Are Atlanta’s ‘underwater’ homes clustered on racial lines?

lines 1The line between healthy and unhealthy housing market is largely a racial one, according to a study by the Federal Reserve Bank of Atlanta.

At least when it comes to negative equity, also described as being “underwater,” the problem is much worse in areas that are largely African-American, according to Elora Raymond, a graduate researcher with the Fed’s Center for Real Estate Analytics.

Not all African-American neighborhoods, but the ones that are more economically stressed, she said in a paper done for the Fed.

“The places with persistent high negative equity are in predominantly black zip codes with longer commute times, higher unemployment rates, and high rental vacancy rates,” Raymond writes.underwater 1

Other issues are factors, such as the quality of the housing, the amount of joblessness and the epidemic of foreclosures in the area, but when by themselves they do not explain the location of underwater mortgages. More than the other factors, there is “strong association between racial composition and persistent negative equity,” she said.

The Fed relied on data collected by Zillow, a Seattle-based real estate data firm.

As reported by the Atlanta Journal-Constitution, Zillow reported that 17.6 percent of the homeowners with mortgages in metro Atlanta homeowners are underwater. More than twice as many — nearly 37 percent of homeowners — are effectively underwater, that is, “they don’t have enough equity to comfortably cover the costs of selling their home and buying a new one,” according to Zillow.

In the Atlanta Fed’s southeastern district, the worst 1 percent – that is, the mortgages that were the farthest underwater – are 72.7 percent black, 20.5 percent white, 7.7 percent Hispanic and 3.8 percent non-white Hispanic.

In metro Atlanta, 56 percent of all the zip codes have a high level of homes underwater. Nearly one-in-five zip codes were in the worst 1 percent of negative equity, according to the Fed.

A map included in the Fed’s report shows that the areas with a high share of underwater homes are nearly all at the center and the south of metro Atlanta. A “red zone” representing areas with a high share starts in the middle of Cobb County and moves mostly south and east.

Negative equity has been “persistent” because a tidal wave of high-risk loans helped fuel a housing bubble that left behind large pools of foreclosures and debt as it burst, according to Raymond.

In many areas, a downward spiral followed as foreclosures dragged down surrounding values, which made more foreclosures likely.

It may be, too, that government programs meant to soften the blow “were not structured in the most effective ways, or simply did not reach the places there were needed the most,” said Raymond.

Foreclosures have ebbed gradually, the overall market slowly recovered and prices began to rise, but in places with the worst debt and foreclosure, home prices were slow to recover. Or didn’t recover at all.

But Raymond’s research does not aim to explain why there is such a racial disparity in negative equity. But she does suggest that the current pattern will serve to widen the racial gap in real estate wealth – the difference between the average housing assets held by whites and non-whites.

Black man 1

Reader Comments 0

4 comments
CharlesReed
CharlesReed

As you have a Mayor Reed and Rep Lewis running around with there heads so far up the Obama machine that the illegal foreclosed FHA & VA loans are ignored and like in Los Angeles, Miami, Chicago and Oakland that are suing the big banks for racial discrimination.


How is Atlanta and the metro area which is more black than any of the cities that are suing the big bank not suing for the same reason? Let simply take a look at all the FHA & VA properties that were foreclosed, and review the Notes and the Security Deeds and we fine that as 95% of all FHA & VA loans are placed into Ginnie Mae Mortgage Backed Securities (MBS) which makes them impossible to be foreclosed due to the separating of the Notes that are endorsed in blank and relinquished to Ginnie Mae without a sale occurring!


Because this is a crime at the Federal Government level like the contaminated lead water black babies have already drank in Flint MI, Jackson MS and Newark NJ plus I say that blacks live in these 100 year old homes where these areas have not had pipes replaced as we are being poison and after the fact this White House wants to do something as if the last 7yrs the Fed Gov no been run by President Obama!


Problem come when you needed a black person that wanted to address black issues instead of a politician that ignored the rights of blacks that were and are to stupid to question why due process is not perform for black families. Here the fact that President Obama is half black and sees thing as a half black from a 1% black Hawaiian populated person would. Obama left Hawaii and entered into politics in Chicago where Mayor Washington was in place.


Let look at Chicago today after 7 years of their adopted son policies! Chicago in a jungle and maintained the same level of murders and the foreclosure rate fueled by illegal foreclosure by the Fed Gov itself over at the FHA & VA are not address because black leadership is stupid and President Obama to busy dealing with everything else but black issues!

Infraredguy
Infraredguy

SO ? the home equiquity piggy bank only goes so far

Bill & Ginny
Bill & Ginny

The AJC presents many interesting articles.  The service they do in uncovering the many "strange" behaviors of our politicians at the least help shine light on these practices (even if they do not necessairly help stop them).  One area that I believe is in their approach to reporting - they focus on the "what" but choose to ignore the "why".  The article above, in my opinion, is an excellent example of this shortcoming.  The "what" of the article is important (African Americans) have been disporportionately impacted by foreclosures and underwater mortgages - I believe that premise).  The "why", however, in my opinion, has been ignored.  I believe the "why" helps us understand what has happened and what we need to do to make sure it never happens again.


It is my sincere hope that the AJC management will address this significant shortcoming in their fine reporting.

PJ25
PJ25

@Bill & Ginny The "why" is pretty obvious and well documented.  When 40% of black children don't graduate government school, 74% don't have a father who hung around and 90% will eat from food stamps before the they turn 18, you can't expect most of these kids to amount to anything in life.