The foreclosure crisis has hit blacks harder than any other group in America and it will be tough for them to regain their footing in the housing market.I'll remind everyone that the attitude of the Federal Reserve during the growing housing bubble was that it was best to just let bubbles grow unimpeded and then mop up the mess afterward. That hasn't worked out too well.
Blacks' homeownership rate has plummeted nearly 6 percent to 46.2 percent since its peak in 2004. That's more than twice that of any other racial or ethnic group, as well as the nation's rate as a whole, which fell only 2.3 percent, according to U.S. Census data.
Also, among recent borrowers, nearly 8 percent of blacks have lost their homes to foreclosure, compared to 4.5 percent of whites, according to the Center for Responsible Lending. Latinos, who have also been pummeled by the mortgage meltdown, came in a close second behind blacks in foreclosure losses.
The consequences are devastating. Fewer blacks own their home now than any other racial or ethnic group and that makes it even more difficult for them to achieve financial security and attain wealth.
Friday, October 29, 2010
African Americans hardest hit by collasping housing bubble
From CNN:
Subscribe to:
Post Comments (Atom)
Posts
To be fair to the FED, no ne can see a bubble before it bursts, even with tons of info saying its a bubble.
ReplyDeleteSarcasm ON.
A lot of commenters here seem confused *why* "it's different here" when we talk about close-in areas in the Washington, DC market. This is a pretty interesting treatment of the dynamic:
ReplyDeletehttp://www.washingtonmonthly.com/features/2010/1011.doherty-leinberger.html
Also:
ReplyDelete"The millennials will likely confound apologists for the status quo ante who suggest that the relentless dispersion to the exurbs remains America’s manifest destiny," Volk and Zimmerman say. "Millennials are the first generation largely raised in the “perfect world” of the auto-dependent suburbs. Many resent having been held hostage to someone with a driver’s license and vow to bring up their children (when they finally get around to having them) in more walkable neighborhoods."
Also: "By mid-century it will be clear that the great demographic convergence will have had as profound an impact on American settlement patterns as did the dramatic growth in family households after the long hiatus of the Great Depression and World War II."
http://nyti.ms/cZsLJU
"Many resent having been held hostage to someone with a driver’s license and vow to bring up their children (when they finally get around to having them) in more walkable neighborhoods."
ReplyDeleteNot that I disagree, but do they pull statments like these out of their ass or just a plain hole in the ground? LOL
I cant imagine people basing their entire future lives and childrens lives and location based on resentment of having to drive a car when they were a teenager. Just sounds like a bunch of made up shit to me.
Flute
ReplyDeleteI grew up in a walkable small town, an urban center and for a few brief hellish years an utterly unwalkable suburban sprawl zone.
The part that sucks isn't having to drive as a teenager, I was good at that. The Cruddy part was having to wait around for my Brother to come back with the car, or begging a friend for a lift, or trying to get onto my parents calendar.
I like being able to catch a bus or ride the bike to events.
"Flute
ReplyDeleteI grew up in a walkable small town"
He wasnt talking to you. He was talking about how people pull nonsense out of nowhere. Lots of kids drive and grow up to still like driving.
My family grew up in the cornfields...and still live there cause they hate the city for example.
My family grew up in the cornfields...and still live there cause they hate the city for example.
ReplyDeleteRight, but that's the thing about watershed moments in social trends: not *everyone* participates. There's been a near-universal migration by Americans off the farms into the urban areas (mostly the suburbs). Does that mean there aren't any farmers? Of course not.
It's just the experience of the huge majority of Americans. Does this shift in preferences among those under 40 mean we're in for an inverse Khmer Rouge revolution, with the stalwart soil-tillers of America's Heartland being driven, at gunpoint, into the cities? Of course not.
Even if there's a 20% change in preferences, that's going to be massive. Couple that with factors like suburban congestion, fuel costs, and the amplifying effects of a rise of urban middle-class (e.g. better schools, better public services, better amenities) and you're looking at a tipping point.
"Anonymous said...
ReplyDeleteHe wasnt talking to you. He was talking about how people pull nonsense out of nowhere."
Hey "flute" quit sockpuppeting! Its obvious that you are now posting anon to bolster your prior statement. Pathetic...
Everyone has been hit hard.
ReplyDeleteJames,
ReplyDeleteFrom what I understand, officials, even when they see a bubble forming are loathe to 'pop' it lest they be labeled as the cause of the crash. Can't say how true that is, but it seems reasonable. Comments from Greenspan make me believe that he really didn't understand this housing bubble. Very smart man, and I can't understand why he didn't see it. Surely he had the power to intervene, yet he did nothing. Maybe he didn't want to be the father of the crash.
And like you say, it didn't turn out very well.
Of note the FDIC has a new department dedicated to identifying bubbles but it isn't clear what if anything they can do to mitigate them. Makes sense to have the FDIC involved, since they have to clean up the mess as crashing bubbles pull lending banks down with them.
Mark, you are right; plenty of pain to go around.
jj
So housing prices are dropping even though interest rates are at record lows. Someone explain to me why I'd buy a house now when I know home prices will go down as interest rates go up. Do we think rates will be this low for the next 20 years?
ReplyDelete@Alpha Check:
ReplyDeleteYou wouldn't. At least not in the areas where prices are tanking--mostly the 'burbs.
As far as the assertion "home prices will go down as interest rates go up" that may be true somewhat. Though inflation is likely to counter that to a greater or lesser extent.
My prediction is we'll see falling home prices in certain suburban areas--meaning the urban poor will migrate. Urban housing in the "winner" cities will stay relatively stable.
And in 20 years, we'll all be irritating the crap out of teenagers with stories about how you used to be able to buy a cup of coffee at Starbucks for $2.
"Alpha Check said...Someone explain to me why I'd buy a house now when I know home prices will go down as interest rates go up."
ReplyDeleteDo you really "know" that to be the case? I ask because, while the theory (higher interest rates = lower home prices) makes sense, there is no evidence it is true.
In fact there is some evidence that it is just plain old false:
http://seattlebubble.com/blog/wp-content/uploads/2010/02/KC-Home-Price_1950-2009-nominal.png
Notice how interest rates stayed above 14% for 5 years in the 1980s, and yet during all that time nominal prices continued to go up.
Think this is isolated to King County? Take a look at James' other page where he posts CPI vs median prices - again, on a national scale as interest rates hit 14%, nominal prices continued to go up.
The answer it seems, is as Oboe hinted, higher interest rates are almost always associated with higher inflation. As such, nominal prices continue to rise even in the face of escalating interest rates.
Now I dont like this conclusion any more than you do. In fact, I would love to see some EVIDENCE that it is not. However, all I ever get as "evidence" is people pointing to articles where someone else says "rising interest rates = lower home prices" as if it were axiomatic fact, without actually testing it out.
So thats my take on it. If anyone can show a graph contrary to this one (and James' national data), I would love to see it.
Anon - thanks for posting that graph regarding interest rates & rising nominal prices. My father bought a house in the early 80s. He said that prices really didnt go down even as interest rates were going through the roof. I didnt really believe him, but I guess now after seeing that chart it looks like he was right.
ReplyDeleteSigh...