I just realized that there's a powerful analogy in your research to the old practice of redlining neighborhoods, and it makes me worried. Where that federal policy had explicit discriminatory aims, it was generally limited to discrete geographic areas within older cities. The current regime of lending constraints is like a redline around swathes of lower credit scores and lower income levels. Federal policy has effectively made a discriminatory practice of homeownership denial portable, although your data analysis tends to manifest in historically lower income zip codes. As a practical matter it would be easier to correct the problems you've identified, but it could be a tough fight with the generation that still has a skewed memory of the "housing bubble."
It's one of the many toxic side-effects of the bubble myth. Since so many people either ignore or see the changes in credit access after 2007 as a return to sanity, it simply isn't a factor that they can acknowledge as a change agent. So, they blame the deep decline in minority homeownership on the bubble. Those people were unqualified to have mortgages, and so the decline was an inevitable result of the boom. Almost all of the increase in black homeownership was in the 1990s ( https://fred.stlouisfed.org/graph/?g=YpHV ) which I think was actually due to prudent changes at the GSEs to help match qualified families to reasonable products. The decline was almost purely due to the crackdown on lending that reversed those gains, which both locked out new buyers and devastated urban working class property values. And, yet, so many people now conclude that those institutional improvements in lending in the 1990s were the problem.
It's very hard to convince them otherwise because there are plenty of anecdotes of borrowers in 2005-2007 who quickly defaulted, but the truth doesn't require ignoring those anecdotes, it just requires realizing that they were a sideshow unrelated to more important trends.
Your analogy is apt. We have basically redlined, on a class and income basis rather than race, whole sections of the country.
It’s true! It’s amazing how many pieces of the puzzle you already had in that post!
First, I had just kept finding reasons to doubt the credit bubble narrative. And seeing your post was one of the triggers to fill in the mysteries that remained when the credit explanation didn’t seem accurate.
I just realized that there's a powerful analogy in your research to the old practice of redlining neighborhoods, and it makes me worried. Where that federal policy had explicit discriminatory aims, it was generally limited to discrete geographic areas within older cities. The current regime of lending constraints is like a redline around swathes of lower credit scores and lower income levels. Federal policy has effectively made a discriminatory practice of homeownership denial portable, although your data analysis tends to manifest in historically lower income zip codes. As a practical matter it would be easier to correct the problems you've identified, but it could be a tough fight with the generation that still has a skewed memory of the "housing bubble."
Absolutely.
It's one of the many toxic side-effects of the bubble myth. Since so many people either ignore or see the changes in credit access after 2007 as a return to sanity, it simply isn't a factor that they can acknowledge as a change agent. So, they blame the deep decline in minority homeownership on the bubble. Those people were unqualified to have mortgages, and so the decline was an inevitable result of the boom. Almost all of the increase in black homeownership was in the 1990s ( https://fred.stlouisfed.org/graph/?g=YpHV ) which I think was actually due to prudent changes at the GSEs to help match qualified families to reasonable products. The decline was almost purely due to the crackdown on lending that reversed those gains, which both locked out new buyers and devastated urban working class property values. And, yet, so many people now conclude that those institutional improvements in lending in the 1990s were the problem.
It's very hard to convince them otherwise because there are plenty of anecdotes of borrowers in 2005-2007 who quickly defaulted, but the truth doesn't require ignoring those anecdotes, it just requires realizing that they were a sideshow unrelated to more important trends.
Your analogy is apt. We have basically redlined, on a class and income basis rather than race, whole sections of the country.
An old post that "awakened your call"!
https://thefaintofheart.wordpress.com/2012/10/27/the-housing-boom-financial-crisis-the-great-recession-3/
It’s true! It’s amazing how many pieces of the puzzle you already had in that post!
First, I had just kept finding reasons to doubt the credit bubble narrative. And seeing your post was one of the triggers to fill in the mysteries that remained when the credit explanation didn’t seem accurate.