Earlier this year, we highlighted how the racial wealth gap tripled from 1984-2009, mainly due to structural barriers to wealth accumulation for households of color, including rampant housing discrimination that constrained where African-American families could live and restricted access to affordable home loans. A new report from HUD shows the extent of housing discrimination against people of color. The report found that people of color looking for homes are told about and shown fewer homes and apartments than their white counterparts. This type of discrimination raises the costs of the housing search for people of color and restricts their housing options.
The study conducted over 8,000 tests in 28 metropolitan areas. For each test, two trained individuals—one White and the other African-American, Latino or Asian—contacted a housing provider to inquire about a housing unit that was randomly selected from a recent advertisement. The two testers were matched on gender and age and were equally and unambiguously well-qualified to rent or buy the advertised unit.
African-American and Asian home buyers are told about and shown fewer houses than white home buyers. For Asians, they are shown almost 20 percent fewer housing units.
While it may not seem like a big deal that people of color are shown fewer available units, these types of policies add up to a structural issue that is preventing households of color from accumulating wealth. Home ownership is a fundamental step to accumulating wealth, particularly for future generations, which is why it is often seen often heralded as the pinnacle of the American Dream.
Preventing this step limits the ability of households of color to accumulate wealth, and in particular, accumulate inter-generational wealth. Without stopping these types of discriminatory practices, we can expect that the racial wealth gap will continue to grow, which is bad for our economic health and our future.