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.
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Predatory lending is also quite rampant these days. I have to find the article, but the targets are usually minorities. This is the case with homes and vehicles.
Good job!!
I think there are any number of reasons we tend to lag in the home ownership category. As you stated, we generally have fewer financial resources from family to rely on. But, I think as a gross generalization, that we also do not learn good financial habits. We tend to live above our means, from hand-to-mouth, not just in our 20's (like every other irresponsible 20-something year old), but our entire lives.
I think, as a culture, that we put outward self-expression in the form of clothes, car, etc. first, and investment last. As a kid, personal finance was never discussed, except how my mom was going to pay the bills. As a people who must constantly fight off an inferiority complex, I think we compensate by doing things to prove our status or worthiness - self-affirming purchases. Everyone is vulnerable to our consumer culture, but I think blacks are particularly vulnerable. Add that to the fact that large portions of our population are under-educated, and it makes for a nasty mix. On average, a black person walking onto a car lot will pay a premium for the same vehicle than their white counter-part (this is proven fact). Why? Culturally, we are not taught how to respect our money. The white guy likely walks into the showroom with research in hand and bargains hard. I think there is a stigma in our culture to being a stingy hardass - to demanding respect for our money.
Corporate America sees us as ripe for the picking, and we fall for it. But, do they return the favor with jobs, investment in our communities, etc.? Not very often.
I can say all of the above, because I used to be like that. Hate to say it, but I learned everything I know about how to conduct my money affairs from Jews (no offense intended), both thru observation and directly. And the big surprise is how the little things add up. This comes right down to culture and ours needs to evolve, radically.
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