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‘Black Tax’ Creating Wider Wealth Gap For African American Homeowners, Study Says


It costs Blacks in America more to own a home than it does for whites, according to a new study. The research outlines how home payments can widen the racial wealth gap, and how it is oftentimes harder for African Americans to accumulate wealth through homeownership.

The research, detailed in an MIT study released earlier this month entitled “The Unequal Costs of Black Homeownership” found that Blacks pay $743 more a year than whites on mortgage interest payments, $550 more a year in mortgage insurance premiums, and $390 more a year in property taxes, that totals more than $13,000 over the life of a loan.

The researchers in charge of the study found that can mean $67,000 in lost retirement savings for Blacks who own homes. Calling it a “Black Tax,” they said it worsens already widened racial income gaps.

Blacks tend to pay higher interest rates, so it is also tougher for Blacks to refinance their properties, the study says, and lose another $475 more than whites.

“So, when the [Federal Reserve] lowers rates, people refinance to lower their mortgage rate. But more Black families are stuck at the old higher rates and our data shows that,” Ed Golding, executive director of the MIT Golub Center, one of the study’s principal authors told The Hill. Because of higher unemployment rates among Blacks that also means “they’re more likely to be in that group that can’t refinance.”

Antoine Thompson, executive director of the National Association of Real Estate Brokers, known as the nation’s oldest trade organization headed by people of color, said racist practices have traditionally kept Blacks from participating in homeownership at the level of whites. Something that dates back to slavery and still persists.

Many Blacks who lost homes during the Great Recession are victims of many of the things remarked on in the study, he said to The Hill.

“Their first loan was good, but then someone went after them and encouraged them to refinance and then they no longer had a 30-year fixed-rate mortgage … and once they hit a cliff they couldn’t recover.”

Institutionalized racism, “the long history of slavery, segregation, and race discrimination,” is one of the reasons cited in the study, other factors like “current policy choices that maintain the disparities,” the study is quoted as saying by The Hill.

“Our policy analysis focuses on disparate interest rates and mortgage insurance costs, which can be addressed at the federal level,” the study reads. “We nonetheless point out that nearly a quarter of the disparity in homeownership costs for black homeowners is due to local property tax assessments. A fair homeownership system must reform these inequitable federal, state, and local policies.”




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