Net Worth of Whites Now 20 Times Minorities

[Retire Soon]

A recent study shows that the net worth of Whites is now 20 times that of Blacks and 18 times that of Hispanics. By Comparison, the gap between Whites and both of these minorities was 7 times greater in 1995.

The median net worth for Whites in 1995 was $113,149 with Hispanics having $6,325 and Blacks with $5,677. This article explains why this may have taken place.

Census data show wealth of whites is 20 times that of blacks, widest US gap in quarter-century - The Washington Post

 

[eytonxav]

It would have been interesting to see this differential comparing college educated vs non-college minorities vs whites over that same time period.

 

[gerntz]

You do understand that a gap is a difference, not a ratio as you're discussing? You do know that whites actually lost more wealth (-$21K in same period) than those two groups, right? Someone is trying ot score political points on you. They won.

 

[Andre1969]

I can see the rationale in those numbers. For instance, in my neighborhood, over the past 7 or 8 years, it's been either Blacks or Hispanics moving in, and unfortunately they have been buying at the peak of the market.

Here are a few examples (pulled from a real estate website):

1/05/05: $375,000: nice 3br, 3ba all-brick L-shaped rancher, built in late 70's, on 1/2 acre. Very nice house, and they've done a pretty good job keeping it up. But if forced to sell, I imagine it would fetch maybe $250K at best today. Zillow estimates $270K.

9/27/05: $350,000: old 2br/2ba shanty on 1.99 acres. Used to be a railroad tower back in the day for the WB&A railroad. Foreclosed on 11/22/10, and re-sold 6/29/11 for a mere $110,000! Honestly, I wish I'd bought it...it's on a nice piece of land. I figured the house would be a tear-down, but the people who bought it are fixing it up. Zillow.com gives this one $113K.

5/23/06: $330,000: modest 3br/2ba cape cod on 1/2 acre, built around 1940 I'd guess. They'd be lucky to fetch $200K today. Zillow estimated $199K.

5/4/07: $450,000: old 3br/1ba house dating back to around 1920, on 4.28 acres, but much of it wetlands. Previously bought by a developer in 2005 for $475K, but the county set up too many roadblocks so it wasn't profitable for him to tear down and develop it. Current owner wanted to put in a church, but also got turned down. Dunno what it's worth now, but about a mile away, there's a much nicer place for sale, on 3+ acres, for only $350K, so I'm sure this one is well south of that. Zillow.com gives this one $199K, too.

11/2/07: $375,000: 1924 Sears and Roebuck home on 1/2 acre. Originally a 2br/1ba, but added onto in the early 80's. It's now a 3br/2ba, but I question the quality of the second bath...alot of the work was done without a permit, as the guy who bought it in 2003 for $144K slowly put lipstick and makeup on this pig. Anyway, I'd guess it's worth $200K at best. Let's check Zillow... wow, they only give it $174K!

Now, I'm sure there are plenty of White people who have lost their shirts, as well. However, in the cases I've mentioned above, all except one, the Sears and Roebuck home, had been owned by Whites. Some of them had been original owners. In most cases, they profited handsomely from their sale. But, unfortunately, the incoming owners were sort of left holding the bag, as the bubble burst.

In the past, Whites usually had a higher percentage of home ownership than Blacks or Hispanics, so on average, I'd imagine they had more equity saved up. So, even if they bought an overpriced home after selling their overpriced home, they at least had some equity to put down for a decent payment.

 

[skyvue]

One could easily rationalize why Whites make more and have more in this country as we are the majority and the ethnic group with more generational roots tied the country. More stability, longer family history, etc...would all tend to drive up property owndership, education levels and also income levels.

However, what is harder to understand for me is why do some minority groups fair better here than others under what should be somewhat equal opportunites and circumstances? For instance, the data would suggest that blacks and hispanics are worse off than Asians and Indians for example.

 

[Andre1969]

However, what is harder to understand for me is why do some minority groups fair better here than others under what should be somewhat equal opportunites and circumstances? For instance, the data would suggest that blacks and hispanics are worse off than Asians and Indians for example.

I'd have to go back and re-read, but I think that article did say that Asians got hit pretty hard. I believe they had, on average a higher household net worth than Whites back in 2005, but got knocked down to an average of $66K by 2009?

One of the main reasons stated was that, like the Hispanics, a lot of Asians are concentrated in hard-hit areas like California, Nevada, etc. And a lot of poorer Asians had come over in recent years, which also brought the averages down.

Most Indians that I've known tend to seriously live below their means. Even if they have a nice house, nice cars, etc, they usually have the money, rather than the over-extended credit, to back it up. They also tend to have very close-knit extended families, and pool resources to help each other out. Kinda like the Waltons, but with more money.

**Edit: Just went back to the article, and on page two, there was this blurb, about Asians:

"Asians lost their top ranking to whites in median household wealth, dropping from $168,103 in 2005 to $78,066 in 2009. Like Hispanics, many Asians were concentrated in states like California hit hard by the housing downturn. More recent arrivals of new Asian immigrants, who tend to be poor, also pushed down their median wealth."

I also thought this blurb was interesting...

"The threshold for entry into the wealthiest top 10 percent, however, dipped lower: from $646,327 in 2005 to $598,435."

I'm above that threshold, but I swear I don't "feel" wealthy! Hope that statement doesn't open up a whole new can of worms!

 

[stoutboy]

I also thought this blurb was interesting..."The threshold for entry into the wealthiest top 10 percent, however, dipped lower: from $646,327 in 2005 to $598,435."

I'm above that threshold, but I swear I don't "feel" wealthy! Hope that statement doesn't open up a whole new can of worms!

I'm well above that threshold too (though not yet at 7 figures), and certainly don't feel wealthy. In fact I feel in a quite precarious situation. If things go as planned for another ten years my family should be o.k, but more and more that's a big if...

 

[Andre1969]

I'm well above that threshold too (though not yet at 7 figures), and certainly don't feel wealthy. In fact I feel in a quite precarious situation. If things go as planned for another ten years my family should be o.k, but more and more that's a big if...

I think the problem is that, while the top 10% is a pretty nice place to be, it's still a very broad category. It extends from $598,435 of net worth on up to, well infinity and beyond!

Oh, and I did a little more checking, and found out that I might not be in the top 10%, after all. I had forgotten that $598K number was for 2009. As of the end of 2009, I was at around $530K (not including assets such as cars, furnishings, and the house, but also not including the mortgage).

I wonder what the 2011 threshold to get into the top 10% will be?

Still, even if I'm in the top 10%, having $600K+ is nowhere near the same league as Bill Gates, Warren Buffett, etc!

 

[GregLee]

You do understand that a gap is a difference, not a ratio as you're discussing?

Does this mean anything? If there's a ratio >1, then there's a corresponding positive gap: A/B = r, A>B; A = Br; A - B = Br - B.

 

[cloudeleven]

Not surprising, given that probably 99% of all posters on this forum and the Bogleheads forum are white.

 

[ziggy29]

I tend to think this is more class-related than race-related, because in recent years there's been a growing disparity between the haves and the have-nots -- and between the "economic elite" class and the rest of us. The well to do economic classes are the ones "rising" in this "recovery" while the middle/working class is falling farther behind. (Yes, this is a generalization and there are exceptions, but this appears to be the trend over at least the last 10+ years.)

To the extent that more minorities are in the working/middle classes, I would expect they would be falling behind more. The correlation/causation thing may come into play here. We could replace "whites" and "minorities" with "the top 10% of households" and "the other 90% of households" in terms of income or net worth, and that would also be an increasing gap regardless of race.