Coronavirus is set to widen the minority wealth gap, Washington Post reports. According to a report titled “How Economic Crises and Sudden Disasters Increase Racial Disparities in Homeownership," from the Urban Institute, “The Great Lockdown, instituted to reduce the spread of the novel coronavirus, has crippled households, jobs, and businesses in ways we have not seen in modern history and that will have lasting effects on racial homeownership and wealth gaps."
The researchers looked at the aftermath of Hurricane Katrina in 2005 and the Great Recession to draw conclusions on how COVID-19 might exacerbate the wealth gap. Their data analysis finds that natural disasters economic downturns hit communities of color harder. But households with savings or home equity they can tap are better able to weather the storms.
“Redlining is still alive and well in markets today,” said Alanna McCargo, VP for housing finance policy at the Urban Institute. “Segregated neighborhoods still exist, and if that neighborhood is predominantly black, it’s valued lower. There is still an appraisal bias.”
Analyzing data from the Census Bureau Household Pulse Survey, the Urban Institute identified how black homeowners were more likely to miss or defer mortgage payments in May and reported higher uncertainty for June payments.
The Pulse survey also reveals significant differences in ability to pay mortgages this month and who expects to be able to pay next month. Among people with mortgages, 28% of Black homeowners did not pay or deferred their mortgage in May, compared with only 9% of white homeowners. Latino and Asian American homeowners with mortgages paid this month at rates of 15% and 11%, respectively.
The prospects for June look a bit different, Urban notes. Black and latino homeowners with mortgages expressed similar rates of concern about paying their mortgages—27% and 25%, respectively, had slight or no confidence—compared with only 10 percent of whites. Asian American homeowners were more concerned about paying their mortgages than a month ago: 18 percent had slight or no confidence.