Particularly with the onset of the Great Recession, housing foreclosures began to contribute to neighborhood decline. Mortgage brokers and banks targeted high-minority neighborhoods like Woodlawn with a considerable amount of single-family and multifamily homes for sub-prime loans and home equity loans in the high-risk boom leading up to the Crisis (Immergluck, 2011). Immergluck and Smith’s analysis of Chicago foreclosures demonstrates not only that each additional single-family (one- to four-unit) foreclosure decreases surrounding property values, but that properties in low to moderate income communities experience an even more dramatic fall in property values when they are in proximity to a foreclosure (2005). Lastly, when property values fall, obtaining financing for surrounding properties becomes more difficult given the loan to value ratios of lenders and the lower rental income in low to moderate income communities (Seidman, 2005).
The filtering hypothesis posits that older housing structures provide a source of housing for newer migrants, as well as great value in understanding that neighborhoods do not have static populations (Kennedy, 1987). However, it assumes a much simpler housing market than one impacted by racial discrimination, school quality and a different bundle of services across municipalities. It also begs the question of how the filtering of black neighborhoods—when residents are bound by a similar ethnicity and solidarity that often cuts across economic lines—will impact these sociopolitical identities if they “filter up” to a newer housing stock. In other words, what about when residents resist mobility in favor or stability. The “natural” filtering process thus poses great challenge for acknowledging but refusing to accept the inevitable consequences of a subpar housing stock.
Though mixed-income development, the explicit attempt to use housing to create communities with more economic diversity, has been advanced as the solution to concentrated poverty. Its primary empirical advantages revolve around the benefits of informal social control and higher quality services that are associated with higher-income residents. The former happens through strong social capital and participation in voluntary neighborhood organizations, whereas the latter happens through the greater political leverage that more affluent residents are able to exert on city services (Joseph, Chaskin, & Webber, 2007).
Many argue that subsidized housing is another cause of neighborhood distress, but there is sufficient evidence to cast doubt on many of these assertions. Through the rigorous use of neighborhood-level data, Ellen et al make a compelling case that the introduction of housing vouchers recipients into neighborhoods does not lead itself to additional crime. Growth in housing vouchers may in fact be a consequence of increasing crime, as landlords turn to the voucher program as other challenges arise (Ellen, Lens, & O’Regan, 2011). In Woodlawn, the observation that voucher holders track crime would suggest that the Housing Choice Voucher Program is less than effective in expanding housing choice; voucher recipients should be moving to “opportunity areas” not declining neighborhoods. Susin (2002) demonstrates that formula-allocated housing choice vouchers increase the price of housing for non-subsidized housing as much as 16%, both for low-income, middle and upper-income residents. This also conflicts with the hypothesis of vouchers as leading to decline for neighborhoods, since across the board increases in housing revenues should support more production. This, however, does not fully consider the question of quality versus quantity.
Pendall’s (2000) study of why Section 8 participants live in more distressed area suggests a neighborhood like Woodlawn will be in high demand because it has so much available rental units yet it is not as distressed as other neighborhoods. The implication of this literature would be to acknowledge the reality of voucher concentration, to dispel the causal relationship with neighborhood decline and raise the prospect of ensuring housing and neighborhood quality amidst a seemingly market-driven (though government-assisted) phenomenon.