Wealth gap grows between minorities, whites
LOS ANGELES (KABC) -- The wealth gap between white and minority households is the largest it's been in the past 25 years. That's according to a study by the Pew Research Center that lays much of the blame on the collapse of the housing market.
Manuel and Eufracia Segura were living the American dream. In 2003, they bought their house in Boyle Heights for $210,000. And by 2005, their house was worth $400,000. But then came the recession.
"Our payments kept going up," said Eufracia. "And it got to a point where our house was worth less than what we owed."
By 2009, their house was only worth about $180,000. The equity had evaporated. And the Seguras were not alone.
"Minorities were affected more by the housing downturn because most of their wealth derives from home equity," said Pew Research Center study author Rakesh Kochhar. "For example, for Latinos, about two-thirds of their net worth comes from home equity, compared with white households, who have more diversified portfolios and rely on home equity for only about 45 percent of their wealth."
In white households, the median wealth in 2009 was $113,149. In Hispanic households that number was $6,325, while in black households, it was $5,677.
"In 2009, white households had 20 times as much wealth as black households and 18 times the wealth of Hispanic households. These ratios are twice as high as 2005," said Kochar.
According to the Pew study, Hispanics were hit particularly hard. From 2005 to 2009 their median household wealth dropped by 66 percent. Blacks didn't do much better: Their median household wealth in that same time period dropped by 53 percent. But for whites, from 2005 to 2009, it was only a 16-percent drop.
"Latinos were more likely to be residents of areas that suffered the severest impact from the housing downturn," said Kochar. "States such as California, Arizona, Nevada and Florida."
Back in Boyle Heights, the Seguras have spent the past two years fighting foreclosure. With help from the East L.A. Community Corporation (ELACC), they were able to modify their loan and keep their house.
economy, real estate, national news, robert holguin
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