Wealth inequality has widened along racial, ethnic lines since end of Great Recession

[daredtowork]

69. Quantitative Easing, Construction, and Home Ownership

One of the reasons the recession never ended for people of color is pretty clear to see in the Bay Area.

Bernanke and Yellen put the country on life support through Quantitative Easing. The main place where that heats up the economy is the housing market because it creates low interest loans. However, because of the recession, credit rules also tightened.

I'm not sure about the rest of the East Bay, in Berkeley low income people were pushed toward renting as a matter of policy. I'm still doing reading in this area, but it was deliberate policy. Some earlier papers on homelessness thought that rent subsidies were the way to handle the fact that growing inequality was placing too much pressure on the low end housing market, which pushed the people on the bottom out of housing all together. I haven't gotten to why some bright sparks thought it was better to keep pushing the mid-to-low income people through the rental market instead of offering them support for home ownership - but perhaps the foreclosure wave in 2008 made those local policy-makers double down on their decision to discourage marginal people from ownership rather than going to HUD and/or creating more supports.

The result is even greater inequities. We have massive white wealth growing wealthier on real estate equity, with massive credit and collateral power because of ownership, who can leverage their property to engage in more speculation by buying up the lower end properties the renters are now living in. This creates chaos for the renters because thanks to the speculation boom, rents have driven so high there is no place for the low-end renter to go once they are displaced from an old rent-controlled unit. According to Barron's this area is the third most over-valued real estate market in the country, and the parts of town that are targeted for gentrification (through rumors of development projects and withdrawal of services that support the poor and enable them to live there) are even more over-heated: "for sale" signs are popping up everywhere. I would be interested to know how many of the buildings being sold out from under seniors, disabled people, and people of color are going to outside investment groups (who also pay for the campaign literature and other perks of our various City Council "representatives&quot and how many are being acquired by established property owners from the wealthy white part of town.

Over the last year people have been talking about the shifting demographic in which the black population has been reduced from 30% to 7%. I think this explains the mechanism in a "no duh", freaking obvious sort of way. Black people weren't the 1% here, and they most definitely weren't the super rich. Quantitative easing, which was basically Real Estate Speculator Welfare, did not benefit them because they didn't have the same stake in property OWNERSHIP as white people did. Then speculation exacerbated the difference by buying the homes out from under people. This area writes a hell of a lot of papers about mitigating or preventing displacement, but as far as I can see policies don't actually DO anything but CAUSE displacement and then stand by talk about it.

Perhaps history will be able to detect some massive migration of low-income people of color based on how Quantitative Easing "relieved the recession" by creating white property speculation wealth.