiling of the Black neighborhood.