Pre-Covid Homebuying Trends May Widen Racial Wealth Gaps in Massachusetts
A new report from MassINC’s Gateway Cities Innovation Institute finds a concerning pattern in Black and Latino homebuying trends that could exacerbate the racial wealth gap.
For Immediate Release
Monday, September 28, 2020
Press Contact: Meridith St. Jean
Priced out of Boston’s historic neighborhoods of color, Black and Latino residents are increasingly purchasing homes in lower-cost Gateway Cities according to data MassINC obtained through the Home Mortgage Disclosure Act (HMDA). These records include most mortgages for owner-occupied properties in Massachusetts issued between 2007 and 2017.
More than one-quarter of the state’s Black buyers purchased in Boston in 2007. In 2017, Boston accounted for just 11% of homes purchased by Black residents. This 16-percentage-point drop in Black buyers purchasing in Boston was almost entirely matched by a 15-percentage-point increase in Gateway City purchases; 53% of Black buyers bought in Gateway Cities in 2017 up from 38% in 2007.
The share of Massachusetts’ Latino buyers purchasing homes in Boston declined from 11% in 2007 to only 4% in 2017. For Latino households, the 12-percentage-point increase in Gateway City purchases (from 48% in 2007 to 60% in 2017) surpassed the 7 percentage-point decline in Boston.
The prospect that Black and Latino buyers will gain wealth through these purchases is far from certain. Using a neighborhood conditions index constructed with Census figures, MassINC found that one out of four Black buyers and 30% of Latino buyers made purchases in neighborhoods vulnerable to decline. Within Gateway Cities, Black and Latino buyers were twice as likely as White Gateway City buyers to purchase in at-risk neighborhoods.
“Economic stress from the COVID-19 pandemic presents an especially large problem for the vulnerable neighborhoods where Black and Latino residents have been buying,” says Ben Forman, MassINC research director and report co-author. “Neighborhood conditions are critical to social and economic well-being broadly and, in particular, to the prospects for home price appreciation and wealth building through homeownership.”
MassINC also found that significant racial and ethnic disparities in mortgage origination rates remain. In 2017, mortgage originations per 1,000 residents climbed to 7.1 for Latino households, up significantly from 5.9 per 1,000 in 2007. Over this same period, mortgage originations to Black households only inched upward from 6.4 to 6.7, while origination rates for White borrowers grew from 9.4 to 10.5 per 1,000. In percentage terms, the gap between White and Latino rates fell from about 60% in 2007 to 50% in 2017. The White-Black disparity moved in the opposite direction, rising from 47% to 57%.
“Not all residents in Massachusetts have been able to purchase homes in stable neighborhoods where they can build equity and pass it on to the next generation. With each real estate cycle, the problem seems to metastasize. This time we need to get ahead of it with tools to protect vulnerable neighborhoods from entering downward spirals,” says Forman.
About MassINC: Founded in 1996, MassINC’s mission is to provide the people of Massachusetts with the information they need to participate fully in our democracy. We are a nonpartisan, 501c3 and achieve impact through independent research, nonprofit journalism and civic engagement.About the Gateway Cities Innovation Institute:
The Gateway Cities Innovation Institute works to unlock the economic potential of small to mid-size regional cities. Leveraging MassINC’s research, polling, and policy team, the Institute strengthens connections across communities and helps Gateway City leaders develop and advance a shared policy agenda. Gateway Cities are midsize urban centers that anchor regional economies around the state. For generations, these communities were home to industry that offered residents good jobs and a “gateway” to the American Dream. Over the past several decades, manufacturing jobs slowly disappeared. Lacking resources and capacity to rebuild and reposition, Gateway Cities have been slow to draw new economy investment.