White Flight and Housing Market Collapse

A new study links foreclosures to increasing racial segregation, especially in neighborhoods that had been relatively integrated.
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A new study links foreclosures to increasing racial segregation, especially in neighborhoods that had been relatively integrated.
Foreclosed house in Baltimore, Maryland. (Photo: Oleg./Flickr)

Foreclosed house in Baltimore, Maryland. (Photo: Oleg./Flickr)

"It is a fact that whites are moving out of the West End as fast as they can. A vocal minority is trying to stem the tide, but there is hardly a block without a 'For Sale' sign, and some blocks show as many as ten," a young Hunter S. Thompson wrote in 1963.

Back then, Thompson was reporting on an urban renewal project that drove racial segregation to new depths in his hometown of Louisville, Kentucky. As it turns out, the more things change, the more they stay the same: Last month, a demographer and two sociologists found the home foreclosure crisis that began a decade ago to have had much the same effect.

Housing segregation has been an issue in the United States for what seems like forever, but since 1960, the overall trend has been toward integration. That's "led some people to conclude that segregation is no longer a significant social problem," write Matthew Hall (the demographer), Kyle Crowder, and Amy Spring (the stenographers) in the American Sociological Review. But the improvements are uneven, and in some places racial segregation has actually gotten worse. "As a consequence, the modal experience for blacks (and Hispanics) in U.S. cities is high residential segregation," they write.

An average neighborhood with a five-percent foreclosure rate witnessed a six point drop in the percentage of whites, offset mostly by an influx of Hispanic residents and a small uptick in the number of blacks.

It was in that context that Hall, Crowder, and Spring wondered whether the rash of foreclosures between 2005 and 2009 might have made housing segregation worse. To answer their question, they began with block-level racial and ethnic composition data from the U.S. Census, as well as foreclosure data compiled by RealtyTrac, a website aimed at people interested in buying and flipping foreclosed homes.

The data confirmed what many suspected: Foreclosure rates were markedly higher in predominantly black and Hispanic neighborhoods. More surprising, integrated neighborhoods, where whites, blacks, Asians, and Hispanics were present in roughly equal numbers, had the highest rates of all, as lenders foreclosed on 8.6 percent of homes in those communities between 2005 and 2009, compared with the 4.5 percent national average.

Making matters worse for integration, whites tended to move out of areas with high foreclosure rates, while blacks and Hispanics moved in. Controlling for pre-existing trends in each neighborhood's racial and ethnic milieu, the researchers estimate that an average neighborhood with a five-percent foreclosure rate witnessed a six point drop in the percentage of whites, offset mostly by an influx of Hispanic residents and a small uptick in the number of blacks.

And those effects were strongest in relatively integrated areas—a bad sign, the researchers argue, since those neighborhoods have been central to decreasing segregation nationwide. "[O]ur findings suggest this pathway may have been significantly damaged during the foreclosure crisis, with housing distress piling up in these neighborhoods and white populations abandoning these areas at a quicker pace," Hall, Crowder, and Spring write.

"At the same time, our findings lend support to theoretical claims that this segregation is maintained, at least in part, by discriminatory practices," such as predatory lending targeted at black and Hispanic communities, the team writes.

Quick Studies is an award-winning series that sheds light on new research and discoveries that change the way we look at the world.

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