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The proportion of a home’s value that a homeowner actually owns—or, in other words, the difference between the market value of a home and the amount of debt that an owner owes on their home. Homeowners can build equity both by paying off the value of their home (through an initial down payment, or through monthly payments on a mortgage) and when the market value of their home appreciates (which generally happens over time, especially in more desirable neighborhoods). Home equity is “the main source of wealth middle-class Americans,” and it provides homeowners with a cushion in case of emergency. But, because of de jure residential segregation over the 20th century in the United States, it has been virtually impossible for most African American families to build home equity, because they could not take out federally-insured mortgages with federal insurance and their homes increased in value much more slowly and less sharply than white people’s (for instance, a home of the same size and quality, purchased for the same price in 1948, is worth three and a half times as much in the white suburb of Levittown, New York as the neighboring black suburb of Lakeview). Ultimately, differences in home equity are the primary component of the wealth gap between black and white Americans, which further shows how residential segregation directly sustains the United States’ system of racial caste.
Home Equity Quotes in The Color of Law
The The Color of Law quotes below are all either spoken by Home Equity or refer to Home Equity. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Chapter 7
Quotes
The consequences of racially targeted subprime lending continue to accumulate. As the housing bubble collapsed, African American homeownership rates fell much more than white rates. Families no longer qualify for conventional mortgages if they previously defaulted when they were unable to make exorbitant loan payments; for these families, the contract buying system of the 1960s is now making its return. Some of the same firms that exploited African Americans in the subprime crisis are now reselling foreclosed properties to low- and moderate-income households at high interest rates, with high down payments, with no equity accumulated until the contract period has ended, and with eviction possible after a single missed payment.
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Home Equity Term Timeline in The Color of Law
The timeline below shows where the term Home Equity appears in The Color of Law. The colored dots and icons indicate which themes are associated with that appearance.
Chapter 4: “Own Your Own Home”
...“shoddier” and “skimpier” houses, offered his residents savings plans that did not let them “accumulate equity during the process,” and did not build “the community facilities” that he did for the...
(full context)
Chapter 6: White Flight
...mortgages, African American people bought their houses on a contract system, paying monthly without gaining equity. If they could make every payment for 15-20 years, the house was theirs; but if...
(full context)
Chapter 11: Looking Forward, Looking Back
...less than 10 percent of the median white family’s. This directly reflects residential segregation because “equity that families have in their homes is the main source of wealth for middle-class Americans.”...
(full context)
