The impact of the financial crisis on homes on communities with a plurality of Black or Hispanic communities has been highlighted in a new study.
Zillow found that, while millions of people from all communities lost their homes in foreclosures and were unable to benefit from regaining equity, this was felt especially hard in Black and Hispanic communities where foreclosed home values fell more than 50%.
"The housing bust and foreclosure crisis that followed resulted in a disproportionate number of people of color losing not only the roof over their heads, but the wealth—and the opportunity to potentially build more—that came with it," said Zillow Senior Economist Sarah Mikhitarian.
Although foreclosed homes in Black and Hispanic communities have more than doubled in value since reaching their lowest point, they remain 4.7% and 9.5% below their peaks.
Near the height of the housing bubble in 2007, Hispanic and Black homeowners had 73.1% and 61.8% respectively of their net worth tied up in their homes, compared to just 46.5% for white homeowners.
"Black and Hispanic homeowners were more exposed to the foreclosure crisis because homes accounted for such a large share of their wealth. With fewer assets to draw on, it was harder for them to hold onto their homes if they fell underwater on their mortgages, owing more than their home was worth. For people who ultimately succumbed to foreclosure, they missed out on the opportunity to see their home's equity—and therefore their wealth—climb back up," added Mikhitarian.
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