With her popularity on the rise following the Democratic presidential debates last month, California Senator Kamala Harris has announced a $100 billion housing plan aimed at closing the gap in household wealth between whites and African-Americans and Latinos. But her proposal—to provide up to 4 million households with a $25,000 federal grant toward closing costs or down payments on homes—risks doing just the opposite. Previous federal housing programs and the damage wrought by the 2008 financial crisis show why.
Harris is understandably concerned about the black-white gap in household wealth. In 2017, a Federal Reserve report found that average family wealth for white families totaled $933,000; for black families, the average was just $138,200, less than 15 percent of the white figure. The Latino average was $191,000. Levels of home ownership represent a significant part of these differences. And the case for helping black families in the housing market has some historical justification: blacks faced discrimination in getting mortgages ensured by the Federal Housing Administration, were locked out of certain housing markets, and suffered the loss of homes that they did own to the eminent-domain policies of urban renewal and public housing.
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