Wealth provides numerous opportunities for a family’s future generations. White families are more likely to amass wealth and own homes than African Americans, Latinos, or Native American families. This is partly due to government policies from 1933 to 1978 that enabled white families to buy homes with affordable mortgages in suburbs. Due to the creation of white suburbs, housing market policies, the status quo, and loan discrimination, most U.S. cities are segregated, with black families experiencing hypersegregation.
The reasons for wealth inequalities in the United States stem from the impact of history and are partly related to housing policies, because homeownership is often central to amassing wealth. Residential segregation first characterized U.S. urban areas from 1900 to 1940. Racial violence, racial covenants blocking people of color from moving into certain neighborhoods, and housing policies enabled mostly whites to move to suburbs on low-cost loans. This segregation continues into the present. Currently, those living in segregated and poor neighborhoods are less likely to complete high school and get employment. There are two ways to measure segregation. The dissimilarity index indicates the extent two groups are present in a neighborhood. The isolation index indicates how much the racial make-up of a neighborhood differs from the rest of the community. Being blocked from home ownership along with lower earnings due to discrimination kept families of color from gathering wealth. Blacks and whites with similar earnings do not hold the same wealth. Without wealth, blacks are at more of a risk of downward social mobility when they use up their savings for emergencies. Blacks tend not to be securely employed and lack jobs with benefits. Contemporary discrimination adds to the inequalities with blacks denied mortgages 2.7 times more than whites. People of color are also given higher rates of subprime loans even with the same credit scores. In 2000, Native Americans had the lowest average incomes and lowest numbers of home ownership compared to overall averages. African Americans and Latinos had higher rates of foreclosure during the economic downturns of 2005 to 2010.