Black Americans Pay More to Be Homeowners Than Other Groups: MIT

The video discusses racial disparities in housing costs, highlighting that black families pay more due to higher interest rates and property taxes. This financial burden contributes to a significant wealth gap at retirement. The video explores the role of risk-based pricing and policies that exacerbate these disparities, suggesting a shift back to flat pricing. It also examines structural issues and potential policy changes to address these inequalities.

What is one of the main reasons Black families pay more for housing over their lifetime?

• They buy larger homes.

• They have higher interest rates and property taxes.

• They live in more expensive neighborhoods.

• They have more family members.

How much less in liquid savings do Black families have at retirement compared to White families?

• $60,000

• $130,000

• $200,000

• $90,000

What is risk-based pricing in the context of mortgages?

• A pricing model based on the size of the house.

• A pricing model based on the location of the house.

• A pricing model based on credit score and down payment.

• A pricing model based on the age of the borrower.

Why are Black families less likely to benefit from lower interest rates?

• They have higher incomes.

• They do not apply for loans.

• They are often unable to refinance due to job loss and re-underwriting.

• They prefer fixed rates.

What is one suggested policy change to address racial disparities in housing finance?

• Reduce the number of available loans.

• Increase interest rates for all.

• Implement flat pricing instead of risk-based pricing.

• Focus only on urban areas.

What role do Freddie Mac and Fannie Mae play in the housing finance disparities?

• They charge more to guarantee mortgages with lower down payments or credit scores.

• They provide loans to all applicants.

• They only serve urban areas.

• They offer the same rates to everyone.

What is a potential collective approach to address housing finance inequities?

• Address structural issues and discriminatory practices collectively.

• Focus on one segment of the market.

• Ignore the issue.

• Only change policies for new homeowners.