Kriston Capps is a staff writer for CityLab covering housing, architecture, and politics. He previously worked as a senior editor for Architect magazine.
A new interactive map shows that households hit hardest by the housing crisis are also now locked out of the recovery.
The housing crisis and credit collapse that together comprised the Great Recession disproportionately affected minorities in America in at least two specific ways. As recent research from Rice University and Cornell University has demonstrated, black households were widely targeted by predatory lenders. Building on a major joint report from the U.S. Department of Housing and Urban Development and the Treasury Department, the researchers found that more than half of home-refinance loans for poorer African Americans were subprime, while black households were more than twice as likely as white households with comparable incomes to receive subprime loans.
Now, a new tool from the Urban Institute shows the other shoe dropping. Today, with interest rates low and policies in place that favor new homebuyers, credit is disproportionately unavailable for minorities. The households hit hardest by the housing crises have been effectively locked out of the recovery.
The Urban Institute has released its data in the form of an interactive map to show exactly where that other shoe has dropped. The interactive map tracks some 100 million mortgages over 12 years using home price index data from CoreLogic as well as public data provided via the Home Mortgage Disclosure Act. According to lead researchers Taz George and Bing Bai, "The combined number of African-American and Hispanic mortgages rose 83 percent from 2001 to 2006, and then it plummeted 68 percent over the next three years."
Consider Atlanta. In 2006, home prices there, as in many other metro areas, were relatively high, and "anyone who could fog a mirror could get a mortgage" (as The Wall Street Journal's Nick Timiraos likes to put it). Here's a snapshot of the Atlanta metro area at the height of the boom.
Fast-forward a little more than 6 years later, and the demographics for new mortgage originations are greatly changed. In 2012, there are far fewer new mortgages for African Americans. Where in 2006, the northeast Atlanta suburbs boasted a growing community of new Hispanic households, those new homebuyers are harder to find during the recovery.
Even in Texas, a state that has led the recovery, racial disparity can be seen in the gains of the return to growth. Texas cities rebounded faster than any, according to a report from the Brookings Institution; the organization's latest findings show the Texas metro areas of Austin, Dallas, Houston, and San Antonio among the top 15 metro areas nationwide in terms of economic performance today.
In 2006, new Hispanic households were a big part of the growth in Texas metro areas, especially in San Antonio and Austin. New mortgages for African Americans originated primarily in Dallas but also in Houston.
Yet by 2012, new household formation looks nothing like the rich diversity of Texas. As a result of the credit crunch, minorities appear to be left out of the Texas Miracle.
It is a universally acknowledged truth that San Francisco's housing market is thorny like few others. But the racial difference between new mortgages started in San Francisco in 2006:
And a comparison to new Bay Area mortgages during the recovery...
...is as stark as a complete palette swap.
What may not be so immediately clear from the map is how few households are benefitting from the recovery. In San Francisco and San Jose, the researchers note, there were 245,000 mortgages created in 2012. That's 13 percent fewer than were started in 2005.
"The map makes it clear that entire communities, particularly those with high levels of African-American and Hispanic residents, were hit hard by the bust and are, in many cases, the same communities that are most affected by today’s tight credit market," said researchers George and Bai in a release. "Between 2006 and 2012, the percentage of loans made to African Americans and Hispanics dropped from 25 percent to 11 percent."
Urban Institute data show that the average FICO score for all home-purchase loans is about 750. In an address this week, HUD Secretary Julián Castro noted that some 13 million people have credit scores ranging from 580 to 680—a range that has been effectively frozen out of the housing market. What this map illustrates is the extent to which the recovery is benefiting whites as well as the wealthy.