Removing the Constraints on Black and Hispanic Developers Would Generate Large Economic Benefits
Removing the constraints on Black and Hispanic developers—fixing the representation crisis, closing the revenue gap for medium-sized Black developers, and leveling the revenue cliffs for large Black and Hispanic developers—is an opportunity to increase wealth in Black and Hispanic communities. It’s also an opportunity to expand the economy in a way that creates many new jobs.
To demonstrate the economic potential of Black and Hispanic developers, we developed a simulation of what the real estate development industry would look like if we removed these constraints. We provide more detail in our methodology section.
Removing the Constraints on Black and Hispanic Developers Would Create 54,000 New Developers
Removing the constraints on Black and Hispanic developers would create more than 23,000 new Black developers and more than 31,000 new Hispanic developers. If the real estate development industry grew so that Black developers represented 14.7 percent of the industry (the percent of the U.S. population that is Black), there would be 23,332 new Black real estate developers.
FIGURE 10 – POTENTIAL TOTAL NUMBER OF BLACK DEVELOPERS IF CONSTRAINTS ARE REMOVED
Removing the constraints on Black developers would result in 23,332 new Black developers.
If the development industry grew so that Hispanic developers represented 18.7 percent of all developers (the percent of the U.S. population that is Hispanic), there would be an additional 31,759 Hispanic developers.
FIGURE 11 – POTENTIAL TOTAL NUMBER OF HISPANIC DEVELOPERS IF CONSTRAINTS ARE REMOVED
Removing the constraints on Hispanic developers would result in 31,759 new Hispanic developers.
Removing the Constraints Would Generate More Than $106 Billion in New Revenue Each Year
If we removed the constraints on Black and Hispanic developers, then Black developers’ total annual revenue would increase by about $45.7 billion and Hispanic developers’ annual revenue would increase by about $62.0 billion.
FIGURE 12 – POTENTIAL TOTAL ANNUAL REVENUE OF BLACK DEVELOPERS IF CONSTRAINTS ARE REMOVED
Removing the Constraints on Black and Hispanic Developers Would Create 1.7 Million New Jobs
Increasing the number of Black and Hispanic developers and increasing their average size would create 717,691 new jobs at Black developers and 982,499 new jobs at Hispanic developers.
FIGURE 13 – POTENTIAL TOTAL ANNUAL REVENUE OF HISPANIC DEVELOPERS IF CONSTRAINTS ARE REMOVED
Hispanic developers’ total annual revenue would increase by about $62.0 billion if we removed the constraints on Hispanic developers.
If these new developers kept just 1 percent of total revenue as profit, then this could result in hundreds of millions of dollars in wealth creation for the owners of these businesses each year.
Removing the Constraints on Black and Hispanic Developers Would Create 1.7 Million New Jobs
Increasing the number of Black and Hispanic developers and increasing their average size would create 717,691 new jobs at Black developers and 982,499 new jobs at Hispanic developers.
FIGURE 14 – POTENTIAL TOTAL EMPLOYMENT OF BLACK DEVELOPERS IF CONSTRAINTS ARE REMOVED
Removing the constraints on Black developers would create 717,691 new jobs at Black developers.
FIGURE 15 – POTENTIAL TOTAL EMPLOYMENT OF HISPANIC DEVELOPERS IF CONSTRAINTS ARE REMOVED
Removing the constraints on Hispanic developers would create 982,499 new jobs at Hispanic developers.
Our estimates of new businesses, revenue, and jobs may understate the true economic impact of removing the constraints on Black and Hispanic developers. This is because new developers would not only create jobs at their own firms; their businesses’ activities would also lead to more jobs at construction companies, real estate brokerages, professional service providers, building service companies, and other real estate-related businesses. Then, when the employees of these new developers spent their earnings, they would support even more jobs throughout the economy.
Increasing the numbers of Black and Hispanic developers could also have spillover benefits for Black and Hispanic communities. For example, research shows that Black- and Hispanic-owned businesses are more likely to hire Black and Hispanic employees than are white-owned businesses. Thus, increasing the number of these developers could help grow the number of Black and Hispanic professionals employed in the broader real estate industry. These new Black and Hispanic real estate development professionals could in turn go on to found their own development firms, potentially creating a positive feedback loop. Removing the constraints on Black and Hispanic real estate developers is an enormous opportunity not only for economic justice but also for expanding the industry and the overall economy.