The Wall Street Journal, October 29, 2020, Dearth of Credit Starves Detroit’s Housing Market
Lenders have turned their backs to financing homes in Detroits low-priced properties making it harder for Black residents to have access to home ownership. The impact of prohibiting mortgages in these areas of Detroit disproportionately affects Black resident making it harder for them to build wealth. Due to lenders not being able to make money on tiny mortgages they do not make them, and this further devastates the city’s neighborhoods.
Detroit is making a comeback after years of decline that led to a bankruptcy filing in 2013. But large swaths of the city are left behind, starved of the housing credit needed to revive them. No purchase mortgages were made last year in almost a third of Detroit’s census tracts, and fewer than five each in another third, according to data from LendingPatterns.com, a mortgage-data analysis tool.
The impact runs disproportionately along racial lines in the majority Black city. Detroit’s Black residents are largely shut out of access to financing, making it tougher to attain homeownership, the key to building wealth for most Americans.
Nonprofits, governments and corporations are trying to channel money back into the city’s neighborhoods. But making mortgages in Detroit is a convoluted task. The dearth of credit is largely a consequence of battered property values plus a commercial reality that depresses them further: Lenders can’t earn money on tiny mortgages, so they don’t make them.