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Twin Cities’ persistent racial inequality begins at home

You might have noticed the recent articles in the Star Tribune about the rising price of starter houses that often cost over $200,000.

It’s a problem for many who are struggling to buy a home, but the way that the rising prices intersect with the Twin Cities’ existing racial inequalities makes the problem much worse. During the last few years, the Twin Cities has become known for having the largest racial inequalities in the country (depending on how you measure it). A great deal of the problem stems from the unequal access to homeownership and everything that goes along with that.

That is one reason why, last month, the Met Council released a report aimed at debunking common narratives about the region’s homeownership gap, attempting to focus attention on the broader structural problems around housing markets. If trends in housing affordability continue, the problem is only going to get worse.

Waving the statistical magic wand

For at least 10 years, researchers from institutions around Minnesota have been trying to better understand the causes behind the homeownership gap. But the previous reports, like the Met Council’s “Choice, Place and Opportunity” report or the Minneapolis Fed studies from 10 years ago, haven’t always had the desired effect. According to the Met Council research team, these gaps are often dismissed as temporary, part of the problem with “emerging markets” of homeownership. Skeptics point to age or language differences and suggest they will gradually disappear over time.

Libby StarlingLibby Starling

“When we reported on disparities by race and income, people in comments sections immediately turned to say, ‘well once communities of color have been in this country longer, the disparities will go away,’” Libby Starling, a research manager for the Met Council, told me. “People sometimes claim that once they match the white age distribution, the disparities will go away. We were looking to measure the contribution of these demographic differences, and how much of the gap we could explain. But what’s left isn’t explained by these differences.”

The research — much of which is over my head — involves running regression analyses to factor out demographic differences between ethnic and racial groups. The study looks at seemingly every possible combination of factors, everything from educational attainment (categories like high school diploma, associates degree, college degree) to foreign-born status to language to income to age to gender. The result is what Met Council number cruncher Matt Schroeder calls “waving a magic wand” in an attempt to see what might happen if communities of color had the same income, age and educational profile as the region’s white households.

The results are not encouraging. The gap in homeownership stubbornly remains.

“I spent a number of years as deputy director of civil rights in Minnesota, working on both class- and individual discrimination complaints. This is a prima facie case that discrimination is occurring in the marketplace,” Met Council Member Gary Cunningham said at a press conference last month. “Basically it says, hey if black education were the same, on down the list of factors, there would still be a disparity.”

If not demographics, then what?

Gary Cunningham
Gary Cunningham

Cunningham argues that housing, banking and Twin Cities’ geography seem to “work together” to produce an outcome that’s deeply and persistently unequal, where white people gain advantage seemingly without realizing it.

And the problem exceeds the traditional economic solutions, for things like income, education and credit scores. While those remain critical factors, there’s something about the cultural production of housing in Minnesota that excludes a big slice of society.

“Income and education are definitely prime movers and shakers in this disparity, but there are other things too,” Ed Nelson, communications manager for the Minnesota Homeownership Center, a housing nonprofit, told me this week.

Nelson points to three more subtle causes for the homeownership gap that transcend the underlying economics.

“The first is knowledge and comfort with the buying and lending processes. Few communities of color have family members with experience in the buying process, people who they can turn to learn about home ownership. Black households are much less likely to initiate a mortgage application on their own because they have the expectation that their application would be denied or be treated unfairly,” Nelson said.

(Given that people of color pay higher interest rates than white buyers, this suspicion seems warranted. But that doesn’t make it less problematic.)

Ed Nelson

The other factors Nelson describes include age: Communities of color are often much younger than white households. Yet an “age gap” remains around when people purchase homes in the Twin Cities. According to the Minnesota Homeownership Center’s research, the average age at which people buy homes depends on race.

“Approximately 30 percent of white households purchase their first home after the age of 35,” Nelson told me. “But 52 percent of African-Americans buy their first home after 35 and 45 percent of Latino households buy after 35. So while some of the issue is that communities themselves are younger, it generally takes our communities of color longer to age into when they purchase a first home as well.”

The intergenerational wealth gap

Of all the factors behind the scenes of the homeownership gap, the one that seems the most significant and pervasive is the wealth gap between the white and nonwhite families.

“After World War II, the GI bill allowed many white Veterans to enter home ownership,” Libby Starling told me. “But it did not allow African-American renters that same privilege. When you think through home ownership as a way of wealth formation, you accumulate wealth through the value of the home. White households 40, 50, 60 years ago were building up a foundation of wealth, but black or African-American households did not have that opportunity. Nationally, the average wealth of white households is over $100,000, but the average for a black household is something like $5,000.”

This disparity rings true for Nelson, as well. Compared to communities of color, white homebuyers often turn to family members for help when buying a home.

“It’s what we refer to as generations of wealth,” Nelson told me. “White buyers are four times more likely to receive down payment assistance from a parent or relative than communities of color. Our focus group participants [from a recent study] discussing this issue also added that the culture of teaching children about money management and savings is less integrated for families from communities of color.”

For example, Nelson describes how some immigrant communities come from areas of the world with unstable banking systems, or often deal in cash for work and employment. Both of these factors make people less likely to get involved with or have trust in the U.S. mortgage and lending systems.

The long legacy of racism and housing

One of the great untold stories in both the Twin Cities and the Midwest is how housing policy worked almost systematically to create today’s unequal landscape. The combination of redlining, lending and racism is just one piece of the puzzle. Zoning codes, affordable housing and outright violence also played a role. 

Two stories illustrate this history: The first is the Arthur Lee house, in South Minneapolis, where a white mob formed when a black family moved into the Field neighborhood in 1931. Another similar tale is Thomas Sugrue’s amazing book on housing policy, economics, and racial violence in Detroit, where white homeowners, realtors, and public policy worked to keep the benefits of home ownership in few hands.

MinnPost photo by Bill Lindeke
The Arthur Lee house, which they bought in 1931.


It’s not difficult to understand that there’s a connection. As clichés about the “American dream” reveal, so much of our collective sense of identity and prosperity revolves around our houses. The connection between Minnesotans and their houses is a deep and emotional one.

But in the Twin Cities, it’s also largely a white relationship. The economic role that homeownership plays as an inter-generational asset profoundly shapes the social and economic landscape of the Twin Cities. The Met Council report suggests that the legacy of Twin Cities housing inequality has a long tail, that the racism that was inherent in the housing market in the ’50s and ’60s still plays a role in today’s urban landscape.

“We know there’s a giant disparity between white and nonwhite homeownership in Minnesota,” Ed Nelson explained. “And nonwhite populations are growing much faster than the overall white population. As these groups are growing, if we don’t fundamentally change something about these homeownership rates, the gap is only going to get larger.”

Even under a rosy political scenario where policy-makers could somehow equalize income and education for people of color, there would still be a deep gap around race and opportunity. It reminds me of the trope about the difference between justice and equality. To tackle the region’s inequality will involve something more remunerative than good schools and fair wages. Economic equality would be a good start, but housing justice remains a larger challenge.

Comments (9)

  1. Submitted by Thomas Weyandt on 05/05/2016 - 12:00 pm.

    What is the basis for Mr. Cunningham’s assertion?

    Mr. Cunningham is quoted as saying something is a prima facie case of racism.

    What is? This type of comment does nothing to help deal with the issues raised in this article.

    Where is the data comparing similarly situated people in terms of educational achievement, age, time in the work force, all of the things that result in the accumulation of wealth that would allow for the purchase of a home?

    Mr. Nelson points out some factors that really aren’t susceptible to measurement but are very real. It would seem that those hurdles could be lowered with some first time home-buyer’s classes.

    Given the available housing stock right now it probably isn’t a time when things are going to change very dramatically. But of course waiting for tomorrow isn’t going to solve these things either.

    • Submitted by Bill Lindeke on 05/05/2016 - 02:28 pm.

      Maybe read the study?

      I’d suggest clicking the link and reading through some of the data and analysis. There are a whole bunch of charts and information about demographics that address your question precisely.

  2. Submitted by Ivy Chang on 05/05/2016 - 12:17 pm.

    Home ownership among ethnic groups

    It is about time the Metropolitan Council works on inequality in home ownership. I agree with Gary Cunningham that housing and banking should be added to the traditional economic solutions. Let’s educate all the forces that deal with housing for minority populations, especially for African Americans. As a state, Minnesota is 158 years old and in a new millennium, the state should have more equality among its entire population.

  3. Submitted by Rich Nymoen on 05/05/2016 - 02:02 pm.

    Actually, it begins with land

    It’s not so much home ownership as land ownership. Houses depreciate. It’s the land underneath them that increases in value over time. Some people say racism was invented to justify stealing land from one group of people and enslaving another group of people to work it. Increased use of community land trusts — where the homeowner finances the house but rents the land from a non-profit — throughout the metro would go a long way to addressing these disparities.

  4. Submitted by Dennis Tester on 05/05/2016 - 03:03 pm.

    I like your thinking

    As a card-carrying member of the Sioux nation, I think it would be great to get some sort of race-based benefit for buying a house. If only I could get someone to give me a loan, right? Yeah, that’s the ticket!

    So I went online to lendingtree dot com and started the process for getting a mortgage. But you know what? I went through the whole application and they never asked me what my race is. They never even asked me what my income is! They did ask permission to pull my credit report though.

    After the number crunching that lasted a whole 30 seconds, I got bids for over 25 loan packages from several different banks. How’d that happen? I am getting phone calls about every 10 minutes though from one of those banks, which is a pain.

  5. Submitted by Ray J Wallin on 05/05/2016 - 04:28 pm.

    How bout a solution?

    Organizations like Black Lives Matter and black community ‘leaders’ constantly parade pictures of people of color getting beat up, shot, and arrested. Through this, young couples and young professionals of color are being told by their own that they will not succeed.

    I realize there is prejudice, I am not arguing with that. But youth of color need to be shown a path rather than story after story describing why they are not making it.

    How many black success stories have you heard lately?

  6. Submitted by Ray Schoch on 05/05/2016 - 04:40 pm.

    Old story

    “…One of the great untold stories in both the Twin Cities and the Midwest is how housing policy worked almost systematically to create today’s unequal landscape.”

    The key word in that sentence is “almost.” I can’t speak directly to the Twin Cities because I’ve not lived here long enough to know very much about how things worked “on the ground” (i.e., in practice, and often undocumented) in the area, but I did live in the St. Louis metro for more than half a century, and there was nothing “almost” about housing segregation and discrimination there. It WAS done systematically, with formal, written covenants to keep people of color out of particular areas, no matter what their education or income happened to be, and that remained the case right up until the passage of civil rights laws in the mid-1960s, and – perhaps more importantly – their enforcement by federal courts.

    My suspicion – and this allegation has, at the moment, no proof at all to support it – is that, with or without the formality of written covenants, something similar happened here. It’s difficult to explain the RCAP phenomenon, not to mention heavily weighted populations of one ethnicity/race or another in different parts of the city, without taking a look at the whole cornucopia of discriminatory policies and actions that might have taken place.

    Also relevant – meaning this isn’t just an afterthought, but seems to me part and parcel of the combination of practices, formal and informal – is the nexus (even if we leave purposeful discrimination out of the picture for the moment) of education, income and housing price. As part of something else I was working on, I compared some figures for my own neighborhood in NW Minneapolis, my son’s neighborhood in NE Minneapolis, and the Ericsson neighborhood in S Minneapolis around Minnehaha Creek, all based on responses to the American Community Survey taken with the census. None of these neighborhoods are in the heart of RCAP territory, but the differences in both ethnic/racial and economic diversity are significant, nonetheless. I won’t bore every body with all the numbers, but here are a select few to highlight race, education, income, median household income, and single-family housing prices in those respective areas:

    White: NW – 42.6% / NE – 61.3% / S – 90.6%
    Black: NW – 15.7% / NE – 17.2% / S – 2.3%

    High School Grads: NW – 79.8% / NE – 88.3% / X – 96.0%
    Bachelor’s Degree or higher: NW – 22.5% / NE – 45.7% / S – 55.2%

    <$35,000: NW - 24.1% / NE - 36.9% / S - 27.3% > 200% of poverty: NW – 57.2% / NE – 59.0% / S – 80.7%

    Median Household Income (latest figure available is 2013):
    NW – $45,608 / NE – $67,202 / S – $69,052

    Select single-family home prices:
    <$200,000: NW - 99.4% / NE - 58.2% / S - 55.3% >$200,000: NW – 0.6% / NE – 41.8% / S – 44.8%

    Combine these differences with zoning policies that, especially in the suburbs, strongly favor single-family-detached housing, and I’d argue that it’s not difficult to see why it’s more difficult for both individuals and families of color to become homeowners than it might be for people like me.

  7. Submitted by Barbara Lofquist on 05/06/2016 - 06:28 am.

    There they go again..

    Many years ago, when I was managing section 8 housing in Minneapolis, the federal government proposed making taxpayer funded section 8 subsidies a valuable ‘forever’ currency, to be used towards a house payment. Other income could be used to afford ‘more of a house’, such as a partner, friend, or spouse with employment, disability, etc. I tossed the flier in the trash. As a real estate broker at the time, I sold many homes to my tenants. I managed 66 units of family section 8. Approximately 50% of my tenants were African American, and 50% were recent Vietnamese refugees. Over 5 years, I sold 8 homes to Vietnamese tenants, and 1 home to an African American family. All of the Vietnamese families were married. The African American family was a single mom of 3 kids. All families had one thing in common, they worked full time and considered the education of their children to be extremely important. Until the importance of education, and regular full time employment are instilled in a community, home ownership will remain unlikely, as it should be. Programs to pretend folks can afford a home are proven failures. Bill Clinton tried that, forcing banks to lend to financially unqualified families of color. Foreclosure rates went through the roof.

  8. Submitted by DENNIS SCHMINKE on 05/09/2016 - 11:59 pm.

    If the State of MN really wants to help…

    if you want to address the problems of minority/racial economic ineqqualities the best thing the state could do would be to subsidize attendance at Dave ramsy-style ‘financial peace’ seminars (with long-term follow-up) for whoever wants it.

    Have we learned NOTHING from the 2007-2009 mortgage debacle and ensuing financial melt-down?

    Home ownership is is an EFFECT of wealth accumulation, not a cause. We took people who were probably not even good renters–and did them no favors by putting them into houses they could not afford, and could not take care of.

    It is PRUDENT to have a long-term financial plan the includes have a home–paid for–by the time you reach retirement. No house payment will make Social Security go a lot farther.

    On the other hand, if you live in a house for 30 years–even if you own it–but do not take care of it (which is expensive) you will be living a shabby, broken down house that needs new paint, new windows, a new kitchen, one or more new baths, a new roof. That is easily $100K of work that you will not be able to afford, if you do not have the rest of your financial house in order.

    Then the state will be forced to subsidize all sort of home improvements for home improvements, energy assistance, yada, yada.

    Predictable as the sunrise.

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