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Housing in Brief: ‘Modern-day Redlining’

Plus: Home prices jumped (jumped!) in April, and New York could lose 21,000 affordable units under budget cuts. 

A New Deal-era map showing redlining in part of Chicago. A new analysis finds that lending in majority-black neighborhoods is still just a fraction of the lending activity in white neighborhoods. (Map via Mapping Inequality)

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‘Modern-day Redlining’

For every dollar that banks lend in majority-white neighborhoods in Chicago, they lend just 12 cents in majority-Black and majority-Latino areas, according to a new analysis from WBEZ and the nonprofit newsroom City Bureau. The newsrooms examined 168,859 loans made for single-family homes, condos, and apartment complexes between 2012 and 2018, worth a total of $57.4 billion. Of those loans, more than $39 billion — 68 percent of the total — went to majority-white neighborhoods, while just 8.1 percent went to majority-black neighborhoods and 8.7 percent went to majority-Latino neighborhoods, according to the report. Some individual white neighborhoods received more money from banks in that period than all of the city’s black neighborhoods combined, the report said. And though some of the disparity was due to higher prices in white neighborhoods, banks also made four times as many loans in those neighborhoods as they did in majority-black and majority-Latino ones. The loans are a form of “modern-day redlining,” the report says — a reflection of the systemic racism in the financial markets and the urban environment, the report said.

“The private market works in white communities. The private market does not work effectively in black communities. It wasn’t set up to work, and it has not worked,” Nedra Sims Fears, the executive director of the Greater Chatham Initiative, told the reporters.

The lending disparity means that racial inequalities are going to become worse over time, not better, the report said. As my colleague Oscar pointed out on Twitter, the disparities are in line with a history of racist policymaking, and similar banking disparities could likely be identified in most U.S. cities.

Home Prices Jumped in April

Home prices rose 5.4 percent in April while the coronavirus pandemic shut down much of the American economy, according to a report in CNBC based on an analysis by CoreLogic. But the increase, which was even larger than the increase in March, is due to a reduction of inventory — the number of homes for sale in April was 25 percent smaller than the inventory of April 2019, according to the report. By next year, CoreLogic said it expects that home prices will drop 1.2 percent, a rare occurrence in the American housing market. According to the same CNBC report, the National Association of Realtors is predicting 11 percent fewer home sales this year than last year. And some 40 percent of metro areas in the country are overvalued in terms of their home prices, according to the report, including Miami and Las Vegas, where by next April home prices could drop by 4.4 percent and 7.2 percent respectively. (As Next City reported this week, Nevada recently relaunched a program, created during the Great Recession, that helps unemployed homeowners by their mortgages.) According to Frank Martell, the president and CEO of CoreLogic, “Tight supply and pent-up demand” mean that housing prices will likely bounce back and continue to rise fairly quickly, the report said.

New York Could Lose 21,000 Affordable Units Under Budget Cuts

Developers and housing advocates continue to raise the alarm about a planned 40 percent cut to the budget for New York City’s Department of Housing Preservation and Development, according to a report in The Real Deal. Such cuts could jeopardize financing for 5,000 planned new units of affordable housing and put the preservation of 15,000 more at risk, according to the report. The cuts were proposed in response to an estimated $9 billion loss of revenue due to the coronavirus pandemic, the report said. New York City Council members Vanessa Gibson and Brad Lander are fighting the cuts, calling them a “misguided application of austerity economics,” according to the report. Gibson said the budget needs to prioritize housing, especially for communities of color that have been disproportionately affected by the coronavirus outbreak, the report said.

“They have felt this pandemic the most, and they are going to feel this capital budget the most,” Gibson said, according to the report.

This article is part of Backyard, a newsletter exploring scalable solutions to make housing fairer, more affordable and more environmentally sustainable. Subscribe to our weekly Backyard newsletter.

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Jared Brey is Next City's housing correspondent, based in Philadelphia. He is a former staff writer at Philadelphia magazine and PlanPhilly, and his work has appeared in Columbia Journalism Review, Landscape Architecture Magazine, U.S. News & World Report, Philadelphia Weekly, and other publications.

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Tags: new york cityaffordable housingchicagoredlininghomeownership

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