Generational wealth refers to assets or financial resources passed down from one generation to the next, providing future generations with a financial head start.
These assets can include cash, real estate, stocks, bonds, businesses and other investments.
In San Diego County, generational wealth plays a significant role in shaping economic mobility, particularly in terms of homeownership, education and access to financial resources.
According to the San Diego Economic Equity Report, however, the distribution of this wealth is highly unequal, influenced by systemic barriers and racial inequities that have persisted over decades.
Homeownership: A Key Component
One of the most crucial pathways to generational wealth in the United States, including San Diego, is homeownership. Owning a home allows families to build equity over time, which can be passed down to future generations.
However, homeownership rates in San Diego County show stark racial disparities.
According to county data, 58.4% of White households and 57.2% of Asian households owned homes in 2021, compared to only 37.7% of Hispanic or Latino/a households and 25.1% of Black households. This disparity is particularly concerning because homeownership is one of the most effective ways to accumulate and transfer wealth across generations.
The cost of homes in San Diego County exacerbates the challenge of building generational wealth. The median home price in San Diego is significantly higher than the national average, creating barriers for many families, especially those from minority communities.
Local initiatives like the San Diego Foundation (SDF) Access Granted Homebuyer Program are attempting to close this gap by offering down payment assistance, financial counseling and credit education to help more families of color purchase homes. These efforts are a small step toward addressing the broader systemic issues that have contributed to the racial wealth gap in the region.
Role of Education and Income Inequality
Another critical factor in building generational wealth is access to education and higher-paying jobs. In San Diego, Latino/a and Black communities face significant educational and income disparities compared to their white counterparts.
The State of San Diego Latinos Report found that median earnings of Latino/a workers in the county are $28,000 less per year than that of their White peers. This wage gap limits the ability of Latino/a families to save, invest and accumulate wealth that could be passed on to future generations.
Educational attainment also plays a significant role in wealth accumulation. Households with higher education levels tend to have better-paying jobs and more access to wealth-building opportunities such as investments and homeownership.
In San Diego, while 42% of White residents hold a bachelor’s degree or higher, only 15% of Latino/a residents have attained the same level of education. This educational gap directly impacts economic opportunities and the ability to accumulate generational wealth.
Historical Inequities
Historical and systemic factors, such as redlining and discriminatory lending practices, have had a long-lasting impact on the distribution of wealth in San Diego.
Redlining, which systematically denied Black and Latino/a families access to home loans in certain neighborhoods, has led to long-term disparities in homeownership and wealth accumulation. These historical practices, combined with ongoing economic inequities, mean that Black and Latino/a families have had fewer opportunities to build and pass down wealth compared to White families.
Additionally, the cost of living in San Diego—among the highest in the nation—further complicates efforts to build wealth. Housing costs, utilities and transportation all place a strain on lower-income households, making it difficult for these families to save or invest for the future.
Generational Wealth for All Who Call San Diego Home
Several programs in San Diego aim to increase generational wealth for historically marginalized communities.
In recent years, San Diego Foundation has engaged partners through affinity funds to advance its vision for just, equitable and resilient communities.
Affinity funds support specific communities in San Diego and their unique needs and opportunities in San Diego. These funds include the:
- Black Community Investment Fund, which prioritizes and invests in community-led, innovative efforts that increase racial equity and generational wealth for Black San Diegans
- El Camino Fund, which focuses on enhancing economic mobility and wealth generation for Latino/a families.
- ANHPI Fund, which enhances the visibility of and advancing the leadership of Asian Americans, Native Hawaiians and Pacific Islanders (AANHPI)
These funds, along with SDF’s entire portfolio of programs and initiatives, help reduce the racial wealth gap by providing equitable access to opportunity for all San Diegans.
Moreover, nonprofit organizations and local governments are working together to increase access to affordable housing and improve financial education, particularly for first-time homebuyers.
These initiatives are essential in helping families establish a financial foundation that can benefit future generations.
