RedJar/Flickr
Last summer, the Michigan town of Grosse Pointe Park erected a farmer's market
in the middle of one of the few remaining streets that allowed cars to
pass between the tony suburb and the urban Detroit neighborhoods at its
border. It was the latest of many
attempts by Grosse Pointe Park residents to close off roads and block
traffic between what has become a predominantly white, affluent suburb,
and its poorer, urban neighbor.
There were protests about the border, and Grosse Pointe Park later said it would tear down
the farmer's market and re-open the road, but the incident speaks
volumes to the segregation that exists in Detroit, and the tensions that
can grow as a result. The barrier erected in Grosse Pointe (Alana Semuels)The
fact that these two areas are so close is unique—the border between
Grosse Pointe Park and the city of Detroit is the only place in any of
America's biggest citieswhere a very wealthy, predominantly-white area abuts a very poor, black one, according to research from a new working paper
from the University of Minnesota. But the existence of self-segregated
wealthy white areas close by low-income minority ones isn't unique,
according to the Minnesota researchers. They have sorted census tracts
in 15 of America's 20 biggest cities into "racially concentrated areas
of affluence" and "racially concentrated areas of poverty," and find
that many cities have more areas of segregated affluence than they do
poverty.
Racially concentrated areas of affluence, by the researchers'
definition, are census tracts where 90 percent or more of the population
is white and the median income is at least four times the federal
poverty level, adjusted for the cost of living in each city. Racially
concentrated areas of poverty, by contrast, are census tracts where more
than 50 percent of the population is non-white, and more than 40
percent live in poverty.
Detroit has 55 racially concentrated areas of affluence and 147
racially concentrated areas of poverty, according to the research, done
by Ed Goetz, Tony Damiano, and Jason Hicks. Detroit's racially
concentrated areas of affluence are just 1.1 percent black. Its racially
concentrated areas of poverty, by contrast, are 76 percent black.
Cities such as St. Louis, Boston, Baltimore, and Minneapolis have
more racially concentrated areas of affluence (RCAAs) than they do
racially concentrated areas of poverty (RCAPs). Boston has the most
RCAAs of the cities they examined, with 77. St. Louis has 44 RCAAs, and
36 RCAPs. Other cities with a large number of racially concentrated
areas of affluence include Philadelphia, with 70, Chicago, with 58, and
Minneapolis, with 56.
In Boston, 43.5 percent of the white population lives in census
tracts that are 90 percent or more white and have a median income of
four times the poverty level. In St. Louis, 54.4 percent of the white
population lives in such tracts.
Programs may still integrate schools between white and black areas, as I’ve written about before, and they may move black families to white neighborhoods, as I’ve also detailed.
But government programs don’t—and probably shouldn’t—move white
families from wealthy areas to somewhere else (although they do provide
incentives for home buyers or builders to locate in certain lower-income
neighborhoods, thus beginning a process of gentrification).
Public policy has “focused on the concentration of poverty and
residential segregation. This has problematized non-white and
high-poverty neighborhoods,” said Goetz, the director of the Center for
Urban and Regional Affairs at the University of Minnesota, when
presenting his findings at the Lincoln Institute of Land Policy. “It’s
shielded the other end of the spectrum from scrutiny—to the point where
we think segregation of whites is normal.” Racially Concentrated Areas of Affluence and Areas of Poverty in Large Metro Areas
Goetz, Damiano, and Hicks/University of Minnesota
Goetz
and his team are still researching the effects of this self-segregation
of whites, but he thinks that a high number of RCAAs may be a negative
factor for cities.
“Some people argue that when whites and affluent people segregate
themselves, it can erode empathy, and it can inhibit the pursuit of
region-wide remedies,” he told me. “It can inhibit a sense of shared
destiny within a metropolitan area.”
This brings to mind a metro area such as Detroit, which emerged from bankruptcy
last year, and was characterized by a poor and segregated urban core
and wealthy white suburbs that did not contribute to the city’s revenue.
The executive of Oakland County, to Detroit’s north, which is one of
the whitest areas in the nation, has said publicly he doesn’t feel any incentive to help the city of Detroit.
Goetz and his team also researched the RCAAs’ and RCAPs’ distance to
downtown. Areas of affluence are located, on average, 21.1 miles from a
metro area’s downtown. In Detroit, racially concentrated areas of
affluence are, on average, 24.2 miles from the city’s downtown. In
Washington, D.C., racially concentrated areas of affluence are 25.1
miles from downtown; in Chicago, they’re 22.1 miles. Racially
concentrated areas of poverty, on the other hand, are on average 6.6
miles from downtown, and in cities such as Baltimore, St. Louis, and
Philadelphia, they’re much closer. RCAAs and RCAPs in the Detroit Metro Area RCAPs,
in blue, are concentrated in the city of Detroit, while RCAAs, in red,
are all in the suburbs (the Grosse Pointe border is on the right side of
the right map) (Goetz, Damiano and Hicks/UMN)There
is less self-segregation of metro areas in the West: San Francisco and
Houston have just five racially concentrated areas of affluence each,
Seattle has nine, Los Angeles, 11. Seattle has just six racially
concentrated areas of poverty and San Francisco has 12. These westerncities
have larger populations of affluent minorities, and are, in general,
more diverse. Only 1.1 percent of affluent households live in RCAAs in
San Francisco and only 3.1 percent do in Seattle, but in St. Louis, by
contrast, 23.1 percent of affluent households live in a racially
concentrated area of affluence. In cities in the North and East, there are also still lingering effects of the housing policies that, for decades, kept non-white families from buying in certain neighborhoods.
The racial makeup of concentrated areas of poverty differs between
regions, too: they're predominantly black in Atlanta, Baltimore,
Chicago, Detroit, St. Louis, Philadelphia, and Washington, predominantly
Latino in Houston and Los Angeles, and mixed in Boston, Minneapolis,
and San Francisco.
Goetz and his fellow researchers are planning on looking into why
these areas form in certain cities and certain places, and whether
people pay a housing premium to live in segregated areas of affluence,
as opposed to more racially diverse areas of affluence. Racially Concentrated Areas of Affluence in the Boston Metro Area RCAAs in the Boston area are located in both the city and the suburbs (Goetz, Damiano and Hicks/UMN)
Some
of their further research has already generated interesting results.
They looked into how federal housing dollars are spent in areas of
poverty and areas of affluence in the Twin Cities, and found something
surprising: The government spends just as many housing dollars in areas
of poverty as it does in areas of affluence.
In racially concentrated areas of affluence, federal dollars come in
the form of the mortgage-interest deduction. In areas of poverty, they
come through vouchers and subsidized housing units. In the Twin Cities,
the total federal investment in the form of housing dollars in RCAAs was
three times larger than the investment in RCAPs. On a per capita basis,
it was about equal.
Federal dollars are now being spent to “subsidize racially concentrated areas of affluence,” Goetz said.
Watch The American Home Get Supersized Over 40 Years
Mark Wilson April 15, 2015 | 2:00 PM
We had to store all those beanie babies somewhere.
American homes have gotten bigger. From 1974 to 2013, the
average American single family home ballooned from 1,560 square feet to
2,384 square feet.
A CNN Money animation from data viz specialist Bård Edlund
visualizes that extraordinary growth by taking a two-story house and
stretching it sideways. What may at first glance seem like just a cute animation is actually a highly accurate portrait of the changing American home. The 1970s marked the tail end of the Second Great Migration, a 30-year period during which 5 African Americans moved from rural areas to cities. White Flight
ensued, with many middle-class families moving from cities into
suburban homes, and the money went with them. Urban areas decayed while
suburbs blossomed. This visualization begins in the '70s because that's
as far back as this Census data set goes, but it's a good starting point
to show the growing aspirations of the American homeowner.(my emphasis)
The square footage in Edlund's home is accurate at each step of the
animation. (As for the vinyl-sided, two-story, three-bedroom, two-bath
house that Edlund chose to stretch, that format was actually the most
commonly constructed home over the entire period—save for 1975 when a
half bath was added, removed immediately in 1976, and 2013 when that
half bath trick was tried again.)
But that doesn’t mean homes grew consistently over 40 years. "Perhaps
naively, I expected the median home had just gotten larger and larger
and larger," Edlund tells Co.Design. "As the animation shows, the growth
is a lot less straightforward, with several periods of contraction."
Indeed, in the recessions of the 1980s and the late aughts, you see
blips as homes get smaller.
The data set Edlund used for the animation
doesn't capture everything. He points to now-standard luxuries like
supersized kitchens with premium appliances and countertops, and
bathrooms with double sinks, as trends lost in the spreadsheets of data.
I’d add that you don’t see all the furniture filling those extra square
feet, or the home theaters, either.
It’s a good example of how source data sets, no matter how deep or
well researched, don’t often tell an entire story. And in this case, not
only did we distend the average American home to the size of a small
castle; we began decorating it like one, too. See the animation here.
Housing Fades as a Means to Build Wealth, Analysts Say
August 22, 2010
By David Streitfeld
New York Times
Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.
The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.
More than likely, that era is gone for good.
“There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”
Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.
Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.
“People shouldn’t look at a home as a way to make money because it won’t,” Mr. Baker said. If the long term is grim, the short term is grimmer. Housing experts are bracing themselves for Tuesday, when the sales figures for July will be released. The data is expected to show a drop of as much as 20 percent from last year.
The supply of homes sitting on the market might rise to as much as 12 months, about twice the level of a healthy market. That would push down prices as all those sellers compete to secure a buyer, adding to a slide that has already chopped off as much as 30 percent in home values.
Set against this dismal present and a bleak future, buying a home is a willful act of optimism. That explains why Adam and Allison Lyons are waiting to close on a $417,500 house in Deerfield, Ill.
“We’re trying not to think too far ahead,” said Ms. Lyons, 35, an information technology manager.
The couple’s first venture into real estate came in 2003 when they bought a condo in a 17-unit building under construction in Chicago. By the time they moved in two years later, it was already worth $50,000 more than they had paid. “We were thinking, great!” said Mr. Lyons, 34.
That quick appreciation started them on the same track as their parents, who watched the value of their houses ascend for decades. The real estate crash interrupted that pleasant dream. The couple cannot sell their condo. Unwillingly, they are becoming landlords.
“I don’t think we’re ever going to see the prosperity our parents did, but I don’t think it’s all doom and gloom either,” said Mr. Lyons, a manager at I.B.M. “At some point, you just have to say what the heck and go for it.”
Adam and Allison Lyons plan to rent their condo in Chicago until the housing market recovers.
Other buyers have grand and even grander expectations.
In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.
With minor swings in sentiment, the latest results reflect what new buyers always seem to feel. At the boom’s peak in 2005, they said prices would go up. When the market was sliding in 2008, they still said prices would go up.
“People think it’s a law of nature,” said Mr. Shiller, who teaches at Yale.
For the first half of the 20th century, he said, expectations followed the opposite path. Houses were seen the way cars are now: as a consumer durable that the buyer eventually used up.
The notion of housing as an investment first began to blossom after World War II, when the nesting urges of returning soldiers created a construction boom. Demand was stoked as their bumper crop of children grew up and bought places of their own. The inflation of the 1970s, which increased the value of hard assets, and liberal tax policies both helped make housing a good bet. So did the long decline in mortgage rates from the early 1980s.
Despite all these tailwinds, prices rose modestly for much of the period. Real home prices increased 1.1 percent a year after inflation, according to Mr. Shiller’s research.
By the late 1990s, however, the rate was 4 percent a year. Happy homeowners were taking about $100 billion a year out of their houses, which paid for a lot of good times.
“The experience we had from the late 1970s to the late 1990s was an aberration,” said Barry Ritholtz of the equity research firm Fusion IQ. “People shouldn’t be holding their breath waiting for it to happen again.”
Not everyone views the notion of real appreciation in real estate as a lost cause. Bob Walters, chief economist of the online mortgage firm Quicken, acknowledges that the recent collapse will create a “mind scar” just as the Great Depression did. But he argues that housing remains unique.
“You have to live somewhere,” he said. “In three or four years, people will resume a normal course, and home values will continue to increase.”
All homes are different, and some neighborhoods and regions will rebound more quickly. On the other hand, areas where there was intense overbuilding, like Arizona, will be extremely slow to show any sign of renewal.
“It’s entirely likely that markets like Arizona will not recover even in the 15- to 20-year time frame,” said Mr. Humphries of Zillow. “The demand doesn’t exist.”
Owners in those foreclosure-plagued areas consider themselves lucky if they are still solvent. But that does not prevent the occasional regret that a life-changing sum of money was so briefly within their grasp.
Robert Austin, a Phoenix lawyer, paid $200,000 for his home in 2000. Five years later, his neighbors listed a similar home for $500,000.
Freedom beckoned. “I thought, when my daughter gets out of school, I can sell the house and buy a boat and sail around the world,” said Mr. Austin, 56.
His home is now worth about what he paid for it. As for that cruise, “it may be a while,” Mr. Austin said. Showing the hopefulness that is apparently innate to homeowners, he added: “But I won’t rule it out forever.”
I include here 2 links for a deeper look at this topic:
The first is to a video from a presentation at Vanderbilt University in 2009. In a clear and concise manner, Dr. Melvin L. Oliver, UCSB Dean of the school's Social Science Division provides the history of housing in America as it relates to the African American population. This presentation was given at the time of the explosion of the 2009 housing bubble, and Dr. Oliver, shows how the collapse of the sub-prime market was directly related to the policies and procedures of the real estate industry to exploit and deny black home buyers equal opportunities and protections that the rest of the American public enjoyed. It is profound.
The second link is to the PBS documentary series, "Race - The Power of Illusion". At the link you will find, the additional information resources that the program offered. It includes books, links to websites and organizations that have done research on dynamics of race, housing and wealth in America. If you have never seen this program, it's well worth the investment, or the effort to rent it.
“People shouldn’t look at a home as a way to make money because it won’t,” Mr. Baker said.