Racial Wealth Equity Research and Conversation Series: The Great Wealth Transfer

On December 17, more than 130 people came together online for the latest installment of Boston Indicators’ Racial Wealth Equity Research and Conversation Series, focused on how elements of the coming “Great Wealth Transfer” will affect racial wealth gaps.

The Great Wealth Transfer, the passing down of tens of trillions of dollars in assets from the estates of the Baby Boomer generation to their heirs, will represent a seismic shift in wealth, and there are signs that the transfer is primed to exacerbate existing racial wealth gaps. In his presentation, Michael Neal, Housing Finance Policy Center Senior Fellow at the Urban Institute, highlighted a compendium of data to back that conclusion, including that older White Americans (over age 58) hold 70 times the assets of older Black Americans:  $70 trillion versus $900 billion.

That gap is further exacerbated by the racial homeownership gap—over 64 percent of White households own their own homes versus 40 percent of Black households—and the fact that White homeowners typically own homes in better condition and of higher value than Black homeowners. In addition, research shows that Black families are less likely to have wills or estate plans that protect and ease the transfer of liquid assets.

 Together, those gaps suggest that without significant reforms, the intergenerational transfer of assets will likely increase the homeownership gap and wealth gap, Neal said, a gap that is also likely being underestimated today because measures do not include payouts from life insurance premiums—where White households are more likely to have life insurance policies and higher value policies than Black households.

Faced with that data, a panel moderated by Carmen Panacopoulos, Senior Business Strategy Manager for Regional & Community Outreach at the Federal Reserve Bank of Boston, sought to surface some ways to close these impending gaps. Olivia Barrow Strauss, Vice President of Neighborhood Development at  JP Morgan Chase Foundation, said for their part, JPMC and the foundation were investing in increasing access to affordable housing options to reduce the homeownership gap while seeking to make the costs of ownership more manageable for homeowners in the face of rising insurance and other expenses. Barrow Strauss said the bank was also working to reduce bias in the appraisal space, where homes owned by Black families or in Black neighborhoods are summarily assessed for less than similar homes owned by Whites.

Alex Camardelle, Vice President of Policy & Research at Kindred Futures, pointed to several policy opportunities, sharing his own family’s experience inheriting a home but then being unable to afford the property taxes on the inherited asset. In addition to property tax reforms, Camardelle highlighted opportunities to craft down payment assistance programs based more on wealth than income. He also noted the impact of climate policies, as climate resilience (or a lack thereof) can be reflected in both prices and the cost and likelihood of rebuilding. Lastly, he also called for policies that encourage investment in energy efficiency and protect housing from the speculative market.