Twenty Years of Progress Lost: Blacks in America and the Mortgage Market

• In Event: 459 - Regular Session. African Americans: Racial and Spatial Challenges to Upward Mobility

Abstract

Using interpolated 2004 and 2013 mortgage data for the US, we analyze racial/ethnic disparities in access to mortgage credit between black and non-black applicants and for homes in black neighborhoods relative to non-black neighborhoods. We utilize Census and Housing Mortgage Disclosure Act Data strengthened with house price-to-income ratios and local credit scores. We explore the homeownership experiences of the black community (African-American and foreign-born black) in three ways: (1) black applicants; (2) black neighborhoods; (3) neighborhoods gaining black residents. We compare the housing peak with the most recent data available post-peak to identify the state of changing racial disparities in the housing mortgage market. We find new evidence that blacks lost all gains in the housing market made during the 1990s and early 2000s relative to non-blacks. Blacks remain only as likely to own homes as nearly two decades ago, erasing twenty years of racial progress towards parity with whites. Initial results suggest that black applicants and neighborhoods were considerably less likely than non-black to receive mortgages during the housing peak and this disadvantage expanded in the post-peak period. We investigate several theories as to why the black community experienced difficulty obtaining mortgages and conclude that a dual housing market and discrimination created a façade in which black applicants, black neighborhoods, and neighborhoods gaining black residents were labeled “riskier” than their non-black counterparts. This heightened “risk” factor was particularly menacing for the black community to obtain mortgages during the risk-adverse post-crash period reducing blacks’ chances at homeownership relative to non-blacks.

Author

• Meghan Kuebler, State University of New York-Albany