Uneven Housing Values Worsen Racial and Income Segregation

A report by Cheryl Young at Trulia, Housing Diversity: What Home Values Say About Inequality, finds a strong correlation between the unevenness of housing values across America’s 100 largest metropolitan areas and the racial and income segregation within a metro area. Housing segregation among owners and renters is greater in smaller markets, reducing the availability of affordable housing for low income households. The lack of housing options in terms of price and tenure (homeownership or rental) constrains choice, particularly for lower income households, worsening persistent residential segregation.

The study created an index that measures the share of neighborhoods with the highest and lowest housing values compared to the metro area median. The author scored metro areas on a scale from 0 to 100, with higher values reflecting greater home-value segregation. Metro areas with the greatest segregation of home values in 2016 were Detroit (72.2), Milwaukee (66.7), Fairfield County, CT, (61.0), Birmingham, AL (60.6) and Dayton, OH, (58.3). Milwaukee and Detroit were also two of the most racially segregated cities.

Home value segregation decreased in more than half of the metro areas (53 of 100) from 2010 to 2015, but income segregation decreased in just 36 out of 100 metro areas. Metro areas with the largest declines in home value segregation lost a greater proportion of inexpensive neighborhoods than expensive neighborhoods, as most of these markets are recovering from the 2008 housing collapse and are experiencing a convergence of home values. Fifty-five out of the 100 largest metro areas have fewer neighborhoods categorized as “very low value” compared to five years prior.

Conversely, most metro areas that saw the largest increases in home value segregation experienced an increase in the proportion of inexpensive neighborhoods. In Detroit, for example, very low priced neighborhoods increased by more than 17 percentage points, while very expensive neighborhoods grew by less than 5 percentage points. The exceptions to this trend were New York City, Boston, and Allentown, PA.

Increases in home-value segregation result in a lack of housing options in terms of price and tenure for lower income households. Low income households can often only find affordable homes in low income and racially segregated neighborhoods, perpetuating that segregation. The author urges local governments to expand housing choices by incentivizing low income housing investments in neighborhoods where lower-priced homes are disappearing.

The report’s data on race, housing tenure, and income come from the U.S. Census 5-Year American Community Survey from 2010-2015.

Housing Diversity: What Home Values Say About Inequality is available at: http://on.trulia.com/2npsG6u