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The Socioeconomic Impact of Postforeclosure Sales

Many foreclosures during the recession occurred in minority or disadvantaged neighborhoods, the Joint Center for Housing Studies of Harvard University (JSHS) notes, but in a paper recently published in City and Community, Jackelyn Hwang, Assistant Professor of Sociology at Stanford, takes a closer look at how foreclosure purchases shift at the neighborhood level, with a focus on Boston.

In her study, titled “Racialized Recovery: Postforeclosure Pathways in Boston Neighborhoods,” Hwang found that many differences are tied to management practices. Hwang found that corporations were more likely to purchase foreclosed properties in predominantly black neighborhoods. Meanwhile, owner‐occupants were more likely to purchase foreclosures in hard‐hit mixed‐ethnoracial neighborhoods with substantial shares of non‐Hispanic/Latinx whites.

Foreclosures in Boston are heavily concentrated in black neighborhoods, and as JSHS notes, over 80% of Boston’s foreclosures occured in just five of the city’s 15 planning districts, which make up just 30% of Boston’s housing units.

“Compared to the city as a whole, the high-foreclosure block groups were, on average, home to about half as many whites and twice as many blacks,” said David Luberoff is Deputy Director of the JSHS. “However, high-foreclosure block groups were not the city’s most disadvantaged areas, which have large numbers of publicly subsidized housing units that are not likely to be subject to foreclosure.”

According to Hwang, corporations were more likely to resell previously foreclosed properties to other investors and have reported maintenance issues against them. With this in mind, Hwang’s study alleges that “predominantly black neighborhoods hit hard by foreclosures in Boston were left further behind in the recovery from the housing crisis compared to other hard‐hit neighborhoods.”

Stabilization, Hwang notes, would “require resources and incentives for both owner‐occupants and investors—both small and large—to maintain their properties and for investors to fill properties with long‐term renters.”

Hwang’s complete study can be found here.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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