Saturday, February 9, 2013

Something I Missed

I'm so embarrassed to have missed this article.  What it points up that is important is that the disproportionate effect of the foreclosure crisis in non-white communities wasn't the result of investments by minority owners, but by white real estate speculators decimating non-white communities.  The authors looked at foreclosures in white and African American neighborhoods in Louisville, Kentucky.  What they found was that, controlling for income and so on, foreclosures affecting homeowners were pretty evenly distributed.  But when they looked at African American communities, they found that the higher foreclosure rate was the result of white investors buying up rentals and then, of course, giving them up when the housing bubble popped.  After all, as I noted in my other blog, the investor wasn't giving up his home, but someone else's.

So this video isn't exactly right.  The video should show the "respectable" (read: white?) family buying an investment property in someone else's neighborhood, and then defaulting on the property when its price collapses.  Had this been clearer, economists and politicians might have looked at what could be done to protect those neighborhoods from the "life after people" landscape that some of them have suffered.  Local governments could have bought the properties, kept the tenants in place, and limited the damage.  Instead they left the communities to weather the storm alone, and chose not to understand who was really responsible.

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