By GABY VINICK and ALEXA CHATHAM
Wisconsin Public Radio
MADISON, Wis. (AP) — To Greg Lewis, the two-bedroom house in Milwaukee was beautiful. Cozy and inviting, it had a finished basement, a two-and-a-half car garage, an attached apartment and a yard.
He had his eyes set on it for 42 days, only to learn that the appraisal, or valuation of the property, was lower than he expected. Lewis thought it was going to be about $100,000, as another house on the same block sold for $130,000. Yet the appraisal only came in at $90,000 — meaning banks would be restricted in how much they could lend him to buy the home.
He blames the difference on racism. And he is not alone. Experts and some homeowners say historic racism continues to play a role in depressing the value of Black-owned homes, especially in majority-Black neighborhoods.
“Some homes can be beautiful homes and the appraisal comes in short, and then you got to deal with that because they find out that it’s a Black person that owns it and is selling it,” said Lewis, who had to take a pass on buying the house.
Owning a home allows families to preserve and grow wealth, increases their capacity to borrow and lowers the cost of housing. Lower appraisals are among many barriers to building wealth faced by Black Americans, Wisconsin Public Radio reported.
Wisconsin has one of the lowest Black homeownership rates in the country; just 26% of Black residents own their own homes, compared to the white homeownership rate of 72%.
Experts say that historic, discriminatory practices such as redlining — areas where banks refused to lend money — and racial covenants, which banned sales to Black buyers, have combined with modern-day racism and overall lower incomes to disadvantage Black Americans, hurting their ability to buy a home.
Lewis has now stalled his house-hunting, discouraged by being outbid so many times.
“It took a lot out of me,” he said. “I went into a depressive state. Looking for a house is really excruciating, and at the end of the day, you want to find something that fits you, something that you like, so that’s the hardest part.”
The National Association of Realtors found in a 2019 study that owning a home remains elusive for many Black buyers. Forty-three percent of Black households are able to buy the typically priced house, far fewer than the 63% of white households.
The Center for Responsible Lending also found it would take 14 years for a Black household at the national median income level to save for a 5% mortgage down payment and closing costs for a median-priced house — and 11 years for a Latino family — whereas a white median-income family needs nine years to accumulate the same amount of funds.
Sheila DeCuevas, a mother of four, struggled to find a home for 11 years, unable to save enough money for a deposit or meet financial requirements for a loan.
“There was always problems with qualifications for any type of loan or traditional lending or any type of program, so we had a really tough time trying to get someone to help us,” she said.
DeCuevas rented for years without feeling secure after experiencing homeless with her then-2-year-old son. “A lot of people don’t understand because they have stable lives, but acquiring your own place brings peace of mind to a lot of people,” she said.
DeCuevas eventually worked with Acts Housing of Milwaukee, which helps low-income families purchase and fix up their own homes. DeCuevas said Acts Housing improved her financial literacy, allowing her to buy her own home.
“My oldest is already talking about ‘When I’m buying my own house,’ so they’re not thinking about renting,” said DeCuevas, who now works for Acts Housing as an office coordinator. “They’re not thinking about making other people wealthy, they want to make themselves stable and more wealthy.”
Homeownership can indicate a standard of living in several ways. Homes are often the largest single asset a family owns, providing a source of wealth for current and future generations. Homeownership also provides housing stability, which can help children do better in school and provide other benefits. It is a benefit that too many Black people do not enjoy.
A recent Wisconsin Policy Forum analysis found that between 2014 and 2018, the city of Milwaukee spent $26.4 million to help existing homeowners repair their properties but comparatively less — $3.5 million — on increasing homeownership. The city also spent $19 million on expanding the amount of affordable housing. The think tank suggested that Milwaukee could better focus its efforts — spread across 20 housing programs with no single director — to boost the level of homeownership and affordable housing in the city.
One resource is the Wisconsin Housing and Economic Development Association, created in 1972 by the Wisconsin Legislature, which holds over $2 billion in assets and serves as a lender for state residents in need of affordable housing financing. The organization issued 2,680 loans — totaling $366 million — to first-time homebuyers and working families in the 2020 fiscal year.
Joaquin Altoro, CEO of WHEDA, said increasingly, financial institutions are identifying potential owners of color and helping them buy homes. “I’m not trying to change racism, I can’t do that by myself,” he said.
“But I can change the fact that we put one, two, three homeowners in a neighborhood.”
Lewis said he looks forward to the day he can finally buy a house — and possibly pass that asset along to his family.
“I think everyone should own a home,” he said. “That’s a start to building some generational wealth for Blacks.”