Mark DeSouza, Flickr
The biggest investment most people will ever make is the investment in their own home. And for decades, home ownership has been touted as a solid and steady road to the middle class.
But new MPC analysis on how homes gain or lose value in the region paints a sobering picture: this road to middle class greatly depends on the state of the housing market…a market which doesn’t work for people who live in racially and economically segregated areas.
The tendency of homes to appreciate and depreciate in value drives whether or not buyers are attracted to an area. And where buyers go, neighborhood investment and amenities follow. So when homes appreciate in value, businesses like Starbucks, Whole Foods and a trendy restaurant or boutique are much more likely to invest in the neighborhood. And where homes depreciate in value, well businesses and amenities are less likely to set up shop. To borrow a phrase from the planning world, “retail follows rooftops”.
On the heels of the release of The Cost of Segregation, MPC has been eager to continue telling the story of racial and economic segregation, and how its impacts weave throughout issues of equity and opportunity in the region. The appreciation and depreciation of homes is one vital thread in this conversation.
Our analysis of American Community Survey (ACS) home value data between 2013 and 2015 reveals unmistakable connections between wealth, racial concentration, and patterns of home value appreciation and depreciation in Cook County.
The most clear connection? If you lived in a majority-black community between 2013 and 2015, chances are your neighborhood experienced the region’s highest rates of depreciation.
In fact, examination of the region’s median home value changes for single-family, owner-occupied homes from 2013 to 2014 reveals that 42 of the 60 census block groups with the highest overall depreciation rates county-wide had majority-minority populations. Of these 42, 36 were majority-black, while 6 were majority-Latino. In contrast, of the 60 Census block groups with the highest rates of appreciation from 2013 to 2014, 47 were majority-white. This is a staggering difference.
Another way to ‘slice’ the data is by the level of segregation. In all-white areas—represented by a sample of 60 census block groups where homeowners are 100 percent white—homes over the 2 year period appreciated at an average rate of 40.8 percent.
In areas of 100 percent black ownership, homes appreciated overall, but only at an average rate of 2.49 percent. And though there is a lack of all-Latino block groups in the county, majority-Latino block groups also fared lower in terms of rate of appreciation, at 7.68 percent. Essentially, home values in largely white-segregated areas of the region fared much better than those in minority-segregated areas in the same period.
A wide body of research shows that across many large U.S. metro areas, homes with similar amenities and comparable sizes can be assessed drastically differently, depending on the demographic characteristics of the surrounding population. In Chicagoland, this disparity in the appraisal process is birthed out of historic zoning and land-use policies that made it legally permissible to keep ‘undesirable’ populations (i.e. blacks and Latinos/as) out of white, middle-class neighborhoods. For more background on the city’s legacy of racist zoning and land use policies, be sure to view my colleague’s recent post.
If we use the differences in the assessed price of a home as the starting point for looking at appreciation and depreciation (instead of how those rates correspond to levels of segregation), we come away with a very different story—one that masks the very real ways in which skin color in Chicago still serves as a barrier to opportunity.
When we compiled the county’s census block groups of most and least expensive homes, we found that homes in the most expensive set were only slightly more likely to gain value than homes in the least expensive set. Moreover, of the census block groups that lost value, only 8% had majority-minority populations. This picture, while initially rosy, does not account for that crucial ‘middle’…what about those segments of the population that are middle or just-shy of middle class that happen to be living in areas where the housing market has not ‘caught up’ to their daily realities?
A tendency to focus on assessed value as the starting point for evaluating neighborhood equity is problematic, as it ignores the entrenched racism of housing policy in the region…policy that continues to affect the ways in which potential buyers are either lured or turned away from the market.
As part of MPC’s Phase 2 work on The Cost of Segregation, we are exploring ways in which housing policy in the region can be restructured to acknowledge and fight these deeply rooted realities.