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How Residential Segregation Affects the Marketplace

residential segregation in housingThis year witnessed the 50th anniversary of the Fair Housing Act, but a new report examines how the effects of discriminatory housing practices continue to linger in American communities—even when policies have been implemented to try and help remove those inequities. The issue is examined in a new Apartment List report entitled “The Persistent Effects of Residential Segregation.”

While the report digs into current policies that contribute to residential segregation, whether intentionally or inadvertently, it also points out that many of today’s problems stem from the legacy of past policies.

“Minority populations are often concentrated in specific neighborhoods, while other neighborhoods remain primarily, and in some cases almost exclusively, white,” the report states. “This pattern is known as residential segregation. In many cases, these housing patterns did not emerge naturally and, instead, represent the lasting impacts of policies—both informal and institutionalized—specifically aimed at marginalizing minorities.”

To try and make the notion of “residential segregation” more concrete, Apartment List calculated a “segregation index” for each minority group within the examined cities. “This index can be interpreted as the percentage of the minority group that would need to move to a different neighborhood in order for the distribution of minorities in each neighborhood to match that of the metro as a whole.”

As an example, the report spotlights two metros: Milwaukee and Seattle. In Milwaukee, minorities represent 32 percent of the overall population, and Apartment List gave the city an overall segregation index rating of 0.61. However, the report notes that “55.8 percent of Milwaukee’s minorities live in Census tracts that are less than 25 percent white.” When you narrow the focus down to Milwaukee’s black population, the contrast becomes even starker—74.6 percent of the metro’s black residents live in “concentrated minority tracts.”

Seattle, for comparison’s sake, has an overall segregation index rating of 0.32—“the fourth-lowest of the nation’s 50 largest metros,” the report notes. Seattle’s minority populations are considerably less concentrated in certain areas than Milwaukee’s. “That said, even here, there are still clearly discernible patterns of minority concentration,” the report states.

Apartment List found that black populations continue to suffer the highest rates of residential segregation on a national level. The report calculated the average segregation indexes across the nation’s 250 largest metros for the three largest minority groups: blacks, Hispanics, and Asians. In 2009, black populations had a national average segregation index rating of 0.61; by 2016, it had only decreased to 0.59. For Hispanics, the 2009 rating was 0.49 and 2016 was 0.47. The Asian segregation index rating actually increased during that time span, even if only slightly: in 2009 it was 0.46 and in 2016 it was 0.47.

“Across the 250 largest metros, the average black segregation index is 25 percent higher than the average index for Hispanic Americans, the second most segregated minority,” Apartment List reports.

The report also notes that residential segregation is strongest in those communities that were most established in 1970. Contrastingly, “minority populations tend to be more evenly distributed in areas that have experienced rapid growth in the decades since the passing of the Fair Housing Act.”

The real-world effects of residential segregation remain more substantial than simply which part of town you live in. Apartment List found that renters in minority neighborhoods are more burdened by housing costs and that more segregated metros tend to have larger gaps between white and minority homeownership rates.

“Across the U.S., 72.4 percent of white households own homes, compared to 57.3 percent of Asian households, 48.4 percent of Hispanic households, and just 42.2 percent of black households,” Apartment List reports. “These gaps in homeownership rates vary by metro, and we find that higher levels of residential segregation are correlated with more severe homeownership rate gaps.”

Click here to read the full report.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected].

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