The housing bubble meant that many Americans who were lower on the economic ladder were getting their first shot at buying a home at exactly the wrong time. As Smart News wrote previously, people in the top 5 percent actually made money off the housing collapse, while the average household lost 36 percent of their wealth. And now, even as the housing market improves, families that were hurt by the collapse are being cut out of the recovery, the Urban Institute reports:
Today’s tight credit environment has constrained mortgage lending and is disproportionately affecting African American and Hispanic households. As a result, these communities have found it harder to take advantage of the low home prices and interest rates that followed the housing market crash, missing an important opportunity to build wealth through homeownership.
The net result, says the Atlantic's City Lab, is that more black Americans are being forced from being homeowners to renters, reversing the upward trend in black homeownership in the country.
During the run up to the 2008 housing crash, a disproportionate number of the boom's shaky loans went out to black and Hispanic households—it meant that more of these families could buy houses, but that they also bore the brunt of the collapse. When banks tightened the reins, it was those same Americans who were cut off from credit, in some cases leaving them them unable to refinance their loans, says the Urban Institute.