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Plenty of homeowners succumbed to foreclosure when the housing bubble burst, missing the opportunity to regain their wealth as the market recovered post-crash, according to Zillow. But the effects on Hispanic and black communities in particular were heightened, with many still suffering.
Houses foreclosed on in these communities have yet to fully reclaim their values, and black and Hispanic homeowners traditionally hold most of their wealth in their homes, with their properties accounting for more than half of their net worth, according to a Zillow analysis.
When the bubble peaked in 2007, Hispanics and blacks had 73.1% and 61.8%, respectfully, of their net worth accounted for in their houses, compared to 46.5% for white homeowners. Hispanic and black homeowners accounted for 19.4% and 12.7% of foreclosures between 2007 and 2015.
“The housing bust and foreclosure crisis that followed resulted in a disproportionate number of people of color losing not only the roof over their heads, but the wealth — and the opportunity to potentially build more — that came with it,” said Zillow Senior Economist Sarah Mikhitarian in a press release.
“Black and Hispanic homeowners were more exposed to the foreclosure crisis because homes accounted for such a large share of their wealth. With fewer assets to draw on, it was harder for them to hold onto their homes if they fell underwater on their mortgages, owing more than their home was worth. For people who ultimately succumbed to foreclosure, they missed out on the opportunity to see their home’s equity — and therefore their wealth — climb back up,” she continued.
While homes in black and Hispanic communities have grown more than double in value since the crisis, prices still sit below their prior peaks — by 4.7% for black communities and 9.5% for Hispanic.
The largest share of homes foreclosed on in black communities was in Atlanta, with 50.4%, and in San Antonio for Hispanic communities, with a share of 65.8%.