Falling for the home ownership leads to wealth argument … again

Yahoo! News posted an article about a recent Bloomberg Businessweek cover depicting a black American family in a house surrounded by boatloads of cash.  The accompanying article is supposed to describe the possibility of another housing bubble that may result from the recent nationwide increase in housing prices.

I don’t find anything particularly racist about the cover.  There is nothing in the picture that sends a message that whites are superior to blacks merely because blacks may decide to go out, borrow for a house, and them flip it for a profit.  Last time I checked, flipping was not immoral or illegal.

The controversy here, if there is any, is why black Americans have been duped into putting so much capital into homes versus diversifying their holdings.  The wealth gap between blacks and whites stems in part from this poor allocation of capital where whites have more equity in stocks, bonds, and other financial instruments while black Americans fell for the “wealth building” philosophy of real estate agents, and two of the last three presidents.  

What this picture tells me is that too many blacks may choose to make that mistake again … 

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in Uncategorized and tagged , , , , , . Bookmark the permalink.

One Response to Falling for the home ownership leads to wealth argument … again

  1. Ken Ciszewski says:

    Blacks are not the only ones who have fallen prey to this fable. In my opinion, home ownership as an investment has been very much over hyped and over marketed by all those who actually make money from it–real estate agents, mortgage bankers and lends, title companies, local taxing authorities, builders, the list goes on.

    Over course, you have to live somewhere, and owning might be a little better than renting/leasing, but a real cost ROI calculation usually shows that owning has a very low rate of return, except in rare cases of buying and flipping rapidly rising markets. This is not the normal everyday situation, however.

    In recent times, overbuying (too large or too costly a house) has been a financial diaster for many.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s