Black Homeownership in a Disadvantaged Urban Neighborhood:

Limited Choices or a Neighborhood of Choice?

Margaret Boyd, MSW

Doctoral Candidate

Joint PhD Sociology and Social Work

BostonUniversity

April, 10th 2006

Abstract

Black Homeownership in a Disadvantaged Neighborhood:

Limited Choices or a Neighborhood of Choice

This study aims to further our understanding of the choices, constraints and opportunities Black familiessaw when they bought their home in Mattapan, a neighborhood of Boston. Mattapan is a racially segregated but ethnically diverse neighborhood that can be defined as “economically disadvantaged”. Semi-structured interviews of 10 African American and 7 Afro Caribbean homeowners were conducted to explore four research questions; (1) What are the reasons home seekers give for deciding to buy a home; (2) What led them to buy a home in Mattapan; (3) Do they intend to remain in Mattapan, and what might cause them to leave or stay; and (4) What is the relationship between ethnicity, social class, and social networks to the decision to buy, and remain in Mattapan? Public policies that promote homeownership are explored, as well as, the importance of income, race and social supports, to the decision to buy a home and live in Mattapan.

Margaret Boyd, MSW. Doctoral Candidate, Joint PhD in Sociology and Social Work, BostonUniversity. Areas of interest include social inequality, social policy, immigrant studies, and community empowerment.

1.Introduction:

This is a qualitative research study that aims to further our understanding of the choices, constraints and opportunities Black families envisioned, when they bought a home in Mattapan, and the experience of living there today. A critically acclaimed study by Bradbury, Downs and Small (as cited in Bluestone & Huff Stevenson, 2000) of America’s largest urban communities in 1982, found that Boston scored high on indices of urban distress, decline, and disparity. Many of Boston’s neighborhoods today continue to reflect patterns of racial segregation, high levels of poverty, elevated crime rates and poor quality schools. Mattapan, a neighborhood south of central Boston, exemplifies these and many other social problems. This study seeks to understand why Black families, both African American and Afro Caribbean, decided to buy a home and live in thisneighborhood.

Relatively little is known about the decision to buy a home in a disadvantaged community, and how ethnicity, social class, and social networks might influence this decision. We also know little about the outcome of this decision (both short term and perceived long term effects) for families. The empirical research concerning the possible benefits or reduced life chances of buying a home, and specifically, buying a home in an economically disadvantaged community is inconclusive. This study, focused on urban Black homeowners, aims to expand the research in this area through the exploration of four research questions; (1)What are the reasons home seekers give for deciding to buya home, rather than renting(2) What led them to buy a home in Mattapan, an economically disadvantaged, and racially segregatedneighborhood of Boston;(3) Do they intend to remain in Mattapan, and what might cause them to leave or stay; and finally, (4) What is the relationship betweenethnicity, social class,and social networks to the decision to buy, and remain in Mattapan?This research study seeks to increase our understanding of the dynamics of home ownership and the perceived benefits and disadvantages Black homeownersexperience when living in an urban neighborhood of Boston.

2. Conceptual and Theoretical Background:

This research study is phenomenological and therefore the focus is on understanding the individual actors’ own conscious experiences, perceptions and definitions of their everyday world – the “essence” of their every day lives.This study also seeks to understand the way Black home buyers exercise agency in making their housing and neighborhood choiceswithin thewider political, economic, and racial contextof local and national housing policies.My study of Black homeowners, both African American and Afro Caribbean,explores structural inequality, and in particular, the importance of race, ethnicity, and income to the decision to buying a home and live in Mattapan. I alsouse social network theory as a framework to explore the importance of friends, family, and religious and cultural institutions in the decision to buy and live in Mattapan.

(i) Disadvantaged Neighborhoods:

The concentration of poverty in American urban areas is not a recent phenomenon. Patterson (1994) argued that a half a century before the Great Depression of the 1930’s, settlement house workers, muckraking journalists, and social reformers sang a monotonous dirge about the suffering of people living in poverty. Massey andDenton (1993) argue that industrialization and the corresponding movement of large numbers of Blacks from southern farms to northern cities early in the 1900’s was the beginning of the urban ghetto in America. During this time, joblessness, welfare dependency, and single parenthood became the norm; and crime and disorder were inextricably woven into the fabric of daily life (Massey & Denton, 1993). Almost a century later, the concentration of poverty in urban centers continues to be a major social problem.Wilson (1996) argues that high rates of joblessness within urban communities today continue to undermine social organization, and trigger other neighborhood problems. These include high rates of crime, gang violence, and drug trafficking, as well as family breakups and problems in the organization of family life. Poor urban centers today often experience a decrease in retail trade, limited public services, and businesses relocating to more stable and affluent communities.

There seems little doubt that living within an urban area with a high concentration of poverty can affect individual life chances. However, Massey andDenton (1993) as well as Wilson (1996) do not make a clear distinction between living in an urban ghetto or disadvantaged neighborhood and being poor or disadvantaged per se. Small and Newman (2004) argue that most neighborhood studies are unable to make causal links between neighborhood effects and individual life chances, and can only point to strong associations.

The research that does separate family income from community incomeindicates that the negative effects of living in a poor area also are experienced by working and middle class families. For children and youth, the net effects of living in a poor neighborhood can include increased risk of delinquency (Bellair & Rosgigno, 2000; Wilson, 1996, 1987; Jencks & Mayer, 1990), low educational attainment (Ainsworth,2002; Vartanian, 1999; Galenson, 1998;Wilson, 1996, 1987; Kozol, 1991), increased risk of early sexual activity (Upchurch & Aneshensel, 1999) and adolescent premarital childbearing (Sucoff & Upchurch, 2004; South & Baumer, 2000;Vartanian, 1999).

For adults, the effects can include increased risks of drug use (Boardman, Finch, Williams & Jackson, 2001), reduced job opportunities (Wilson, 1996; Neckerman & Kirschenman, 1991), an increase in the likelihood of families receiving social assistance (Mead, 1992, 1986; Murray, 1984), reduced opportunities for marriage (Edin, 2000),

increased feelings of mistrust (Ross, Mirowsky, & Pribesh, 2001), as well as a lack of positive role models (Wilson, 1996, 1987). For children and adults, living in a disadvantaged neighborhood can increase the risk of social isolation as parents choose to separate themselves and their children from activities in the neighborhood (Rankin & Quane, 2000). Such isolation can lead to reduced opportunities to build social networks and social capital.

In summary, empirical research suggeststhat living within a disadvantaged neighborhood can significantly reduce one’s life chances. Why then do some families purchase a home in a disadvantaged community? An individual’s decision to buy a home can be explored at three different levels; federal and state housing policies, institutional racism within local housing organizations and lender institutions, and finally, individual factors such as income, race, culture, and social support networks. These three levels are interconnected and may be of equal or varying importance to an individual family’s decision to buy a home.

(ii) American Housing Policies;

Homeownership is valued and promoted by government, nonprofit organizations and for-profit real estate agencies. As a core American value, it cuts across race, ethnic, class, gender, geographical, and age categories. Retinas and Belsky (2002) argue that it is not far behind motherhood and apple pie as an American symbol. The theory behind homeownership is that it offers benefits to families and communities and therefore should be promoted by federal, state and local governments, as well as non-profit housing associations. The benefits include asset accumulation, a route out of poverty, the possibility of further loan securities, and often increased self esteem or psychological well-being.. While the benefits of homeownership seem to be generally accepted as “truths,” the empirical research regarding homeownership is sparse, and in some cases seriously questions whether these benefits always are assured and applicable to all homeowners.

(a) Asset Accumulation:

Homeownership is a way to accumulate assets, and for low-income families, often is the only way that they are able to amass wealth. HUD has taken a strong stand in promoting homeownership as the key to social mobility. Buying a home, regardless of how small or in which location, provides the owner with the first step to asset accumulation and wealth creation that can be used to generate further economic benefits.Former Secretary of HUD, Henry Cisneros stated (as cited in Colton, 2003)

“House purchase in America provides opportunities for asset appreciation, for tax benefits, for leverage borrowing, for creation of an estate, and for building the base for a future upgrade.”(p. viii)

Therefore, one could argue that homeownership in disadvantaged areas still gives benefits that renters in any community do not obtain. Generally, homes accrue equity, and for the working and middle classes, it is the major source of wealth that American families have (Colton, 2003).

However, there is a growing body of research that argues homeownership does not always lead to asset accumulation, and that not all communities lead to similar housing appreciation on one’s investment. Silva (2005a) states that between 2001 and 2003, the beginning of the refinancing boom, households cashed out $333 billion worth of equity from their homes to pay for current living expenses. These living expenses are not supporting expensive holidays or extravagant shopping, but are paying for such things as vehicle purchases, higher education, and medical expenses. The federal government’s encouragement of homeownership, while at the same time reducing expenditures on higher education and Medicaid, may represent a shift in responsibility not increased asset accumulation. Silva (2005a) argues that home equity as a measure of family financial health has fallen to its lowest level in 30 years. While low levels of home equity may partly be explained by programs today that allow low income families to purchase homes with low or no down payments, the end result is the same - for many homeowners, their home is not a significant financial asset.

Many also argue today that we are in a “housing bubble” similar to the stock bubble in the late 1990’s (Baker, 2004, and Baker & Barbibeau, 2003). This means that when the bubble breaks and housing prices drop, many families will have negative equity in their homes, especially those families that sell their homes when the bubble has burst. Belsky and Duda (2002) looked at owners who bought homes in 1982 or later and sold by 1999 and found that in Boston, nearly 23% of repeat sales resulted in nominal losses, and this figure does not include those who may have defaulted on their loans. Goetzmann and Spiegel (2002) looked at the investment value of buying a home over a twenty year period from 1980-1999. They found that the capital appreciation of housing during this time was substantially less than the return from US stocks, bonds, and mortgage-backed securities over the same period.

Flippen (2004, 2001) examined housing appreciation across Black, White, and Hispanic households using the Health and Retirement Study (HRS) and the 1970,1980, and 1990 Census of Housing and Population. Flippen found clear evidence that high levels of neighborhood minority concentration undermined housing appreciation. Even when nonracial factors were controlled for, segregated minority neighborhoods experienced lower price growth in comparison to White neighborhoods. However, it is important to note that much of the research investigating house price appreciation has been conducted within relatively few metro areas and that the literature is “devoid of theoretical models and hypothesis testing” (Dietz & Haurin, 2003: 416).

(b) Escaping Poverty:

Today, some see homeownership not only as a means to build assets, but also as a route out of poverty for low income families (Miller-Adams, 2002). Michael Sherraden (2000)writes, “most people who leave poverty…do so because they save and invest in themselves, in their children, in property, in securities, or in enterprise to improve their circumstances” (162). Sherraden argues that the odds of overcoming poverty improve when one kind of asset is acquired, because asset accumulation is interconnected. Similarly, Miller-Adams (2002) maintains that acquiring one’s own home is an economic asset that can lead in turn to the accumulation of human assets such as education, skills, knowledge, and talents, as well as social assets, including networks of trust and reciprocity.

However, there is a growing number of individuals and families who have purchased a home and have experienced a loss of disposable income.McGhee (2005) states that according to a 2002 New Century Housing Survey, families spending more than 50% of their income on housing costs now is a problem for more homeowners than renters in the low to moderate income range. Baker and Baribeau (2003) show that from 1995, house inflation increased across the United States, with the areas surrounding Boston and New York City experiencing price increases of more than 80%. During this time, many low-income homeowners experienced wage stagnation as their adjustable rate mortgages cost them more. Their homes may have substantially increased in value, but they were struggling to pay their monthly mortgage costs and had less disposable income than comparable renters.

Using the Panel Study of Income Dynamics (PSID, 1984-1992) Boehm and Schlottmann (2004) highlight the dynamic process of homeownership andpoint out that many low income families slip back into renting after attaining homeownership. They found that within homeowners, the “cumulative probability of low income minority families owning a home at the end of the nine year period is almost thirty percentage points below similarly situated lower income White households (0.37 compared to 0.64) (p.128).

There also is the concern that while homeownership may be an avenue for low income families to gain assets and accumulate personal wealth, they still may live in poor neighborhoods. South and Crowder (1997) and South and Deane (1993) found that while education and marriage increases the likelihood of families leaving poor neighborhoods, factors such as age, receiving public assistance, and homeownership can reduce it. While homeownership is less of an impediment to mobility for Blacks than Whites (possibly because Blacks are more likely to have invested less time and money into their home), Blacks were less likely than Whites to move from poor to non-poor neighborhoods evenwhen human capital characteristics were held constant.

(c) Tax Advantages and Loan Securities:

As well as accruing wealth, homeownership in America also provides immense tax advantages, such as mortgage interest deductions, real estate property deductions, the mortgage revenue bond program, exclusion of house price appreciation from capital gains taxes, and penalty free IRA withdrawals for first time buyers (Colton, 2003). Home equity also can be used to secure other loans often needed for large expense items, such as higher education or medical bills.

However, using one’s home to secure other loans can have negative consequences for many homeowners. As low and moderate income families increasingly draw upon their home equity to cover their monthly living expenses, they place their housing security in jeopardy. Through aggressive advertising by lenders, families who are faced with increasing credit card debt due to decreased incomes and rising monthly costs, have been encouraged to roll their credit card debt into their mortgage. Silva (2005) argues that while missing a credit card payment will jeopardize their credit score, missing a mortgage payment will jeopardize their home. The American Bankruptcy Institute reported that in 2003, nearly 1.6 million Americans filed for bankruptcy (Silva;2000b).

(iii)Racial Residential Segregation:

The 1968 Fair Housing Act (Section 804) states; “it shall be unlawful…to discriminate against any person…because of race, color, religion, sex, or national origin” (as cited in Yinger, 1998, p. 25). This legislation was designed to protect Americans from many forms of discrimination within the housing market and was a direct response to evidence of racial residential segregation. Chisler and Hartman(1975), state,

“According to the U.S. Civil Rights Commission, the Federal Housing Administration (FHA) contributed to the sale of inferior homes to blacks and others under Section 235 by delegating too much authority to private industry, which had failed to comply with the spirit of the Housing Act and other civil rights legislation.” (p. 136)