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ABSTRACT
The United States experienced the Great Recession between 2007 and 2009 and many American cities and communities are still suffering from its legacy. During the prior period of the early and mid-2000s, many inner city African American communities were experiencing gentrification, driven in part by the real estate bubble that popped in 2007. While much has been written about the institutional and structural causes and consequences of the Great Recession, this article seeks to better understand its community-level implications by investigating the relationship between lending and property value patterns in three gentrifying African American communities just before, during and after this economic calamity. In particular, we investigate Bronzeville in Chicago, Harlem in New York City and Shaw/U Street in Washington, DC. Evidence suggests the Great Recession differentially influenced the development trajectories of these urban neighborhoods. In Bronzeville severe and prolonged property decline resulted, while much less economic stagnation was experienced in Harlem and Shaw/U Street. The Great Recession did not have uniform implications for urban African American neighborhoods: distinct community and city contexts, in particular racial and class neighborhood transitions and citywide unemployment and housing market conditions, mediate the influence of national economic decline and recovery.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. One indicator of a subprime loan is if it was a first-mortgage loan originated at 300 basis points, or 3%, above the going prime rate or 500 basis points, or 5%, above the prime rate for a second lien mortgage. In 2004, the federal government started tracking high cost loan originations. We use subprime and high cost loans interchangeably.
2. Greenlining refers to the influx of high-priced mortgage credit into previously redlined underserved neighborhoods.
3. With increases in subprime lending, between 1994 and 2005, the African American homeownership rate increased from 42% to 49% (Gramlich, Citation2007).
4. Rather than leading to neighborhood decline, some studies suggest that in certain circumstances foreclosures can spur a pattern of neighborhood reinvestment. In certain neighborhoods the availability of below market properties, brought on, in part, by foreclosure concentration, might encourage investors to buy homes, renovate them and sell them to newcomers who perceive that the neighborhood properties are good values compared to other homes in more expensive parts of the city (Li & Morrow-Jones, Citation2010; Maeckelbergh, Citation2012).
5. We assess the tightness of metropolitan housing market conditions through comparing the homeownership vacancy rates in the Chicago, New York and Washington, DC MSAs. We assume that upper- and middle-income people are more willing to move to and invest in low-income neighborhoods in metropolitan areas with tighter housing markets (see Aalbers, Citation2011; Guerrieri, Hartley, & Hurst, Citation2010). Metros with lower vacancy rates are considered tighter housing markets.
6. The data presented on these communities are based on specific boundaries. Bronzeville consists of Chicago’s Douglas and Grand Boulevard districts. Harlem’s geography refers to Central Harlem, which is New York City’s Manhattan Community District 10. Shaw/U Street’s boundaries are 15th Street on the west, Florida Avenue on the north, North Capitol Street on the east, and M Street to the south in Northwest, Washington, DC.
7. In 2004, the federal government started tracking high cost loan originations, thus we present high cost lending figures during and after this year.
8. Census data suggest that Harlem’s general population was changing as well as. Between 2000 and 2010, the Black population decreased by 18%.
9. We focus the citywide unemployment rate and not the community level rate since these were gentrifying communities and people were moving to these areas. Additionally, we assessed the metropolitan housing market conditions since we assume that upper- and middle-income people would be more willing to move to and invest in low-income neighborhoods in metropolitan areas with tighter housing markets (see Aalbers, Citation2011; Guerrieri et al., Citation2010).
10. For instance, Chicago, New York and Washington, DC have different levels of segregation and this might have influenced, along with other metropolitan factors, Bronzeville, Harlem and Shaw/U Street’s susceptibility to subprime loans and associated foreclosures. In 2000, the Black/White dissimilarity index for Chicago, New York and Washington, DC’s MSA was 80.4, 79.5 and 63.0, respectively, meaning that Chicago was the most segregated.