A MacArthur ‘genius’ grant winner traces the housing market’s

On Oct 1, 2021

Hello and welcome back to MarketWatch’s Extra Credit column, a weekly look at the news through the lens of debt.

Have any debt-related stories or questions you want us to tackle? Email jberman@marketwatch.com.

This week we’re digging into the challenges some student loan borrowers borrowers face getting relief from their student debt when their schools close abruptly and the economic impact of restricting abortion. But first up, a look at the work of one of this year’s winners of the MacArthur “genius” grant.

An asset for some, but debt for others

Everywhere from politics to pop culture sends the message that owning a home is key to building wealth in America, but over the past several decades Black households — even when they own a home — have largely been shut out of that benefit.

That’s one of the many takeaways from the work of Keeanga-Yamahtta Taylor, a historian, writer, and professor of African-American studies at Princeton University and 2021 winner of a MacArthur Fellowship, commonly referred to as a “genius” grant.

“Property in white hands is valued more than property in Black hands,” Taylor, the author of “Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership,” told Vox last year. “So even when Black people own property, it still does not accrue in value in the same way or at the same rate. Instead, it often functions as a debt burden to African Americans.”

In honor of Taylor’s win and her work’s ties to the themes of this newsletter, I thought I’d dig into a topic that’s at the center of speaking and writing by Taylor and other scholars who study race, economics and finance: predatory inclusion. The idea is that financial systems that once excluded Black Americans and other marginalized groups shifted to provide them access to assets they were once excluded from — a home, a loan, an education — but did so on predatory terms.

“A lot of the gains of the Civil Rights movement and the demands that people have placed on institutions for equity as well as inclusion have an unintended side effect,” said Louise Seamster, an assistant professor of sociology and African-American studies at the University of Iowa. “Systems that look like they’re giving people what they want but on terms that are turning out to have major catches or downsides.”

Taylor’s work highlights how this dynamic has played out in the housing market. Even when, in theory, a partnership between the government and the private sector aimed to expand homeownership among Black households in 1968, homeowners wound up being harmed, Taylor wrote in an excerpt of “Race for Profit” published in the New York Times in 2019.

The partnership allowed for different than typical mortgage terms, including tying the size of the mortgage payments to a buyer’s income instead of the value of the home they were purchasing. It also allowed for down payments of only $200….