Gap in home values studied

Black owners' houses worth 30% less than whites' in region

Report based on 1990 data

November 01, 2001|By Eric Siegel | Eric Siegel,SUN STAFF

The gap in the value of homes owned by blacks and whites in the Baltimore region is among the greatest of any of the country's 100 largest metropolitan areas, a new study shows.

Homes owned by blacks in the city and its surrounding counties were worth 30 percent less than those owned by whites after adjusting for differences in incomes, according to the Brookings Institution study by urban researcher David Rusk.

The disparity is greater than that of all but three of the country's largest metropolitan areas, the study says. Among all the major metropolitan areas, the difference in the value of homes owned by blacks and whites was 18 percent.

Titled "The `Segregation Tax': The Cost of Racial Segregation to Black Homeowners," the study says the variations were the result of patterns of residential discrimination.

"The higher the segregation, the wider the black/white gap. The lower the segregation, the narrower the gap," Rusk wrote in the study, which was released yesterday.

According to Rusk, the study highlights a problem of "wealth creation" for blacks because of the lack of appreciation of their homes' values compared to whites, making it more difficult for them to build equity.

Rusk - a former mayor of Albuquerque, N.M., and the author of "Baltimore Unbound," a mid-1990s study advocating regional solutions to stem the city's decline - based his study on 1990 census data. He said it would provide a baseline for measuring the gap based on economic data from the 2000 census, scheduled to be released early next year, but he expected little change.

Data on race from the 2000 census shows many residential areas in the Baltimore region remain highly segregated.

Rusk said the way to eliminate the gap was to create "stable, integrated neighborhoods throughout metropolitan areas" by reducing concentrations of poverty in neighborhoods in inner cities and suburbs and changing school enrollment policies to create more middle-class student bodies.

Those familiar with the housing market in the Baltimore region said Rusk's study offers a clear statement of a long-standing problem.

"I think it's absolutely true, especially in blue-collar neighborhoods," Vincent Quayle, longtime head of the nonprofit St. Ambrose Housing Aid Center, said of Rusk's study. "The black working class who bought their houses hoping they would build equity have found that the houses are not worth much."

As for Rusk's proposed solution, Quayle said: "Isn't that what we've heard for 35 years and it doesn't happen?"

Joseph T. "Jody" Landers, executive director of the Greater Baltimore Board of Realtors, said the disparity highlighted in Rusk's study is "a problem people recognize is there."

"It's not an easy issue to deal with," he said.

"I think Rusk's study shows [housing] segregation is not benign. It's harmful to the city and harmful to the region," said Barbara Samuels, an attorney for the American Civil Liberties Union who specializes in housing issues.

For his analysis, Rusk took the mean value of homes owned by whites ($133,000 in the Baltimore region in 1990) and divided it by the mean household income of white homeowners ($55,429) and found that for every dollar of income, whites owned $2.40 worth of house. He then took the mean value of homes owned by blacks ($69,600) and divided it by the mean household income of black homeowners ($41,466) and found that for every dollar of income, blacks owned $1.68 worth of house. He then figured that the mean value of homes owned by blacks was 30 percent less than that of homes owned by whites.

The gap was greater than that of any major metropolitan area except for Harrisburg, Pa., Philadelphia and Detroit.

In the Washington metropolitan area, the gap was 16 percent, Rusk found.

There were 10 metro areas where the values of homes owned by blacks were greater than those of homes owned by whites by between 1 percent and 11 percent, Rusk found, including New Orleans, San Francisco and Tulsa, Okla. Those cities on the whole were characterized by significantly less segregation in housing than all metro areas.

In a "perfectly functioning market," Rusk wrote, all homeowners of similar income would own houses of equal value. But in segregated regions, he said, white homebuyers shun black neighborhoods, reducing competition and depressing home values.

10 leading cities in home value gaps

The following are the 10 major metropolitan areas with the greatest gap in the value of homes owned by blacks compared with homes owned by whites when adjusted for income.

Detroit...43 percent

Philadelphia...39 percent

Harrisburg, Pa. ...33 percent

Baltimore...30 percent

Gary, Ind. ...30 percent

Chicago...29 percent

Milwaukee...29 percent

Toledo, Ohio...27 percent

Buffalo, N.Y. ...24 percent

Fort Lauderdale, Fla. ...24 percent

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