Tag Archives: residential segregation

Appraisals based on neighborhood sales contribute to price differentials in Chicago

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Home appraisals are often based on nearby properties, leading to large price differences and lending practices across Chicago neighborhoods:

That means if you’ve got an area with lots of boarded up houses and lots of extremely low value sales, then it’s likely that even a newly rehabbed house would be appraised at a lower price. Hobbs says that’s because most residential appraisals are determined by comparing that property with ones that have recently sold in the neighborhood.

“In the desirable neighborhoods, there’s an insufficient amount of inventory or supply and therefore buyers are competing even more ferociously to be in place, to be the one individual or family that is successful in buying that property,” he said.

So in an area like Lincoln Park, that demand drives prices way up, even beyond peak prices. And appraisers and banks feel comfortable with that because they have the numbers to back it up. But when someone wants to make a traditional purchase in a marginal area like Lawndale, appraisers and lenders are more conservative, especially after what happened during the housing crisis…

Rose said in the post-bubble market, banks are putting more weight on the value of a property than they did before. He thinks using cash transactions and distressed sales as comparables doesn’t really give a true market sense for what a house should sell for.

Another point in favor of living in hot or desirable neighborhoods: lenders are more likely to make loans. In contrast, economically depressed neighborhoods have a tougher time recovering unless lending institutions decide to make an investment or people have cash or capital to get past the lower appraisals. This could have the effect of reinforcing residential segregation for long periods of time.

As they say in real estate, it’s all about location, location, location…

Don’t forget the influence of discriminatory housing policies on the United States

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As part of a larger argument for reparations for slavery, Ta-Nehisi Coates highlights the long-lasting effects of discriminatory housing policies and residential segregation:

The oft-celebrated G.I. Bill similarly failed black Americans, by mirroring the broader country’s insistence on a racist housing policy. Though ostensibly color-blind, Title III of the bill, which aimed to give veterans access to low-interest home loans, left black veterans to tangle with white officials at their local Veterans Administration as well as with the same banks that had, for years, refused to grant mortgages to blacks. The historian Kathleen J. Frydl observes in her 2009 book, The GI Bill, that so many blacks were disqualified from receiving Title III benefits “that it is more accurate simply to say that blacks could not use this particular title.”…

Whereas shortly before the New Deal, a typical mortgage required a large down payment and full repayment within about 10 years, the creation of the Home Owners’ Loan Corporation in 1933 and then the Federal Housing Administration the following year allowed banks to offer loans requiring no more than 10 percent down, amortized over 20 to 30 years. “Without federal intervention in the housing market, massive suburbanization would have been impossible,” writes Thomas J. Sugrue, a historian at the University of Pennsylvania. “In 1930, only 30 percent of Americans owned their own homes; by 1960, more than 60 percent were home owners. Home ownership became an emblem of American citizenship.”

That emblem was not to be awarded to blacks. The American real-estate industry believed segregation to be a moral principle. As late as 1950, the National Association of Real Estate Boards’ code of ethics warned that “a Realtor should never be instrumental in introducing into a neighborhood … any race or nationality, or any individuals whose presence will clearly be detrimental to property values.” A 1943 brochure specified that such potential undesirables might include madams, bootleggers, gangsters—and “a colored man of means who was giving his children a college education and thought they were entitled to live among whites.”

The federal government concurred. It was the Home Owners’ Loan Corporation, not a private trade association, that pioneered the practice of redlining, selectively granting loans and insisting that any property it insured be covered by a restrictive covenant—a clause in the deed forbidding the sale of the property to anyone other than whites. Millions of dollars flowed from tax coffers into segregated white neighborhoods.

“For perhaps the first time, the federal government embraced the discriminatory attitudes of the marketplace,” the historian Kenneth T. Jackson wrote in his 1985 book, Crabgrass Frontier, a history of suburbanization. “Previously, prejudices were personalized and individualized; FHA exhorted segregation and enshrined it as public policy. Whole areas of cities were declared ineligible for loan guarantees.” Redlining was not officially outlawed until 1968, by the Fair Housing Act. By then the damage was done—and reports of redlining by banks have continued.

Such policies were officially repealed in the 1968 Housing Act but much damage was done: whites were already leaving for the suburbs in droves, poor urban neighborhoods were suffering, and patterns were being formed that would endure for decades. See the next section of the article which discusses how this played out in Chicago.

The next step in this discussion is to then move to the economic discrimination that is more prevalent today. Even as the discriminatory policies continued through the 1950s and 1960s, whites were changing their justifications from race-based arguments to class-based arguments. See the book Colored Property which chronicles this transition and much of the underlying conversation about residential segregation today.

Donald Sterling and residential segregation

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ESPN host Bomani Jones suggests the Donald Sterling affair is less about his recorded comments and more about his contribution to a large issue in the United States that fewer people pay attention to: residential segregation. While others have noted Sterling’s tainted past, particularly his historic $2.725 million settlement in a housing discrimination case, Sterling is part of a bigger system where white people have generally moved out of neighborhoods that blacks and others have moved into. Jones ties Sterling’s past with the problems facing poor neighborhoods in Chicago that have a lack of economic resources and opportunities after whites left for the suburbs. As noted in American Apartheid and numerous other sociological works, the disparities in where people live affect a wide range of outcomes including jobs, social networks, educational opportunities, political power, crime rates, and health.

Of course, tackling residential segregation is much harder to address. As I noted earlier this week, whites tend to argue they should be able to move where they want and take advantage of their economic power. Others don’t have such options. Various efforts to limit some of these geographic disparities – like busing to schools or moving poor urban residents to suburbs – tend not to be met with favor with suburbanites who see such moves as intrusions on their self-rule. It is one thing for whites to tolerate other racial and ethnic groups in society but a much different thing to live in close proximity, share local institutions, and interact regularly with others.

Those with above-average economic power can’t help but be gentrifiers?

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One public policy student suggests it is really hard for those with economic advantages to avoid being gentrifiers, even when they don’t move into up-and-coming urban neighborhoods:

But it’s worse than that: it doesn’t even matter where you live. Moving to a higher-income neighborhood – one where market and regulatory forces have already pushed out the low-income – means you’re helping to sustain the high cost of living there, and therefore helping to keep the area segregated. You’re also forcing lower-income college graduates to move to more economically marginal areas, where they in turn will push out people with even less purchasing power. You can’t escape the role you play in displacement any more than a white person can escape their whiteness, because those are both subject to systemic processes that have created your relevant status and assigned its consequences. Among the classes, there is no division between “gentrifiers” and “non-gentrifiers.” If you live in a city, you don’t get to opt out.

The upshot here is not that we should all descend into nihilistic real estate hedonism. But we need to recognize what’s really going on: that what we call “gentrification” these days is only one facet of the much larger issue of economic segregation. That people get priced out of the places they already live in is only half of the problem. The other half, which affects an order of magnitude more people, is that people can’t move to the neighborhoods to which they’d like to move, and are stuck in places with worse schools, more crime, and inferior access to jobs and amenities like grocery stores. That problem is easier to ignore for a variety of reasons, but it’s no less of a disaster.

And all this, in turn, is the result of a curiously dysfunctional housing system – one that’s set up to allow market forces to push up prices without regard for people who might be excluded, and to prevent market forces from building more homes and mitigating that exclusion.

The emphasis here is on the system: people with more economic resources have more opportunities to move where they want and the capital tends to be or go where they go. A few other thoughts:

1. This reminds me of the book Colored Property which argues a key shift took place in the 1950s and 1960s as white homeowners started arguing for their economic, rather than race-based, rights. Thus, buying a nice home in a nice white neighborhood wasn’t about avoiding blacks or other minorities; it was about taking advantage of one’s own hard work and protecting one’s property values. These are the same justifications underlying the system today: people with more resources argue they should be able to move to nice places and have nice amenities. But, this comes at the expense of fewer resources in other places.

2. Students often ask me what they can do about issues of poverty and social injustice. I try to inform them about these systems as well as tell them that one of the bigger choices they will have to make after graduating is choosing where they live. Should they as relatively wealthy Americans with cultural capital simply chase nice amenities, high property values, and a secure and high-paying job overall? Or, could they choose to contribute to and learn from other kinds of places?

“Why Did Chicago’s Middle Class Disappear?”

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Whet Moser explains the GIF of Chicago’s disappearing middle-class through the work of sociologist Lincoln Quillian:

What’s most striking about Hertz’s map is the transition from 1970 onwards; when the map begins, the lowest-income census tracts are extremely concentrated. Then, as if a switch was flipped, they radiate out from the city center by 1980. (It almost looks like watching Conway’s Game of Life.) The change in those 20 years is immense. And Quillian gives a clue as to why, laying the groundwork for what was happening before Hertz’s analysis begins (emphasis mine):

Modern poor urban neighborhoods, formed after 1970 or so, thus stand in sharp demographic
contrast to poor and minority neighborhoods earlier in the century. Accounts of racial succession of neighborhoods in the 1950s indicate that neighborhoods undergoing racial transition tended to increase in population density, especially in passing through a late phase in racial succession referred to as “piling up,” in which previously white-owned homes and apartments were subdivided into smaller dwellings to accommodate the housing demands of black immigrants (Duncan and Duncan 1957). Although the affluent have always made efforts to segregate themselves from the poor, immigration into cities before about 1970 was proceeding at too rapid a pace to allow inner city neighborhoods to drop substantially in population as part of this process. Indeed, a chief reason blacks desired to exit predominantly black areas of the city before 1970 was because the housing supply in black neighborhoods was insufficient to keep up with demand (Aldrich 1975). With the end of black immigration to urban areas, poor African-American neighborhoods have changed from densely packed communities of recently arrived immigrants to areas gradually abandoned by the nonpoor. The cessation of the flow of black immigrants to the nation’s cities, and the corresponding decline in the population density of poor neighborhoods, may be one unexplored factor responsible for the change in the nature of poor African-American neighborhoods in the early 1970s that Wilson (1987) describes.

The Second Great Migration ends in 1970. To paraphrase Hunter S. Thomson, Hertz’s 1970 map appears to be the point where you can see the wave break and roll back.

Quillian’s data then picks up the narrative, which adds texture to Hertz’s map. Between 1980 and 1990, there’s a substantial leap in the lowest-income-level census tracts, then things plateau from 1990-2000. Here’s Quillian again:

There is no indication in the PSID data that stayers in black and/or poor neighborhoods experienced increases in their poverty rates in the 1970s and 1980s, except during the recession of the early 1980s. During this recession, increases in the poverty rate among the nonpoor were spatially concentrated in black moderately poor neighborhoods. Since these neighborhoods were already moderately poor to begin with, this suggests that increasing poverty rates in the early 1980s had a strong effect in increasing the number of extremely poor neighborhoods.

Quillian was writing in 1998 (here’s another paper from him in 2012, addressing similar issues), but his conclusions accurately foretell the changes you can see from 2000-2012: “Neighborhoods in transition to high-poverty status empty first of whites, then of many middle-class blacks, leaving more-disadvantaged and less-populous areas. The overall result is that high-poverty neighborhoods have been becoming geographically larger and less densely settled.”

So some of these neighborhoods that changed over to high levels of poverty aren’t necessarily the result of increasing number of poor people but rather the departure of higher-income and white residents. They may be poor neighborhoods but they are not necessarily dense because few people of any background (regardless of class and race) are moving in.

Another thought: some conversation about white flight focuses on the 1950s and 1960s when whites moved to the suburbs due to (1) policies that helped make the suburbs more attractive (interstate construction, new rules about mortgages that made home purchases available to more Americans plus (2) continued waves of the Great Migration of blacks to Northern cities. All this is true but this map is a reminder that the processes affecting poor neighborhoods continued from the 1970s to 1990s. It wasn’t until the 1980s that academics started writing important books like this, whether from William Julius Wilson or Paul Jargowsky.

Of course, a key question is how much this is still happening today. Can poor neighborhoods spread even further as better-off urban residents and suburban residents move to wealthier pockets while lower-class and poorer residents are left in emptying out locales? The process may not be over yet and it is hard to find cases where truly poor neighborhoods from recent decades made substantial turnarounds.

DeSean Jackson illustrates how black Americans often retain ties to poorer neighborhoods, regardless of class

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Jamelle Bouie highlights sociological research that shows blacks in America tend to live closer to and have ongoing social ties with poorer neighborhoods compared to whites:

The key fact is this: Even after you adjust for income and education, black Americans are more likely than any other group to live in neighborhoods with substantial pockets of poverty.

As sociologist Patrick Sharkey shows in his book Stuck in Place, 62 percent of black adults born between 1955 and 1970 lived in neighborhoods that were at least 20 percent poor, a fact that’s true of their children as well. An astounding 66 percent of blacks born between 1985 and 2000 live in neighborhoods as poor or poorer as those of their parents…

How does this stack up to white families? Here, Sharkey is indispensable: Among white children born through 1955 and 1970, just 4 percent live in high poverty neighborhoods. Or, put another way, black Americans live with a level of poverty that is simply unknown to the vast majority of whites…

“When white families advance in economic status,” writes Sharkey, “they are able to translate this economic advantage into spatial advantage by buying into communities that provide quality schools and healthy environments for children.” The same isn’t true for black Americans, and some of the answer has to include present and ongoing housing discrimination. For example, in one study—conducted by the Department of Housing and the Urban Institute—black renters learned about fewer rental units and fewer homes than their white counterparts…

This can have serious consequences. Youthful experimentation for a white teenager in a suburb might be smoking a joint in a friend’s attic. Youthful experimentation for a black teenager might be hanging out with gang members. As Mary Pattillo-McCoy writes in her book Black Picket Fences: Privilege and Peril Among the Black Middle Class, “Youth walk a fine line between preparing for success and youthful delinquent experimentation, the consequences of which can be especially serious for black youth.”

Even as the details of the DeSean Jackson situation trickle out, the overall point is clear: blacks and whites in America continue to live in different neighborhoods and this has consequences for adult life. One consequence is that blacks tend to live in poorer neighborhoods, regardless of class, and a second is that social ties between wealthier and poorer neighborhoods often continue even when economic opportunity allows one to move elsewhere (see the work of Robert Sampson in Great American City for his social network analysis of social ties of residents who leave poorer neighborhoods – and also where they tend to end up).

All together, the impact of on-going residential segregation is not as simple as living in different places. The social conditions of different places is related to all sorts of disparate outcomes including housing options, educational attainment, safety and crime rates, economic opportunities, and life expectancy. We should not be surprised if we see this play out in arenas like the NFL which apparently has some divided opinions about how it should be addressed (one team releases a good player, another eagerly signs him).

Growing American political divide between urban and rural areas

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The urban/rural political divide has grown in the last few decades:

As Democrats have come to dominate U.S. cities, it is Republican strength in rural areas that allows the party to hold control of the House and remain competitive in presidential elections…

The U.S. divide wasn’t always this stark. For decades, rural America was part of the Democratic base, and as recently as 1993, just over half of rural Americans were represented by a House Democrat, according to a Wall Street Journal analysis. Conservative Democrats often represented rural districts, including Ms. Hartzler’s predecessor, Ike Skelton, who held the seat for 34 years before she ousted him in 2010.

That parity eventually gave way to GOP dominance. In 2013, 77% of rural Americans were represented by a House Republican. But in urban areas—which by the government’s definition includes both cities and suburbs—slightly less than half of residents were represented by congressional Republicans, despite the GOP’s 30-seat majority in the House…

In 1992, Bill Clinton won 60% of the Whole Foods counties and 40% of the Cracker Barrel counties, a 20-point difference. That gap that has widened every year since, and in 2012, Mr. Obama won 77% of Whole Foods counties and 29% of Cracker Barrel Counties, a 48-point difference.

And with this divide between cities and rural areas, the suburbs, particularly ones in the middle between exurbs and inner-ring suburbs, are where politicians fight for votes.

The profiles of a suburban county outside Kansas City and a rural county in Missouri suggests that most people make conscious choices about where they want to live. In other words, everyone in America can live wherever they want and they make these choices based on culture and politics. A common illustration for this is the plight of high school and college age adults and fears of  a rural “brain drain“: they can leave their small town for the big city where they see there is more excitement. To some degree, this is true: Americans are a mobile people yet it is a more complicated process than simply selecting a cultural milieu and parking there for the rest of their lives. On one hand, people can make much more finer-grained decisions than on a county by county basis (particularly in denser areas where there are plenty of communities to choose from) and on the other hand people are pushed and pulled by particular places through race and ethnicity, social networks, economic opportunities, and life changes. The article mentions cultural factors quite a bit but says little about race and ethnicity, a long-standing factor in where people live and evidenced today by continued residential segregation.

Just a note: the second author of this piece is Dante Chinni, also the co-author of Our Patchwork Nation. His analysis could be contrasted with sociologist Robert Wuthnow’s recentl book on small-town America.

Is there an invisible wall keeping $1 million homes east of Western Avenue in Chicago?

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One person in Chicago real estate argues $1 million homes on Chicago’s North Side stay east of Western Avenue.

It’s as if there is an invisible wall running through the middle of Chicago, along Western Avenue all the way south of Montrose. When buyers of million dollar homes specify their search criteria they will often specify that they want to stay east of Western Avenue – or if they specify Ukrainian Village, Bucktown, Wicker Park, Roscoe Village, or St. Ben’s those neighborhoods technically stop at Western Avenue so again you are staying east of Western. And it almost doesn’t matter anyway because over the last 7 years there have been very few homes above $1 MM for sale west of Western anyway as you can see in the map below. It’s pretty dramatic isn’t it?

What could be behind this?

Well, for one you are typically getting further away from public transportation options as you move west. But then again public transportation isn’t really that much more accessible just east of Western than it is just west of Western. If you can’t walk to the el stop in 10 minutes in January you may not feel like you have good access to public transportation regardless of which side of Western you live on.

The other thing that happens as you cross Western Avenue is that you cross into a few lower income census tracts. For example if you look at the heat map from RichBlocksPoorBlocks.com you will see that there are are a few sections of Western Avenue where the median household income drops pretty dramatically as you cross the street. In the map below as the color transitions to darker green median household income goes up and as it transitions to darker red it goes down. From Fullerton to Armitage the median income is $66K on the east side of the street but $35K on the west side of the street. And from Armitage to Bloomingdale it’s $107K vs. $66K. And then from Division to Chicago it’s $67K vs. $42K.

Might this change in the future?

There is no question that eventually the area west of Western will become populated with million dollar plus homes but at that point the disparity between the east and west sides of the street may persist and the east side may just be populated with homes priced well above $1 MM. And, regardless, it looks like that day is still several years into the future. In the meantime, if you are willing to be a pioneer you can definitely find cheaper living just a couple of blocks further west.

My interpretation: neighborhoods west of Western Avenue aren’t trendy or gentrifying yet and have different demographics. In other words, there isn’t demand yet among the creative class or young professionals for nicer housing west of Western.

This could lead to some discussion about the limits of gentrification on Chicago’s north side. Just how much can it expand? What happens when it moves out of hipper neighborhoods and comes up against more lower-class or non-white neighborhoods? Right now, there are some gentrifiers who want to live on that edge between the expensive homes and poorer neighborhoods, places they might consider more gritty or authentic. But, would large numbers of people move further west? And are there enough of them? (This, of course, doesn’t even consider the negative effects of gentrification which include making housing more unaffordable, a problem in a region that needs much more affordable housing, and white residents pushing out non-white residents.)

Sociologist argues neighborhoods with racial/ethnic diversity and social cohesion not possible

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An urban sociologist looks at whether neighborhoods can have both social cohesion and racially/ethnically diverse populations:

As reported in the American Journal of Community Psychology, Zachary Neal found that neighborhood integration and cohesion cannot co-exist.

“Is a better world possible? Unfortunately, these findings show it may not be possible to simultaneously create communities that are both fully integrated and fully cohesive,” Neal said. “In essence, when it comes to neighborhood desegregation and social cohesion, you can’t have your cake and eat it too.”

The reason has to do with how people form relationships. Neal said people usually develop relationships with others who are close rather than far away, and similar rather than different from themselves (be it through race, religion, social class, etc.).

Neal ran computer modeling of different fictional neighborhoods and, after millions of trials, consistently found the same thing: The more integrated a neighborhood is, the less socially cohesive it becomes, and vice versa…

Neal said he started the project because past research had failed to turn up a city that is both truly integrated and cohesive – from the United States to the United Kingdom to Asia. But it’s not from lack of effort, he said.

This sounds similar to Thomas Schelling’s famous 1971 piece “Dynamic Models of Segregation.” Working with hypothetical models and different assumptions about what two racial/ethnic groups might desire for the best neighborhood composition, Schelling suggested the actions of the two groups tend to lead to more segregated than integrated outcomes. Later research based on these ideas suggests whites generally start moving out of a neighborhood when it becomes roughly 15% black while blacks say they are more comfortable with up to a 50/50 mix of whites and blacks.

If this doesn’t often work in neighborhoods and cities today, wouldn’t one solution be to try to focus less on particular locations and instead working at a more societal level to try to get people to be more comfortable interacting with and eventually living with people different than themselves?

Effects of residential segregation: American schools racially divided across districts

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A new sociological study finds more of the racial and ethnic variation in American education takes place across school districts:

Nearly 60 years after the landmark Brown v. Board of Education Supreme Court decision that ordered school districts to desegregate, schools seem to be trending back toward their segregated pasts. In the 1968-69 school year, when the U.S. Department of Education started to enforce Brown, about 77 percent of black students and 55 percent of Latino students attended public schools that were more than half-minority. By the 2009-2010 school year, the picture wasn’t much better for black students, and it was far worse for Latinos: 74 percent of black students and 80 percent of Latino students went to schools that were more than half-minority. More than 40 percent of black and Latino students attended schools that were 90 percent to 100 percent minority…

Whites are nearly a minority in the U.S. population under the age of five, and Census projections predict that by 2043, whites will no longer be the majority of the U.S. population overall. “There’s going to be fewer whites in minority schools because there are fewer whites in the population,” said Fiel.

Another part of the problem is with desegregation policies themselves. At the time of the Brown decision, schools in the same district were vastly unequal to one another, so efforts went toward integrating schools within each district. That made sense to combat segregation as it existed at the time.

Today, though…”The biggest barrier to reducing racial isolation…is racial imbalance between school districts in the same metropolitan area/nonmetropolitan county,” Fiel wrote in his American Sociological Review article.

In other words, where people can live, typically determined by wealth and income which are related to education and race and ethnicity, helps determines the differential outcomes of school districts. If residential segregation is common – and it is in many metropolitan areas in the United States – then we shouldn’t be surprised that other outcomes are unequal.