Mar 22, 2021
A new report from Neighborhood Housing Services of LA County is sounding the alarm on the dire straits that Black homeowners in Los Angeles County are facing as a consequence of the COVID-19 pandemic. Access to homeownership, and its role as a long-term store of financial equity, has always underpinned the racial wealth divide in the United States. Due to the impacts of COVID, the numbers are perhaps more stark than ever.
- There has been virtually no progress in growing Black homeownership since the Great Recession, and COVID-19 has wiped out any marginal improvement since then.
- COVID-19 has wreaked disproportionate economic havoc on the Black community in LA: higher job losses and greater housing insecurity.
- Pre-foreclosure notices dropped during the COVID-19 moratorium, but still remain highest in Black communities.
The economic fallout of the COVID-19 pandemic has in many ways been an accelerated and augmented repeat of the 2008 Great Recession, especially with the impact on Black homeowners. For most homeowners, their home is the primary asset underpinning household wealth; but the perils of job loss and foreclosure threaten to wipe out generational wealth in Black households and exacerbate the racial wealth gap.
From 2007-2012, foreclosure rates in Los Angeles County were unambiguously a racial phenomenon: Black and Hispanic homeowners faced triple the rate of foreclosures as their white and Asian counterparts (12% vs. 4%). NHS-LA reports that there has been little recovery since then for Black and Hispanic communities: “In absolute terms, the African American [homeownership] rate at the end of the 2010s is essentially the same as those at the start of the decade.”
COVID-19 has only made matters worse. According to the US Census Bureau’s 2020 Pulse Survey, nearly 10% more of Black residents in LA County reported job losses and economic hardships than the non-Hispanic white population. Consequently, nearly twice as many Black homeowners report an inability to pay their mortgage, or no confidence in making their next payment.
Despite the moratorium on evictions and foreclosures, NHS-LA was able to track over 3,000 pre-foreclosure notices issued in the county between April and October 2020. Observing the difference between majority-Black census tracts and majority-white tracts, they report a troubling pattern: “What is particularly disturbing about the inequality is that the rate is over one and a half times as great in Black neighborhoods.”
Although foreclosures are on pause nationwide until June 2021, the mounting debt and housing insecurity that Black homeowners disproportionately face will not go away without major state intervention. To address this potentially long-lasting crisis, NHS-LA makes five recommendations:
- Establish a COVID-19 Mortgage Relief Fund;
- state and local agency collaboration to monitor the status of vulnerable homeowner populations;
- support community organizations and HUD-approved housing counselors to provide housing and legal services to homeowners and renters;
- require lenders to provide information on housing counseling services to mortgage holders; and
- build on existing policies such as SB 1079 to target relief for vulnerable populations and increase Black homeownership.