Tuesday, May 24, 2016

The Race Tax Part II - The Property Value Myth

This story is a tale of two cities...but in reality, it is one of two worlds.  One white, the other non-white.

It is a story that I have often thought about, but just never took the time to pen and then I stumble upon an article that splendidly captures the essence of something that I learned some time ago.

That "something" being that when it comes to housing and real estate, specifically where non-white ("black") peoples are concerned, there are no such thing as "property values"...there only exists "people values"...

The equation goes: equal (or better) real estate property + black inhabitants = worth-less.

Take that to the bank....literally... because property values as generally understood is mostly fiction.

Truth: Property "value" = white people.

This is a logical deduction.

Recall, "It wasn't African-Americans moving in that caused home values to go down....it was whites leaving."

The thing is, I didn't need to read any book or newspaper article, or ever see the documentary to arrive at this equation.

I've lived it first-hand, and observed it occur over and over again and in today's data and information driven  environment, anyone can see it themselves using any number of online real estate search tools.

Excluding some statistical outlier such as "The Hamptons",  without knowing much about the demographic makeup of any given neighborhood, one look at the "property values" tells almost the entire story.

Property. Value. Positive. Equity. Equals White People.

Eric Spann (copyright 2016)

The headline caption from a recent Washington Post investigation summarizes it:

‘This can’t happen by accident.’

For generations, African Americans have faced unique barriers to owning a home — and enjoying the wealth it brings. In Atlanta, where predominantly black neighborhoods are still waiting for the recovery, the link between race and real estate fortune is stark.

select excerpts
"When the new subdivisions were rising everywhere here in the 1990s and early 2000s, with hundreds and hundreds of fine homes on one-acre lots carved out of the Georgia forest, the price divide between this part of De­Kalb County and the northern part wasn’t so vast.
Now, a house that looks otherwise identical in South DeKalb, on the edge of Atlanta, might sell for half what it would in North DeKalb. The difference has widened over the years of the housing boom, bust and recovery, and Wayne Early can’t explain it.
Across metropolitan Atlanta, nearly 9 in 10 largely black Zip codes still have home values below that point 12 years ago.
And in South DeKalb, the collapse has been even worse. In some Zip codes, home values are still 25 percent below what they were then. Families here, who’ve lost their wealth and had their life plans scrambled, see neighborhoods in the very same county — mostly white neighborhoods — thriving.
 These disparities, though, are not simply about income ...The disparities exist in places, like neighborhoods in South DeKalb County, where black families make six-figure incomes.
“It just does not make sense...You’ve got doctors, lawyers, teachers, all kinds of professional people, retired military like myself, who’ve done everything right — everything right — and it never seems to work out in our favor,” 
Even well-off African Americans, like the ones in some South DeKalb subdivisions, were more likely to be given subprime loans when they should have qualified for better ones. Nationwide, black families earning around $230,000 a year...were more likely..to be given a subprime loan than white families making about $32,000.
The problem, Faber argued, wasn’t that professional blacks didn’t understand that they qualified for better loans; they were targeted for bad loans. Subprime lenders viewed them... as particularly profitable targets.
Dan Immergluck, a professor at Georgia Tech, suggests that the area’s problems are a result of “cumulative causation” — all of these forces building upon each other.
Throughout the South and in metropolitan Atlanta in particular, places with lingering negative equity are in predominantly black Zip codes when...controlled for income levels and measures of housing quality, race still mattered...controlled for the severity of the earlier subprime and foreclosure crises, race still mattered....[and] when added controls for how far prices tumbled during the bust, [Raymond] got the most surprising result: Race mattered even more.
You think the longer you stay in the home, the closer you are to paying it off, and the value goes up,” she says. “I had no idea I would be in the predicament I’m in....

Source: The Washington Post
 end excerpts

A compensatory note about the term/idea used in the above news story:  “cumulative causation”. Variations of this same theme are often deployed during discussions of race and racism to promote confusion and to distract the focus from what one is directly staring at. I do not suggest that this is the intent or purpose of the above professor, but the idea is used so often one becomes very suspicious anytime it is used. Once one begins to unpack the idea of "cumulative causation", one is left believing the myth that both everyone and yet no one is to blame. No one to blame, so nothing can be done nor will ever be done....

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