Racial disparities in access to capital for Latino developers

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Out of roughly 112,000 real estate development companies in the United States, about 111,000 of them are white owned. Those numbers are bad, but at the top of the market, they’re even worse: Of 383 top-tier developers that generate more than $50 million in revenue annually, one is Latino; none is Black, according to a new report.
Economists, social-impact strategists, and social entrepreneurs spent the last year studying the for-profit real estate development industry, trying to understand the stark representation crisis. Their report focuses on Black and Latino developers, because the theme of these groups’ lack of access to capital emerged in preceding qualitative research. They hope to look closer at other underrepresented developer groups, like women and Asian Americans, in the future, one of the report’s authors said.
The dearth of diversity at the top matters because that’s where developers can have the most impact on communities and drive the most economic growth. The lack of representation begins with a lack of capital, as Black and Latino people hoping to break into real estate development often can’t even access the seed money to get started.
“A lot of times, developers, myself included, start out raising money from friends and family,” said Cecily King, 35, a structural engineer turned developer based in New Jersey and Detroit, who founded Kipling Development, which focuses on multifamily residential properties across income levels. “In order to raise money from friends and family, you have to have friends and family that have money and knowledge of investing and a desire to invest in real estate.”
A racial wealth gap means that many aspiring Black and Latino developers don’t have such investment-savvy friends and family with discretionary dollars: The median net worth for white families is $188,200, compared to $24,100 for Black families, and $36,200 for Latino families. Nearly three-quarters of white families own a home, but fewer than half of Black and Latino families do.