The Next 400: Cleveland’s housing trends and the impact on generational wealth for African-Americans
A lot of people remember the housing and financial crisis of the mid-2000s. The devastation was widespread. Predominately Black neighborhoods have lagged when it comes to recovery.
CLEVELAND, Ohio (WOIO) - If you ask someone about their definition of the :American Dream,” you’ll likely get an answer that includes owning a home.
According to Redfin, homeownership in Cleveland for Blacks is 36%. For whites, it’s 75%.
National numbers show a similar trend; huge disparities between races in a variety of housing and financial sectors.
Black homeowners in Cleveland also face unique challenges.
Frank Ford, senior policy advisor with the Western Reserve Land Conservancy, has been studying housing trend in Cuyahoga County.
A lot of people remember the housing and financial crisis of the mid-2000s. The devastation was widespread.
It’s part of Fords research compiled into a report titled: “Housing Trends in Cuyahoga County 1930-2020.”
“The majority of African-American communities are not recovering anywhere near to the level that the predominantly white communities are,” Ford said. “East side of Cleveland peaked around 2005 at $75,000 median sale price. But it dropped to $5,000 within a few years. And it’s only come back now, as of 2020, to $35,000.”
Ford said the data shows median home prices in majority Black communities, including the East side of Cleveland and East inner suburbs, recovering at a slower rate; between 44% and 82%.
He said the research shows predominantly white areas, including the West side of Cleveland, West inner and West outer suburbs, having nearly a full recovery.
Ford admits there are lots of historical factors at play.
“We really almost have to go back to the 1930s. We’re talking about 90 years of housing policy, both government entities and by private corporations,” Ford said.
In the 30s, the federal government began steering lenders away from communities considered to be hazardous or too risky for banks to make a loan. “Redlining” became the term.
It was happening in Black communities more than anywhere else. Many call it structural racism that led to housing segregation and discrimination.
“We have a period of like 60 years of not making loans in Black communities and then we have the mid-90s to 2000s of making loans that were high risk, high interest (and) not good for those communities,” Ford said. “It caused a tremendous amount of delinquency (and) foreclosure. The foreclosure led to abandonment and blight.”
Ford said it created lasting effects in Black neighborhoods. For those who managed to keep their home, many saw values diminish because the surrounding area had deteriorated so much.
“That’s a huge loss of wealth for that family,” Ford said. “And in terms of the ability to pass that wealth on, that’s a very tragic situation. And I think it’s really why we need to pay attention to this and why we need to be continuing to look at solutions to help those values come back up in those predominantly African-American communities.”
Ford offered a few solutions that could help plagued neighborhoods rebound faster. He talked about ending predatory lending practices which has been a key focus of the Consumer Financial Protection Bureau.
“So to some extent, this really abusive activity fell off on its own aided by federal government intervention,” Ford said. “The second thing to correct this is to deal with the thousands of blighted properties, some of which could be renovated and recovered.”
He added the Cuyahoga County Land Bank has done tremendous work in this, which has sparked upward momentum. He would like to see more investment in this area from the public and private sectors.
Ford said there also must be continued lending reforms.
“Because in order to help these communities recover, it means that people do need access to home repair loans,” Ford said. “And we do need access for people to still be able to buy homes in these communities when they come up for sale.”
He supports compensation programs to motivate loan officers to work on smaller loans that often aren’t as lucrative. Ford said some banks are starting to do this.
OBSTACLES TO BUYING
Jackie Jones is founder and executive director of Breaking Chains Inc. in Cuyahoga County. The nonprofit offers a variety of financial literacy and housing counseling services. Many of her clients are Black.
“Many of our clients, and this is from generation to generation, have never understood credit or handling money or any type of money management skills,” Jones said.
According to the Federal Reserve, a typical Black family has about $24,000 in wealth compared to about $188,000 for a typical white family. Homeownership plays a role.
Credit is a huge factor to determining who gets approved for a mortgage loan.
It’s why Jones said people have to be willing to get real about their financial situation and make tough decisions that eventually pay off. She said building a relationship with clients and not passing on judgement are key. Programs help clients play off delinquent accounts, raise credit scores and establish a savings plan.
“Then it opens their eyes,” Jones said. “It helps them develop a realistic dream of homeownership.”
Jones said most find success, even if it takes a few years. One success story involves a person who make just $18,000 a year.
“The only way to change the next generation is, as we learn, we have to make sure those coming behind us are at the table with us and it becomes a new table talk of the family.” said LaRese Purnell, managing partner at CLE Consulting Firm in downtown Cleveland.
He said there’s extra challenges to overcome especially in communities plagued with poverty
“We struggle with just trying to maintain and get a grasp around great education in our community let alone talking about wealth,” Purnell said.
He suggests anyone looking to get ahead must be willing to seek information from experts and make strategic steps.
“Let’s talk and download the apps that actually add value,” Purnell said. “Instead of downloading Instagram, you download Mint so you can have a budget. So you can prioritize your finances, ensure that you’re saving and putting strategies in place that will help elevate your wealth.”
It’s the lessons Sean and Fatimah are teaching their sons.
“I’ve sat them down and showed them my bills,” Sean said. “I wanted them to understand what the bills were, what credit scores were-- all those things.”
The couple purchased their first home last August. It’s in Painesville. They rented for years in Lakewood.
“You have to be patient. We saved money. We saved a lot of money even though our rent was pretty high where we were living,” Sean said. “We still were able to save a nice amount of money working together.”
The couple said access to housing hasn’t always been equitable and while progress has been made there’s still more work to be done.
They pray the system continues to be improved along with individuals doing their part to achieve their goals and wealth that can be passed down to relatives.
“I don’t think that was everybody’s main goal in our culture in the past,” Jones said. “(When) my father died, he left me a watch. I didn’t get anything else. It just made me more motivated. I don’t want to leave a watch for my sons. I want them to have something tangible.”
Fatimah said owning versus renting brings a certain kind of freedom.
“You take a lot of pride in your home and your work and just making it a beautiful place,” she said.
Their home was built in the mid-1800s.
“This was Bobby Manchester’s house. He was a prominent figure in Painesville. He owned the (Utopia) Theater,” Sean said.
The couple has done renovations and have more planned. They’re taking their time though. They’re doing the work themselves and made a conscious decision to pay for it as they go from the money they save.
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