The bubble has burst; both shoes have dropped. Collectively, African-Americans have lost billions of dollars in real estate assets over the last several years. Some have lost their homes and all they had worked so hard to obtain; to add insult to injury, even their credit has been ruined. What we do next will impact us now and may have a ripple effect extending to our grandchildren’s generation.
We must step into the future cautiously and we must make our decisions wisely. As we gaze at the pieces of our fractured dreams, we must weigh our options carefully. Do we take our precious resources and bury them in the ground? Or do we pick ourselves up, dust ourselves off and seek competent guidance to help us recapture what we’ve lost and build on the detritus of our dreams so that we may scale higher financial heights?
The choice is crystal clear. Real estate remains the best investment on Earth. That’s still the case for African-Americans. According to Valerie Rawlston Wilson of the Urban League home equity accounts for nearly 90 percent of black homeowners’ total net worth! That number underscores how dependent the African-American community is on real estate to fund our dreams and lifestyles. Real estate has not and will not lose its preeminence as the primary wealth factor for African-Americans.
Home equity is a “passive” investment. A homeowner builds equity just my paying down their mortgage and allowing appreciation to work its magic. What these times call for is for African-Americans to take a more “active” role in their real estate investments and long-term economic futures. What is needed is a better more practical way to grow wealth by investing in real estate.
As an active real estate broker in the Washington, DC metro area I see some interesting things happening. Because of the glut of bank owned properties and short sales investors are finding great deals and buying them with cash. The typical homebuyer who competes with the investor and plans to live in the property has been squeezed out of the market. This phenomenon is so prevalent that the Washington Post did a feature article about it on its front page earlier this year. From where I stand it’s true, but what I’ve noticed is that none of the investors buying these deals are African-Americans, even though the properties are located in African-American communities.
Conspiracy theorists make of this what you will, but the fact is that African-Americans are collectively missing out on the chance of a lifetime! True, the real estate bubble has burst but with it comes the greatest transfer of wealth that we have ever seen. The Savings and Loan crash in the early nineties pales by comparison, yet at that time fortunes were made in real estate.
So, this begs the question, “What do we do now?” Here’s what I suggest. African-Americans must understand that in times of economic hardship there is also economic opportunity. Other groups seem to understand this reality and benefit from it.
I ask you, aren’t there successful investors within the African-American community? Don’t we have real estate agents, title attorneys, general contractors, real estate appraisers, financial planners and advisors? The answers to those questions are an unequivocal yes. What we lack then is not the expertise, but the vision. What comes to my mind is an old Bible text I learned in Sunday school growing up in southern Alabama, “For lack of vision my people perish.”
Well here’s the vision. The first step is simple – African-Americans need to identify competent real estate investment professionals in their communities that can educate them on how to identify good investments and then can help them take advantage of those investments. Believe me it is not that difficult. What my Grandmother did was difficult – doing laundry and chores day in and day out for white folks in a segregated south. I’ve got it easy by comparison.
It’s been said that it takes a village to rear a child. The same can be said for investing in real estate. By utilizing the skills of competent professionals in the African-American community we can all benefit. There are principles and practices for successful investing. If a person understands and uses those principles and practices they will be successful. I have been a witness to this fact over and over again.
African-Americans, I do not minimize the effects of the last several years, but in spite of that we have only one choice and that is to press on. We need not press our noses against the pane glass of opportunity. We are full partners in America in good times and in bad. Let’s raise our hands and our minds and commit to each other and ourselves. We have prospered through worse disasters and as God leads us, I guarantee you we will do so again.
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