African-American and Hispanic homeowners paid a steep price during the foreclosure onslaught that lasted for years after the housing market’s collapse slightly more than a decade ago, and Seattle was no exception to the rule, a study released by Zillow shows.
This reality has an impact not only on homeowners in communities of color, but on the larger economy as well, because it robs entire communities of wealth and contributes to the still-growing homelessness crisis afflicting cities like Seattle. Both Hispanic and black homeowners historically have the majority of their net worth tied up in their homes, according to Zillow.
“Near the height of the housing bubble in 2007, Hispanic and black homeowners had 73.1% and 61.8% [respectively] of their their net worth tied up in their homes,” the Zillow study states. “For white homeowners, that number was only 46.5%.”
Some 19.4% of all home foreclosures nationally between 2007 and 2015 were in predominately Hispanic communities, even though only 9.6% of homes overall are in Hispanic communities. The picture is equally grim for homes in predominately black communities across the nation, with 12.7% of foreclosures occurring in African-American communities while only 7.7% of all homes are black communities.
Leading the charge in terms of the disparity in foreclosure rates in black and Hispanic communities were New York, Los Angeles, Chicago and Dallas-Fort Worth, according to the study. Although Seattle’s results were far better than many similar-sized cities in terms of the foreclosure disparity, it was not immune from the effect. It’s also worth noting that Seattle’s black and Hispanic populations (at roughly 7.1% and 6.5% of the total population, respectively) are much smaller than many of the cities recording a worse disparity in home-foreclosure outcomes ― such as Dallas; Philadelphia; Houston; Washington, D.C.; Miami; and Atlanta.
In Seattle, 0.6% of all foreclosed homes between 2007-2015 were in black communities, while 0.5% of all Seattle homes were in those same communities. The picture is worse for Hispanic communities in Seattle, which accounted for 1.5% of all foreclosed homes in the city, while the share of all homes in predominately Hispanic communities in the city over the period was 0.8%.
The Zillow study also notes that in most major metros, homes in predominately black communities were foreclosed on more often than in white communities, with Seattle homeowners in predominately black communities over the eight year period analyzed being 1.3 times more likely to face foreclosure than homeowners in predominately white communities.
A major takeaway with respect to the “why” of the results points to some basic economic inequities that simply don’t favor homeowners in communities of color when it comes to property values.
“Part of the reason that homes in communities of color experienced higher rates of foreclosure is because home values plunged more dramatically in those areas during the recession,” the Zillow study notes. “As home values fell, negative equity — when a home is worth less than the amount owed on it, making it difficult if not impossible to sell or refinance — skyrocketed.
“This was especially damaging for people of color, many of whom typically have a more difficult time absorbing financial shocks like loss of employment and unexpected expenses.”