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ItemThe impact of racial segregation, income sorting and risk-based mortgage pricing on housing wealth inequality: A comparison between urban regions in the United States(Georgia Institute of Technology, 2017-05-25) Raymond, EloraHousing wealth is the cornerstone of U.S. households’ balance sheets and is among the largest stores of wealth in the United States. This study examines rising housing wealth inequality between 2005 and 2015 in an urban context. Past research suggests that rising income inequality, rising income segregation, or racial segregation could be a cause. Other research highlights the role of mortgage lending in generating inequality. The subprime and foreclosure crises have a well-documented association with housing inequality. Other work highlights risk based mortgage pricing more generally as a mechanism for widening inequality. I first examine the drivers of urban housing wealth inequality with a cross-sectional regression analysis in 2000-2005. I examine how income and racial segregation affect housing wealth inequality between cities prior to the crisis, and find that income inequality is weakly correlated with housing wealth inequality, but income and racial segregation have strong effects. Then, I examine if changes in segregation explain rising housing wealth inequality during the real estate and financial crises of the 2000s, or if mortgage market factors explain the rise. I find that changes in income inequality lead to higher housing wealth inequality; that rises in Black racial segregation again explain much of the increase, and that subprime lending does not fully account for that effect. Finally, I use granular data in a series of quantile regressions to understand the drivers of housing wealth inequality during the housing market recovery years of 2010-2015. I find that risk-based mortgage pricing and income segregation interact to produce significant and meaningfully large increases in housing wealth inequality over a 5-year period, from 2010-2015. Finally, I briefly discuss the ramifications for national housing finance reform, as well as for state and local mortgage programs and policies like inclusionary/exclusionary zoning. The current administration has put housing finance reform at the top of its agenda. Many proposals suggest partial or complete privatization of the government sponsored enterprises (GSE)s, which would lead to increase in risk-based pricing and market segmentation. Additionally, reform could disrupt GSE subsidization of state and local mortgage revenue bond programs. State and local actors should seek to preserve these capacities and increase local programs to guarantee mortgages and provide down payment assistance where possible. Cities should weigh carefully the costs of exclusionary zoning not only on income segregation, but on widening wealth inequality within their region. This dissertation contributes to the literature by situating the phenomenon of rising housing wealth inequality in a spatial, urban context and describing the impact of individual, neighborhood, and regional characteristics on the production of housing wealth inequality. I also tie these results to policy remedies at the national and local levels.
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ItemThe characteristics of resilient neighborhood housing markets during and after the housing crisis(Georgia Institute of Technology, 2016-11-11) Wang, KyungsoonSince the Great Recession, housing market resilience has been of critical interest to academicians and practitioners who have raised the question of why some neighborhoods are more affected by financial crises than others. To answer this question, this study explores the determinants of resilience in the housing market at the neighborhood level in the context of metropolitan areas during and after the recent U.S. housing crisis. This study specifically examines housing market resilience pertaining to three areas: the stabilization process of U.S. metropolitan housing markets over the periods of boom, bust, and recovery from 2000 to 2014 in various metropolitan types, the characteristics influencing the resilience of neighborhood housing markets, and the dynamics of lower-income neighborhoods. Using three housing performance indicators—home values, foreclosures, and home lending—and various neighborhood and metropolitan variables for 368 metropolitan areas and their nested neighborhoods, this study employs multilevel models of neighborhood change that accommodate the panarchy system of resilience and spatial econometrics methods controlling for spatial autocorrelation. The results show that although most U.S. housing markets are in a process of gradual stabilization as of August 2014, the gap between the home values of resilient and non-resilient markets became much larger after the economic crisis. This study also finds that resilient neighborhood housing markets benefit from more robust socioeconomic, physical, and political characteristics. Specifically, federal recovery financing programs, such as NSP2 and NSP3, help the hardest hit communities in resilient regions regain home values while NSP1 contributes to reductions in foreclosure rates across the nation. Neighborhoods with more racial diversity and high education attainment and income consistently contribute to housing market resilience across the nation. The results of some characteristics in the hardest hit and bounce back resilient markets differ from those of other types of markets, including the effects of auto dependency, income inequality, industrial diversity, foreign-born populations, and a longer commute time. Finally, the results indicate that lower-income neighborhoods in volatile and/or non-resilient housing markets suffer more from the economic shock than those in stable and/or resilient markets. The characteristics of resilient neighborhoods suggest that we are able to mitigate neighborhood decline during and after a housing crisis by establishing sound and robust planning and housing policies. Such policies include establishing strong government recovery financing programs, encouraging more sustainable urban form by minimizing auto dependency, creating racially, economically, and industrially diverse neighborhoods, and providing considerable assistance to lower-income neighborhoods. Through such efforts, the U.S. housing market should become less vulnerable and more resilient to the impact of economic downturns.
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ItemMetropolitan housing market restructuring and implications for poverty deconcentration: The effects of foreclosures on the spatial distribution of housing choice voucher residencies(Georgia Institute of Technology, 2016-04-12) Lee, Sang WonThe Housing Choice Voucher (HCV) program is the largest federally subsidized affordable housing program in the U.S., where one of the program’s goals is to deconcentrate poverty and alleviate the standard of living for program participants. However, a large growing number of HCV tenants have experienced involuntary eviction due to rental property foreclosures in recent years. On the other hand, due to the massive amount of foreclosures and the depressed housing market for homeownership, there is evidence that a plethora of owner-occupied units are being converted into rental housing units in a diverse income range of neighborhoods. In this regard, this dissertation has endeavored to shed light on whether the new rental housing supply created from previously foreclosed properties, has assisted the HCV program’s goal of poverty deconcentration. Accordingly, three large central metropolitan counties were analyzed using exploratory spatial data analysis, descriptive statistics, and multivariate negative binomial regression. The dissertation finds that though HCV households have dispersed widely, the distribution is quite uneven. Also, the share of HCV households residing in high-poverty neighborhoods is shown to have increased over time. Foreclosures appear to have played a role in this distribution change, as foreclosure are found to have a positive effect on HCV residencies in a neighborhood. Finally, the impact of foreclosures was found to be greater in lower-income higher-minority neighborhoods compared to higher-income lower-minority neighborhoods. As such, the findings suggest that policymakers need to strengthen protection for renters facing foreclosure, implement strategies to reduce exclusionary practices, and increase HCV availability, in order for the HCV program to further achieve its goal of poverty deconcentration.
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ItemThe impact of high-leverage home loans on racial/ethnic segregation among homebuyers in the mortgage boom(Georgia Institute of Technology, 2013-04-09) Lee, Yun SangResidential racial segregation has been perennially viewed as a major urban problem in the United States. Meanwhile, the single-family mortgage market has been an influential factor in determining segregation since at least the 1930s. Although many prior studies rightly have focused on the very real individual and social costs of subprime loans and related loan features, the greater leverage they afford also may have allowed some, especially minority, homebuyers to purchase properties they otherwise would not have been able to afford. Limited loan-to-value and payment-to-income ratio requirements have constrained borrowers from prime, conventional lenders, and relaxing these standards might allow some borrowers to purchase more expensive homes, possibly in higher quality neighborhoods. Additionally, if minority borrowers disproportionately obtained high-leverage loans, the effect of these loans on neighborhood choice may be greater for minorities than non-Hispanic whites. Since higher-quality neighborhoods are disproportionately non-Hispanic white or racially diverse, the increase in high-leverage mortgages might mitigate the neighborhood quality gap between minorities and non-Hispanic whites and reduce levels of racial/ethnic segregation. Accordingly, this dissertation focuses on two research questions: 1) whether high-leverage home purchase loans enabled borrowers to purchase more expensive homes and homes in higher-quality neighborhoods; and 2) whether these loans affected the racial/ethnic segregation of homebuyers at the metropolitan level. Since blacks and Hispanics comprise significant minorities in many metropolitan areas in the 2000s, I examine the questions for three racial/ethnic groups: non-Hispanics whites, blacks, and Hispanics. To answer the first question, household housing demand and neighborhood quality models are estimated using the American Housing Survey data. To answer the second question, metropolitan area segregation models are estimated primarily using the American Community Survey and the Home Mortgage Disclosure Act. Both cross-sectional and fixed-effect panel segregation models are estimated using a two-stage least squares approach with chosen instruments. I find that the use of high-leverage loans increases housing demand and neighborhood quality, holding other household characteristics constant. I also find that high-leverage loans have a substantial, negative effect on black segregation, while the effect on Hispanic segregation is somewhat ambiguous. The findings suggest that policymakers should consider the impact of regulations affecting allowable loan-to-value and payment-to-income ratios on borrowers' residential choice and urban form, as well as on default risk.