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Many black Americans not over real estate crash

The windows of a house are boarded-up with

The windows of a house are boarded-up with plywood in the Roseland neighborhood of Chicago, Ill. Almost one in 10 Roseland properties is vacant and the area's home ownership rate fell to 57 percent in 2010 from 64 percent in 2000, according to the Woodstock Institute. (Aug. 28, 2013) Photo Credit: Bloomberg News

Helene Pearson's belief in home ownership was shattered in Roseland, the mostly black Chicago neighborhood where President Barack Obama got his start as a community organizer.

Pearson, who bought her two-bedroom, redbrick bungalow on South Calumet Avenue in Roseland for $160,000 in 2006 with a high-interest loan, put it on the market a year ago for $55,000 and didn't attract a single offer. Her bank has agreed to take it back.

Pearson, 35, a guidance counselor and mother of two girls, said, "This scarred me so badly that I never want to buy again."

For most Americans the real estate crash is finally behind them and personal wealth is back where it was in the boom. For blacks in the United States, 18 years of economic progress has vanished, with a rebound in housing slipping out of reach and the unemployment rate almost twice that of whites.

The home ownership rate for blacks fell from 50 percent during the housing bubble to 43 percent in the second quarter, the lowest since 1995. The rate for whites stopped falling two years ago, settling at about 73 percent, only 3 percentage points below the 2004 peak, according to the Census Bureau.

When Obama, the country's first black president, took office in 2009, he inherited an economic and housing crisis that disproportionately affected minorities.

Roseland, among the hardest hit neighborhoods in the country during the housing bust, exhibits many of the causes of the crash and obstacles to rebuilding black home ownership.

Almost 40 percent of borrowers there took out high-cost loans in 2005 and 2006, according to the Woodstock Institute, a Chicago-based nonprofit group. Mortgage lenders backed by Wall Street targeted minority home buyers across the country for loans that required lower credit scores, reduced down payments, or featured rising interest rates, contributing to a bubble that popped when defaults rose and they cut off lending.

Now, almost one in 10 Roseland properties is vacant, and the area's home ownership rate fell to 57 percent in 2010 from 64 percent in 2000, according to the Woodstock Institute. The median home price meanwhile has dropped to $28,000 in the second quarter from $119,000 in 2005, according to Midwest Real Estate Data LLC.

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