Single-family lending drives neighborhood disparities, new report finds


A single-family home loan is one of the biggest drivers of disparity between Chicago neighborhoods, according to a new report from the Urban Institute.

A report released Wednesday by the Urban Institute, a Washington, DC-based think tank, examines the types of investments in Chicago during the period 2010 to 2020. Brett Theodos, a researcher at the institute, said analysts spent about a year of looking at the different types of capital flowing into the city and seeing how it compares to investment in other cities across the country.

Chicago can double down on making communities safer to attract more single-family home loan investment, but other forms of investment need to happen as well, he said. You mentioned the one in Chicago Invest South/Westdesigned to stimulate development in targeted parts of the city through public and private funding, as an example of how more investment could be directed into neighbourhoods.

The report found that the more black residents lived in a neighborhood, the less investment there was in the area compared to neighborhoods with larger populations of white residents.

Between 2010 and 2020 for single-family investment, neighborhoods in which more than 80% of residents identified as Black received an average annual dollar investment per owner-occupied household of $5,050. Neighborhoods where more than 80 percent of residents identify as white received $30,284, according to the report. Neighborhoods where more than 60% of residents identified as Latino or Hispanic received $6,667 and neighborhoods where more than 20% of the population identified as Asian received $15,353.

“It really falls to mission funding and the public sector in particular to help offset some of these disparities and help catalyze and stimulate growth and more investment,” said Theodos. “Obviously, it has to be done in a way that is based on the residents who are there rather than swapping them for other residents. It’s something that’s going to take philanthropy, non-profits, government that’s willing to take more risks to keep them going.”

The Urban Institute’s findings aren’t the first time home equity lending has been linked to racial disparities in Chicago. In 2020, an investigation by WBEZ and City Bureau found that banks invested more money in Lincoln Park, a majority-white neighborhood, than in all of Chicago’s majority-black neighborhoods combined.

The Urban Institute report examined data from the Home Mortgage Disclosure Act from 2010 to 2020 for loans associated with single-family owner-occupied properties that had fewer than four units, according to the report.

While there are various local, state and federal programs, Theodos said officials should look at how the programs can be linked together to increase investment in communities.

“A small amount of resources won’t make a difference, but mobilizing and directing large amounts of resources is what it will take to be transformative,” he said.

Overall, Chicago ranked 40th out of 100 major US cities for investments that included single-family, multi-unit, small business, non-residential, mission-driven and public investments. Theodos said the city has strong industrial estates and a central business district that is seeing investment.

Areas like the South Loop and West Loop saw higher levels of overall investment during the decade examined by the researchers, according to the report.

Multi-family investing, which the report defines as lending for properties with five or more units, was one area where Chicago fell behind other cities, ranking 65th, according to the report. This type of investment increased between 2015 and 2017 but slowed to lower levels by 2020, according to the report. Theodos said it could be related to population trends in Chicago.

The report takes into account the onset of the coronavirus pandemic, but does not take into account all the changes that could have occurred over the past two years. Theodos said commercial investment, particularly for office space, could see a shift from 2010-2020. Single-family investments could also see a shift due to rising interest rates associated with loans, he said she.

“Things are changing, but there hasn’t been as radical a change in investment flows as has been said in the labor market,” said Theodos.

He added that cities have also received federal funds as part of COVID relief efforts and will soon also receive money tied to infrastructure and transit.

Elvia Malagón’s reporting on social justice and income inequality is made possible by a grant from the Chicago Community Trust.


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Written by Natalia Chi

Chicago Popular; Chicago breaking news, weather and live video. Covering local politics, health, traffic and sports for Chicago, the suburbs and northwest Indiana.

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