Denver sees skyrocketing home values in formerly redlined neighborhoods, bucking national norm

A symbol of gentrification in Denver’s Five Points neighborhood.

New research shows many American cities continue to grapple with depressed home values in neighborhoods that were subject to the discriminatory lending policy known as redlining some 50 years after it was outlawed. But that’s not the case a mile above sea level.

Denver is facing the opposite situation, a recent analysis by real estate research firm Zillow shows. Formerly redlined neighborhoods like Five Points, Baker, Highland and Jefferson Park now have higher median home values than the city as a whole. And the high values in these areas — north of $540,000 per home — brings its own set of challenges, longtime resident say, like displacement and decreased economic diversity in areas where minorities were left vulnerable by decades of being cut out of the mortgage market.

“I’m seeing very affluent people come either back into the city from the suburbs or from places from across the country,” community activist Tony Pigford said of the migration of new residents into his City Park West neighborhood, an influx that has coincided with skyrocketing housing prices. “And when you bring race into the issues — and the wealth gap is firmly drawn along racial lines — in my neighborhood it means I am losing the vibrancy that comes with a multicultural and economically diverse community.”

Zillow’s analysis taps into data available through Mapping Inequality, a project from the Digital Scholarship Lab at the University of Richmond. Using maps produced by the Home Owners’ Loan Corp., the New Deal-era federal agency that told banks which neighborhoods in their cities were the highest lending risks — rendering “hazardous” areas in red or “redlining” them — Zillow found that, on a nationwide basis, homes in those areas have a median value nearly $50,000 lower than homes found in surrounding neighborhoods. The gap has shrunk in many places, according to Zillow’s research, but lower property values continue to contribute to economic inequality and wealth disparity among racial groups.

“People living in these places – overwhelmingly people of color – were essentially locked out of the mortgage lending market, and therefore unable to buy a home,” Zillow wrote in a news release this week. “Homeownership is often regarded as a significant factor in building wealth.”

Redlining was widespread in Denver. A 1938 Home Owners’ Loan Corp. map of the city,available online through the Denver Public Library, shows wide swaths of northern and western Denver, including Five Points, Globeville, Highland and Barnum were deemed high lending risks. Redlining was outlawed in 1968, and while economic investment was not quick to come to those Denver neighborhoods — home largely to Latino and African American people — it certainly has come in the last decade as Denver has experienced a population and development boom. The result is homes in Denver’s redlined neighborhoods hit a median value of $542,709 in December 2017, 6.5 percent higher than the $509,545 median home value in the city at large.

This map, dated Aug. 15, 1938, illustrates the redlining of neighborhoods in the City and County of Denver where minorities were excluded from receiving home loan funds because they were considered high economic risks. The map was created by the Home Owners’ Loan Corporation and titled, “Residential security map.”

Zillow’s research did not delve into the reasons some cities — including Denver, Minneapolis and Boston — have seen homes in redlined areas achieve higher values that surrounding areas, but Svenja Gudell, the company’s chief economist, has some ideas.

“Often, I think I think it can be attributed to gentrification,” she said.

Gentrification, the process by which affluent residents move into formerly economically depressed areas, pushing out poorer residents who can’t afford the ensuing cost of living increases in the process, started years ago in formerly redlined areas of Denver, Gudell said. The city was not hit as hard as other metro areas by the foreclosure crisis, according to Zillow research, and its relatively quick economic recovery led to more people moving into the city and buying housing. As homes filled up amid the city’s population boom, some people without the means to buy into traditionally expensive neighborhoods turned their attention to places they may not have considered before. Places like Five Points and Highland.

At the same time, consumer preferences have changed, with more people favoring urban neighborhoods with proximity to public transportation, restaurants and other amenities, over the suburbs many flooded to in the second half of the last century.

Because of redlining disproportionately blocked minority residents from home ownership, many black and Latino people renting housing in these now desirable neighborhoods have had to make tough decisions in recent years on where they can afford to live as rents and home price have risen.

“I think Denver has really had a problem with pricing people out of downtown areas and has gotten more expensive and that shows up in that data,” Gudell said.

For Pigford, an educator running for an at-large City Council seat next year, the downsides of gentrification are obvious.

“It’s important for kids in these neighborhoods to see people who don’t look like them and act like them and don’t have the same resources,” he said. “If I have to leave the city center and go to Aurora to see a multicultural group of people and see the world for different perspective it’s unfortunate. I want that in my neighborhood.”

He points to what he feels are significant shortcomings in the city’s affordable housing program, recently rocked by the revelation that nearly 200 income-restricted homes have sold over the years to people who make too much to buy them, as a contributor to the rising cost of homes in his neighborhood.

City Council President Albus Brooks disagrees with the notion that city’s affordable housing efforts aren’t making a dent in housing costs in urban neighborhoods. Zillow’s study, he said, must be missing something if it’s showing formerly redlined neighborhoods are now less affordable than the city at large, considering neighborhoods like Five Points have been a focus of city housing programs.

“This makes no sense at all,” he said. “We need to dig in and do an analysis and really figure out why that is.”

In northeast Denver, the area he represents, Brooks said 1,300 affordable hosing units –rental and for sale– have been built since 2011. He believes it is only a mater of time before housing affordability programs, which could soon grow in scope and scale with an influx or marijuana tax money, begin to push back against rising costs, both in formerly redlined neighborhoods and across the city.

“It’s still not enough. We still need to do more,” Brooks said. “But at some point the market will adjust to the injection of funds, and when that happens I think that’s when you’ll start seeing prices come down.”

Source Article

wrote byorien
category inNews

Leave a Reply

Your email address will not be published. Required fields are marked *