Sorry, again, for not posting for so long. Between helping launch an online project for the business section of the Globe, transitioning to a new beat writing about sports business and banking (which will both make for some good posts here), and some family drama, it's been hard to keep up.
This entry comes from my hometown of Pittsburgh. Besides having the greatest football team on Earth, Pittsburgh is a little like the land that the economy forgot. That's both good -- a decent house can still be had here for far less than $200 grand -- and bad, because many neighborhoods here, especially black 'hoods, haven't seen a new job, store or anything else in years. Ain't been a house built or a business opened around my way in my lifetime -- and I'll be 30 three months from now.
That said, I owe a lot of my own ambition, if not career success, to the 'Burgh's sorry economy. If I hadn't watched my overeducated mother and hard working aunts and uncles struggle to make ends meet here, and watched my own neighborhood slowly disintegrate under the weight of disinvestment, I may likely not have had the motivation or the stones to go away to college, land jobs in politics and journalism and end up at one of the biggest newspapers in the country while in my 20s.
But as an adult who makes his living writing about how people make money, coming home to see the fam and riding through my old hood is a crazy mix of depressing and ridiculously encouraging. Depressing because the fam still struggles -- peep how my uncle who picks me up from the airport runs down how he's out of work and trying to hold it down for his wife and kids, and because the neighborhood looks worse than ever, with no fewer than half the buildings on The Ave. (don't ask which one, it could be almost any Ave from Brooklyn to Watts) standing empty.
Those buildings, though, are the reason why I'm optimistic, perhaps foolishly. I mean, if anybody had a solid plan and any cash at all, they could make something out of those buildings, like a store or two since there are none for people to walk to, or some decent apartments in an abandoned school, or a renovated single family in a solid brick building that nobody's called home for years. Hell, how bout a salon, cuz damn if black folks are goin' spend their money on anything, it's going to be looking good!
If I had any money of my own, I'd definitely give it a go. Anybody have a story about what it looks like around your way?
A coupla sidenotes: I bought my 9-year-old son a pair of $75 Timberlands today. Did I do wrong? I mean, under normal circumstances, I let my boys pick out their own clothes, within reason. I'm definitely not raising label whores here, but I'm not of the mindset that the best way to teach kids to save instead of spend is to deprive them of any and everything just for the sake of them hearing Daddy say "no". Still, I normally wouldn't have paid that much for a pair of shoes for a nine year old. Thoughts?
Meanwhile, my seven-year-old sees me writing this and wants to know what I'm doing. Daddy is writing for a web site that he owns, I said. "That you own? You mean you're the boss of yourself? That's stupid!" he said. Apparently, that little one has a lot to learn.
Saturday, October 28, 2006
Monday, October 09, 2006
Not by any means...
A friend and reader asked me recently why I thought members of other ethnic groups tend to buy their first houses at an earlier age than we do.
Her theory: "I think it's lack of encouragement. I didn't think owning property was a big deal until my dad badgered me my entire year and a half of grad school to buy something small when I get my first job."
I think there are any number of reasons why we tend to buy our first houses later in life than other groups. First, beware the generalizations -- I know a few black folks my age (in the vicinity of the late 20s, thank you), who already own their houses and have for a few years. At least one person I know owns more than one property. And not every white person, of course, buys their first house in their early 20s.
That said, one obvious reasons is that we as a group have fewer financial resources, which means that young people starting out are less likely to get help with a down payment and to need a few more years to save up after high school or college to stash enough cash to get in the game. As far as the "encouragement" factor, I wouldn't put it in the same language as my friend, but yes, it is true that in many instances matters like buying a home, saving or investing are things that just don't get discussed in black households. In short, it does take many of us a lot longer to realize that buying is the thing to do because we haven't been taught the value of it from an early age. I plan to be much, much different with my sons.
That, though, brings me to my next point: While owning a house is clearly an important step that most people should try to take in their lives, I don't believe in homeownership by any means necessary.
Actually, I think that belief -- that everyone should own their own homes, no matter what their circumstance -- is what has the housing market in shambles now. Too many people in the last few years thought they NEEDED to own a crib when they were probably better off as renters.
Homeownership is great, but only under the right conditions, and you shouldn't be trying to buy a house you can't afford. In fact, it can be a terrible move if you're not otherwise financially stable.
Case in point: a study completed earlier this year found that not only are minorities more likely to have subprime mortgages -- basically loans that cost way more than they should for no good reason -- but that high income minorities (that's right, not poor folks, but educated people raking in that cake), are far more likely than poor or wealthy whites to have subprime loans.
This is very dangerous and puts many ostensibly stable black neighborhoods a rate increase away from being filled with foreclosures. And much of it happened because during the inflated housing market of the last few years, too many people who should have been perfectly comfortable renting allowed themselves to be convinced that owning, by any means necessary, was the way to go.
Her theory: "I think it's lack of encouragement. I didn't think owning property was a big deal until my dad badgered me my entire year and a half of grad school to buy something small when I get my first job."
I think there are any number of reasons why we tend to buy our first houses later in life than other groups. First, beware the generalizations -- I know a few black folks my age (in the vicinity of the late 20s, thank you), who already own their houses and have for a few years. At least one person I know owns more than one property. And not every white person, of course, buys their first house in their early 20s.
That said, one obvious reasons is that we as a group have fewer financial resources, which means that young people starting out are less likely to get help with a down payment and to need a few more years to save up after high school or college to stash enough cash to get in the game. As far as the "encouragement" factor, I wouldn't put it in the same language as my friend, but yes, it is true that in many instances matters like buying a home, saving or investing are things that just don't get discussed in black households. In short, it does take many of us a lot longer to realize that buying is the thing to do because we haven't been taught the value of it from an early age. I plan to be much, much different with my sons.
That, though, brings me to my next point: While owning a house is clearly an important step that most people should try to take in their lives, I don't believe in homeownership by any means necessary.
Actually, I think that belief -- that everyone should own their own homes, no matter what their circumstance -- is what has the housing market in shambles now. Too many people in the last few years thought they NEEDED to own a crib when they were probably better off as renters.
Homeownership is great, but only under the right conditions, and you shouldn't be trying to buy a house you can't afford. In fact, it can be a terrible move if you're not otherwise financially stable.
Case in point: a study completed earlier this year found that not only are minorities more likely to have subprime mortgages -- basically loans that cost way more than they should for no good reason -- but that high income minorities (that's right, not poor folks, but educated people raking in that cake), are far more likely than poor or wealthy whites to have subprime loans.
This is very dangerous and puts many ostensibly stable black neighborhoods a rate increase away from being filled with foreclosures. And much of it happened because during the inflated housing market of the last few years, too many people who should have been perfectly comfortable renting allowed themselves to be convinced that owning, by any means necessary, was the way to go.
Wednesday, October 04, 2006
The sweet sound of wedding bells
Months ago, I wrote a story for Heart & Soul magazine about "generational wealth", the concept that your family's ability to help you financially when you're young has a huge impact on your hunt for a piece of Americana.
With lower incomes and less in the bank than other ethnic groups, black folks tend not to give our kids much of a head start. But I never thought about how much that can be attributed to cultural differences until last weekend, when I went to a wedding reception for a 20-something Cambodian couple.
The reception was an hour's drive outside Boston, even though the couple lives in the city. I understood why once I got there. The location, along with everything else about the event, was set up to keep the young couple from having to spend money and to put some get-on-your-feet cash in their pockets.
The restaurant was owned by a family friend, who ate the cost of feeding and liquoring up what had to be 200 people. And gifts be damned: there were envelopes -- the kind you get in church -- at every table. The couple went from table to table, collecting their offerings and saying thanks for the cash stuffed in them.
I couldn't help but think that had I been at a black wedding, there'd be no envelopes and the couple likely would have paid for the whole thing, on their own, on credit.
The experience took me back to my interviews for the Heart & Soul story, in which young, black professional women recalled how they first realized that their families lacked either the means or a plan to help them get on their feet. For some, it was when they saw their white law school classmates get downpayments on expensive homes from parents, while they scrimped and saved for years to buy smaller ones. For others, it was the weddings their colleagues didn't have to pay for out of pocket.
That's where the cultural part comes in. The people at the reception were not wealthy, at least not outlandishly so. They weren't white, and many didn't speak English as a primary language. But they understood that as a community they could do something to help their own stave off debt and get a decent start to their lives. In that instant, they diverged from many blacks by starting a young couple's nest egg for them.
This is something most black folks just don't do, and not because we can't, but simply because this is not how we've been socialized to act.
Call me cynical; I say I'm a realist. I know how we do. And I know that until black folks start doing more to ensure their kids get a decent economic start to their adult lives, we'll continue to lag behind others in this country.
With lower incomes and less in the bank than other ethnic groups, black folks tend not to give our kids much of a head start. But I never thought about how much that can be attributed to cultural differences until last weekend, when I went to a wedding reception for a 20-something Cambodian couple.
The reception was an hour's drive outside Boston, even though the couple lives in the city. I understood why once I got there. The location, along with everything else about the event, was set up to keep the young couple from having to spend money and to put some get-on-your-feet cash in their pockets.
The restaurant was owned by a family friend, who ate the cost of feeding and liquoring up what had to be 200 people. And gifts be damned: there were envelopes -- the kind you get in church -- at every table. The couple went from table to table, collecting their offerings and saying thanks for the cash stuffed in them.
I couldn't help but think that had I been at a black wedding, there'd be no envelopes and the couple likely would have paid for the whole thing, on their own, on credit.
The experience took me back to my interviews for the Heart & Soul story, in which young, black professional women recalled how they first realized that their families lacked either the means or a plan to help them get on their feet. For some, it was when they saw their white law school classmates get downpayments on expensive homes from parents, while they scrimped and saved for years to buy smaller ones. For others, it was the weddings their colleagues didn't have to pay for out of pocket.
That's where the cultural part comes in. The people at the reception were not wealthy, at least not outlandishly so. They weren't white, and many didn't speak English as a primary language. But they understood that as a community they could do something to help their own stave off debt and get a decent start to their lives. In that instant, they diverged from many blacks by starting a young couple's nest egg for them.
This is something most black folks just don't do, and not because we can't, but simply because this is not how we've been socialized to act.
Call me cynical; I say I'm a realist. I know how we do. And I know that until black folks start doing more to ensure their kids get a decent economic start to their adult lives, we'll continue to lag behind others in this country.
Tuesday, October 03, 2006
Blacks get more in Queens, et cetera
First let me apologize for taking such a long time between posts. Now let's get right to it:
1) In what area does he think African-Americans, especially young black professionals are most lacking in terms of financial education, and how can a for-profit bank address that while still making money?
2) The housing market in many cities -- especially DC -- priced out many families looking to buy their first homes, and now rates are rising. Part of the problem was "creative financing" that had people take out loans they couldn't afford while pushing up sales prices. How -- specifically -- can you help both families that can't afford their first homes and those in trouble on mortgages they already hold?
3) This isn't the first effort at targeting the unbanked -- how can you be more successful at getting them through your doors?
4) How can you possibly compete with the Bank of Americas of the world?
- A story in the New York Times this week reported that in New York's Queens borough, the median income of blacks has actually surpassed that of whites. But, the article points out, black immigrants from the Caribbean are doing far better than African-Americans in Queens, and the income numbers might be skewed simply because the most affluent whites have already absconded to Long Island.
- A Baltimore Sun story says the housing boom in that market was largely fueled by minorities, who took an increasing share of the mortgages let by banks over the past year. Good for the housing market and perhaps stats on wealth gaps, but too many of those mortgages were "interest-only", adjustable rate and so on, so there's a real danger the boom could be an even bigger bust for blacks and Hispanics now that rates are up and home values are tumbling.
- Bob Johnson's at it again. The BET founder turned hotel magnate (more on that tomorrow) launched a community bank in D.C. last month. The press release announcing the opening of Urban Trust Bank said it would " be a community financial partner to the diverse Washington, DC community, providing outreach and financial education in a service-oriented environment to build wealth for diverse urban consumers including young professionals, emerging families seeking first home loans and established families seeking second mortgages, single mothers and those who have never established a banking account."
1) In what area does he think African-Americans, especially young black professionals are most lacking in terms of financial education, and how can a for-profit bank address that while still making money?
2) The housing market in many cities -- especially DC -- priced out many families looking to buy their first homes, and now rates are rising. Part of the problem was "creative financing" that had people take out loans they couldn't afford while pushing up sales prices. How -- specifically -- can you help both families that can't afford their first homes and those in trouble on mortgages they already hold?
3) This isn't the first effort at targeting the unbanked -- how can you be more successful at getting them through your doors?
4) How can you possibly compete with the Bank of Americas of the world?
- Upcoming posts: More on Bob Johnson's hotel empire and how his fundraising could open the door for black entrepreneurs, a black financial advisor in Philly sets out to teach money skills to public school kids -- using real cash, and a question from a reader curious about homebuying.
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