PhotoFor some, the foreclosure crisis of a decade ago is only a distant, unpleasant memory. But an analysis from Zillow suggests it remains a troubling reality for some minority homeowners.

Home prices now exceed their housing bubble highs in most parts of the country, but home values have been much slower to recover in neighborhoods that suffered massive foreclosures.

In predominantly black and Hispanic neighborhoods, home values plunged as much as 50 percent before the market began to recover. Foreclosed homes in black and Hispanic communities have more than doubled in value since then. Even so, they remain as much as 9.5 percent below their peaks.

Loss of wealth

Many minority homeowners, who had been saddled with subprime mortgages during the housing bubble, lost their homes to foreclosure when the market plunged and their interest rates skyrocketed. Even those who managed to hang onto their homes haven’t always benefited from the housing recovery.

"The housing bust and foreclosure crisis that followed resulted in a disproportionate number of people of color losing not only the roof over their heads but the wealth -- and the opportunity to potentially build more -- that came with it," said Zillow Senior Economist Sarah Mikhitarian.

Mikhitarian says black and Hispanic homeowners were hit hard financially by the foreclosure crisis because their homes made up a large share of their net worth. With fewer liquid assets at their disposal, they often had no choice but to let their homes go when they fell underwater.

“For people who ultimately succumbed to foreclosure, they missed out on the opportunity to see their home's equity -- and therefore their wealth -- climb back up," Mikhitarian said.

In 2007, when home values had inflated the bubble to the breaking point, a home accounted for 73.1 percent of a typical Hispanic consumer’s net worth. It made up 61.8 percent of the typical black homeowner’s total wealth. When the housing market crashed, that wealth crashed with it.

In black communities, foreclosures hit 36.3 percent in Philadelphia, 38 percent in St. Louis and Baltimore, 40 percent in Cleveland, and 50 percent in Atlanta. Not surprisingly, these housing markets have lagged behind the rest of the nation in housing market recovery.

In Hispanic communities, foreclosures reached nearly 60 percent in the Los Angeles market and 55 percent in San Antonio.


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