The Bubble That Burst Black Wealth: Richest Black County Suffers After Housing Crisis
The 2006 housing explosion left the country in shambles — with a disproportionate number of Black homeowners unable to pick up the pieces. The Washington Post zooms in on Fairwood, the wealthiest Black county in America, to reveal the crash’s devastation on Black American wealth.
Fairwood, located in Prince George’s County, MD., was vaunted as “The Promise.” The median household income in the neighborhood, which was 73 percent Black, hovered at $170,000. It was, according to the WaPo, one of “the most aspirational black communities in America.” The keyword, though, is was.
Now, Fairwood is just a symbol of how the mortgage crisis bulldozed Black Americans into a rut, according to an analysis conducted by the WaPo:
- 50 percent of the newly constructed homes in Fairwood, during the housing boom, ended up in foreclosure — that’s 723 of 1,441.
- Despite its wealth, Fairwood had the second-highest foreclosure rate in the country.
- Home loans to Blacks in the country have dropped from 14,679 in 2004 to 3,766 in 2013
- 173 homes purchased wound up foreclosed between 2006 and 2008.
- Just seven out of those 173 defaulters received “prime lending” — lower-interest rate mortgages given to creditworthy borrowers.
- Out of 1,441 loans made to Fairwood residents between 2006 and 2007, 416 were subprime — “riskier loans that carry higher fees and interest rates that adjust frequently,” WaPo added.
It was those pesky subprime loans, according to WaPo, that really did Fairwood in. “Borrowers were steered to loans that were more expensive and abusive, when they could have qualified for much better loans,” said Debbie Bocian, a researcher at the Center for Responsible Lending based in North Carolina.
And this isn’t something that only ails Fairwood; analysts have concluded that Black homeowners are more likely to be beguiled into getting subprime loans and pay greater fees — they’re also less likely to receive any mortgage relief. Out of Black Americans who earn more than $200,000, one-third were sold sub-prime loans, “twice the average of the overall population,” WaPo said.
Fairwood, or “The Promise,” has now reneged on its residents as many watch their equity vanish while suffering under hundreds and thousands of dollars of debt. “Houses once valued at $700,000 are going for $350,000,” WaPo noted.
“I would not be able to live here if the bubble had not burst,” said Kris Marsh, an associate professor of sociology at University of Maryland. “I did not make enough money.” Marsh paid just $365,000 for a house in 2009 that sold for $656,000 in 2006.
The crisis has not only made the neighborhood less affluent, due to fewer Blacks receiving loan approval, but it’s also made it less Black: “The percentage of black people in the county in recent years has stopped growing for the first time since the civil rights movement,” WaPo said.
As Black communities seem to bear the brunt of the housing bubble aftermath, Marsh wonders: “Would the same magnitude of predatory lending have taken place in Fairwood if it were a predominantly white middle-class area?”
What do you think?