A few years ago, my daughter, in her late 20s, bought an apartment in Brooklyn that cost nearly a million dollars. How could a youngster, just six years out of college, afford such a place? The answer is, in part: generational wealth.

While initially skeptical of her idea of buying an apartment, I figured it never hurts to look, especially as interest rates were at historical lows and the pandemic had reduced the number of buyers in the market. We spent a few months looking at two-bedroom apartments in Prospect Heights, Park Slope, Clinton Hill, and downtown Brooklyn, areas where gentrification have taken hold. The least expensive one we saw cost $750,000. Yes, that’s how much real estate goes for in these Brooklyn neighborhoods, and prices have only risen since.

Eventually, she bid $950,000 for an apartment in Clinton Hill. To her delight, the offer was accepted. She was able to qualify for three-quarters of a million dollar loan based on her six figure salary as a software engineer. But she still needed to come up with a 20% down payment, $190,000, and she hadn’t worked long enough to save that amount.

Fortunately, I was able to give her money I’d inherited from my parents. How I got this money is a story of generational wealth, one that begins with my maternal grandfather’s arrival in the United States nearly 100 years ago.

In his early 20s, Yosef Wierzbowicz, later Josef Waxman, fled his native Poland and arrived in Palestine in 1922. He found work building roads in and around Tel Aviv. He immigrated to the United States in 1927, listing his occupation as “mason,” meaning that, essentially, he was an unskilled laborer. Needless to say, he had few if any pennies in his pocket. As most of his fellow Jews of the era, he settled in New York City’s Lower East Side.

While he had no money, he did have “social capital,” connections through family and co-religionists who could help him navigate his economic and social environments. The husband of his wife’s older sister, Yankel Goldberg, had moved from Palestine to New York a few years earlier. Yankel had opened up a paper goods store on Essex Street and encouraged my grandfather to do the same. As a traditional Jew, the idea of being a shop owner appealed to my grandfather since it gave him greater control over his work hours. (Employees in that era were generally expected to work on the Sabbath.)

The paper goods industry was a smart choice. In an era before stores such as Target and Staples, consumers and small businesses looked to local paper goods stores to supply all kinds of household and business needs: toilet paper, paper towels, napkins, tissues, paper plates, wrapping paper, bags, boxes, envelopes, writing paper, light bulbs, and the like.

My grandfather opened up a store on 408 East 10th Street between Avenues C and D, a location far enough away from Yankel’s store as not to be in competition with him. To save money on rent, he lived in the back of the store, learning English and lugging a pushcart to sell his wares.

In the early 1930s, my grandfather and Yankel became partners and opened up a new store on Essex Street. (I don’t have the address of this location.) But—alas—the store went bankrupt. No doubt the Great Depression reduced the demand for paper goods. Also, Yankel turned out to be a bad business partner. A compulsive gambler, he gambled away the store’s assets. With his one remaining asset, a truck, my grandfather, now the father of three small girls, decided to return to Palestine.

However, the economy in Palestine turned out to be no better than the one in New York. The truck was rendered useless when the ruling British authorities refused to give him a license to drive it. About two years later, he sold the truck and the family returned to New York. Thus, ten years after arriving in the United States, my grandfather remained essentially penniless.

He re-established his paper goods business in Lower East Side, opening a store on 78 Sheriff Street. Once again, social capital came in handy as a distant relative of his wife lent him $300 to restart the business. Since he lacked the money for a new truck, he again resorted to using a pushcart to sell his wares. As the economy improved during the Second World War, the store became more successful. He purchased a new truck and moved to a larger location at 96 Sheriff Street.

Meanwhile, the family maintained a strict budget to save on expenses. The children attended public schools. Meals were eaten at the store. My grandmother and the children served as unpaid labor. My grandmother essentially lived in the store, serving the customers who came in, while my grandfather tended to the wholesale part of the business.

As my mother’s sister recalls in her memoir: “Papa couldn’t afford a secretary so he taught first Sara (his eldest daughter) and then me and even Yael (my mother), as we got older how to make bills and statements, how to make entries in the ledgers and other bookkeeper jobs. We also had to learn to take care of customers so that Mama could run out of the store to shop or to run upstairs to do something in the house. Most of the cooking she did in the kitchen in the back of the store and we ate there most days (except for the Sabbath).”

At some point during the late 1940s or early 1950s, the store, now known as “Central Bag & Paper Co., Inc.,” moved nearby to 64 Pitt Street.

These photos, taken on the day my parents celebrated their engagement, give a sense of the variety of items offered for sale at the store.

In the late 1950s, my grandfather moved the store to its final location at 72 Columbia Street. Two reasons may have prompted the move. Perhaps it offered more space for a lower rent. But I suspect another motive. My grandfather was nearing age 60. Running the business was hard work, and he’d already suffered his first heart attack. He may have known something that would enable him both to wind up his business while, at the same time, procuring a financial windfall.

In 1934, New York City created the New York City Housing Authority, better known as NYCHA, to provide affordable housing for low and moderate income New Yorkers. The agency began what was termed “slum clearance,” using eminent domain to secure property for the development of large scale housing projects.

The projects were based on the “tower in the park” model. They were box-like high-rise towers that lacked any connection to the surrounding environment. Intended to maximize the number of apartments, they did not incorporate local businesses. (Housing that incorporates local business is called “mixed-use” housing.) (Plunz, A History of Housing in New York City, 268. For a critique of the “tower in the park” style, click here.) Robert Moses, the power behind the city’s “slum clearance” program, “gave the ‘tower in the park’ final economic and political credibility, and also its incredible design mediocrity” (Plunz, at 268).

The program intensified in 1955 with the passage of the Mitchell–Lama law which provided subsidies for affordable rental and cooperative housing. The program enabled the city to use eminent domain to build low and middle income housing while developers received tax abatements, subsidized low interest loans, and a guarantee of return on equity. Between 1955 and 1978, roughly 135,000 units of affordable housing were constructed using Mitchell–Lama funding. 

Everyone living in the Lower East Side knew about these projects as much of the development was centered there.

The first such project in the Lower East Side, the Baruch Houses, was completed in 1959, around the time my grandfather moved his store to Columbia Street. They consisted of 17 buildings spread over 15 blocks, bounded by the F.D.R. Drive and Columbia, East Houston and Delancey Streets.

Shortly thereafter, the city started construction on the Gompers Towers, located on Pitt Street, at the location of my grandfather’s former store. Since the projects did not incorporate local businesses, the city had to buy out businesses located where the projects were intended to be built. My grandfather may have figured that his ticket to retirement lay in owning a store on land the city wanted to take over.

Sure enough, the city began acquiring land for a new housing project, the Masaryk Towers, on Columbia Street. Using his connections with influential persons built up over the years—local officials and perhaps even mob figures—my grandfather was able to obtain a generous financial settlement.

The Masaryk Towers were completed in 1964. I took these pictures in 2021 when I went in search of the location of my grandfather’s store at 72 Columbia Street:

I don’t know exactly how much my grandfather received from the city, but, thanks to my mother, I have a sense of the amount. She kept a notebook of her parent’s financial records, no doubt using the skills she learned while helping to mange the store’s books.

The notebook contains records of money my grandparents invested in stocks. At the end of each year, my mother recorded the name of each stock, the number of shares, the year-end sale price, and the value of the stock. The first such entry is for 1959—the year I believe the city bought out my grandfather’s business. It contains a list 20 stocks, the year end value of which was $68,836.55. Assuming $60,000 of this amount came from the settlement, the city paid my grandfather the equivalent of about $670,000 in today’s dollars.

For each stock, my mother recorded the dividends received.

By 1963, my grandparents’ portfolio had grown to $88,344.29.

After my grandfather died in 1964, my grandmother continued to live off the earnings from this money for her remaining 21 years. 

While I’m sure my grandfather experienced anti-Semitism during his working life, being Jewish doesn’t seem to have impeded his ability to obtain a generous settlement from the city. By the time of the settlement, Jews had obtained some measure of political power as were recognized as part of the city’s ethnic makeup. The same cannot be said for African Americans living in New York at the time. While housing projects were also going up in Harlem, for a variety of reasons, African American business owners generally did not benefit as much as my grandfather apparently did. Property in Black neighborhoods tended to be undervalued, and to the extent they were compensated, it was for the value of the property itself rather than the loss of business revenue. Further, many African American business owners were tenants rather than property owners, and thus received no compensation for the loss of their businesses.

In 1965, my parents moved from the Lower East Side to Palo Alto, California, when my father received a post-doc position at Stanford University. Palo Alto was then a sleepy suburban college town. Little could they have known they were about to encounter one of the most dramatic real estate booms in United States history.

Our first home was a rented two-bedroom apartment. But my parents’ wanted to realize the American dream of home ownership. A man named Joseph Eichler, a fellow Jew from New York, would help make that dream possible.

Eichler moved to the Bay Area in 1925. He founded a company called Eichler Homes, which, between 1949 and 1966, built more than 10,000 houses in various Bay Area cities, including Palo Alto.

The homes were simple, relatively affordable, one-story structures, featuring glass walls and open floor plans, in a style that came to be known as “California Modern.”

One of the Palo Alto communities he built was Charleston Gardens. Between 1951 and 1954, orchards were cut down, and, in their place, single family homes, known as “Eichlers,” constructed.

In June, 1966, my parents entered into a contract for sale for a three-bedroom, two-bathroom, 1,144 square foot home in Charleston Gardens (tract number 670) on the corner of a leafy cul-de-sac. The purchase price was $26,000 (about $260,000 in 2026 dollars). Despite the fact that my mother was not yet working and my father earned but a beginning academic salary, they were able to qualify for a loan of $20,800. But they still needed to come up with an additional $5,200. While that may not seem like a lot of money, they didn’t have it. To make up some of the difference, they negotiated a $2000 second mortgage with the sellers. (It’s possible that being Jewish worked to their advantage as the sellers were also Jewish and perhaps willing to help out my parents instead of waiting for a buyer who had enough money for a down payment.) That still left $3,200. My parents didn’t have this money, but someone in their family did: my grandmother (my grandfather died the year before my parents moved to Palo Alto). The money they were gifted, traceable to the city’s payment to my grandfather, helped my parents become home owners in Palo Alto.

My parents kept the title insurance document which attests to the financials of the sale:

Again, it is instructive to examine my parents’ real estate purchase in terms of race. Palo Alto, at the time we moved there, was almost exclusively white, as it had been for many years. In the mid 1920s, real estate contracts in Palo Alto began to include racial covenants, the typical language of which stated: “No person not wholly of the white Caucasian race shall use or occupy such property unless such persons are employed as servants …” While the Supreme Court in 1948 held that such covenants violated the equal protection clause of the 14th Amendment, housing discrimination in Palo Alto (and, of course, elsewhere) continued. A recent article notes that “In 1952, a survey by the Palo Alto Fair Play Committee found that 68 Palo Altans would rent to non-whites, while 198 would not. In 1971 and again two decades later, ‘testers‘ sent by the Midpeninsula Citizens for Fair Housing revealed that some Palo Alto landlords would rent the same home to a white applicant but not to a similar Black applicant.” (The article also notes that some Palo Alto residents are surprised to discover that their own homes still have restrictive covenants.)

Palo Alto’s de facto segregation was amplified by the almost all Black neighborhood of East Palo Alto, located on the east side of Highway 101 (the Bayshore). When, in 1956, a Black family managed to buy a home in an all-white area of East Palo Alto, “the president of the California Real Estate Association warned white neighbors that an imminent ‘Negro invasion‘ would reduce their property values. This triggered panic sales at steep discounts to speculators, who then directed ads to ‘Colored Buyers.’ Black families paid inflated prices, because . . . they had few choices. Within six years, the city was 82% Black.” (This practice is known as “blockbusting.”)

Based on the demographics of Palo Alto at the time we moved there, it is safe to assume that African Americans faced de facto discrimination in housing, whether in terms of sellers refusing to sell to them or banks making it difficult to obtain a mortgage. Just ten years earlier, the president of Palo Alto’s Board of Realtors was reported as saying: “If you do sell to Negroes, everyone else is down your throat.” The extent of racial discrimination in housing in California generally is illustrated by the passage of Proposition 14 in 1964. The previous year, the California legislature enacted the Rumford Fair Housing Act, outlawing the denial of rentals or sales based on “ethnicity, religion, or national origin.” Intended to overrule that law, Proposition 14 declared that the state could not limit or deny any person’s ability to sell or lease property “to such person or persons as he, in his absolute discretion, chooses.” The proposition passed with an overwhelming 65.39% support. (The law was struck down as unconstitutional by the California Supreme in 1966 and later repealed by the voters in 1974.)

Eichler himself was a progressive in racial matters. He wanted the neighborhoods he created were not racially segregated. “One of his stated aims was to construct inclusive and diverse planned communities, ideally featuring integrated parks and community centers. Eichler established a non-discrimination policy and offered homes for sale to anyone of any religion or race.” Clause 4 of the Title Insurance policy my parents received when they purchased their home specified that “No restrictions based upon race, color or creed are included therein,” a clause that may have been standard in order to fulfill Eichler’s vision of non-discrimination in housing.

Of course, the need for such a clause in the first place says much about the real estate market at the time.

Even today, years after racial restrictions and discrimination in housing have abated, Palo Alto is only 2% African American and 6% Latino. By contrast, 71% of the population of East Palo Alto is either African-American or Latino.

My parents lived in the home for 13 years. Unfortunately, they sold the house in 1979 for about $150,000. While they realized a nearly 500% gain over those years, about three times the rate of inflation, had they held onto the house, it would be worth, according to Zillow, about three million dollars, a staggering 11,438% rate of increase from the time they bought it.

In 1979, my parents used the proceeds from the sale of the Palo Alto house to buy a house in the Berkeley hills, overlooking the San Francisco Bay, for $223,000. They lived in that home for over 30 years. My father sold it in 2017 after my mother passed away for $1,527,500, realizing a nearly 600% rate of return.

This was the source of the money, inherited from my father after he passed away, that I gave to my daughter to help fund the purchase of her Brooklyn apartment.

The generational wealth I acquired was a product of my grandfather’s hard work as he struggled to make a living as a first generation immigrant. It’s an American story of immigrant perseverance and sacrifice. Yet it’s also a story of being in the right place at the right time as the city undertook to transform the way it housed its residents. It is also a story, sad to say, of being the right skin color. My parents as well had the good fortune to find themselves at the right place at the right time, and the right skin color, as Palo Alto transformed from a sleepy college town to Silicon Valley, the epicenter of the high-tech industry. The story accords with a recent poll that found that 38% of white adults say they’ve gotten at least $10,000 in gifts or loans from a parent or older relative whereas only 14% of Black adults receive similar gifts or loans.

My daughter was able to afford her apartment in Brooklyn because she is smart and works hard but also because she was the beneficiary of generational wealth. Hard work played an important role in accumulating that wealth, but so too did social and racial factors. Hard work was a necessary, but not sufficient, cause of the wealth I passed along to her. My daughter has lived in her apartment for five years now, and it’s now worth about 1.2 million dollars. Wealth begets wealth. So too, it seems, poverty begets poverty.