Report: Housing crisis hit harder in communities of color
ACCORDING TO A REPORT FROM THE Alliance for a Just Society, Providence communities lost more than $200 million in wealth in 2012 due to the foreclosure crisis, with "communities of color" feeling the hit hardest.
WASHINGTON – Providence communities lost more than $200 million in wealth due to the foreclosure crisis in 2012, according to the “Wasted Wealth” report from the Alliance for a Just Society.
The report – “Wasted Wealth: How the Wall Street Crash Continues to Stall Economic Recovery and Deepen Racial Inequality in America” – said that the foreclosure crisis claimed an average of $1,900 per household.
The figure, according to the report, was 42 percent larger than the average for ethnic communities. Neighborhoods with higher concentrations of people of color saw more wealth lost per household, at $2,700 versus $1,700 in segregated white communities.
On average, communities in Providence saw 14 foreclosures for every 1,000 households. As with lost wealth, communities of color saw a larger figure than segregated white communities. “Majority of communities of color” and communities with “above average percentage people of color” saw 20 foreclosures per every 1,000 households and 15 foreclosures per 1,000 households, respectively, while segregated white communities saw 13 foreclosures per 1,000 households.
The report’s methodology section said the Alliance for a Just Society calculated total wealth lost by using a formula that included total decline in property values of foreclosed homes and neighboring homes, total impact on property taxes, and total municipal cost of maintaining bank-owned properties.
The alliance report recommends principal reduction for homeowners with underwater mortgages, insisting that it could help homeowners save roughly $600 per month, “money that could instead be used to boost the economy and create jobs,” said the report.
“Renegotiating mortgages for homeowners with underwater mortgages will save homeowners money and benefit the local economy by increasing consumer spending and creating jobs,” said the report, which added that homeowners in Providence would save an average $7,500 annually.
“If all underwater homeowners renegotiate based on these terms and spend those savings on goods and services, this will mean an economic stimulus of more than $83 million, which can create over 1,000 jobs,” said the report.