Supporters of the new “neighborhood schools” plan for Wake County, North Carolina might assume that families will be able to “vote with their feet” and move to a school of their preference.

The data hints at inequity in how mortgage loans are made, but that is not really the point that I am trying to make. Nor is this a conclusion that should be seen as limited to Wake County. In most districts, school funding is at least loosely correlated with property values.  That means that it is a norm for well-off neighborhoods to have better schools.  Thing is, it doesn’t have to be that way. The reason that I am looking at Wake is only because they’re doing their best to develop a problem.  Since the most recent school board election, their district has been dismantling its old assignment plan. That system sought to put a ceiling on the concentration of poverty in the student populations of its schools.  Now, they are redistributing under a new plan that is loosely described as “neighborhood schooling.”

Critics argue that schools in low-income areas will gradually succumb to the challenges of the plan.  Data show that low-income students perform at better levels when they have a socioeconomically diverse set of classmates. For years, that insight has guided the reassignment policy. It meant that Wake set a ceiling on the share of low-income students that could be assigned to any school. The results were evident: Wake was recognized as a leader in urban school policy.

Unfortunately, the truth is different. CRA-NC has studied mortgage lending in Wake County for three years, from 2006 to 2008.  Our results show that minority families are obstructed from moving to upper and middle class neighborhoods.  They have a harder time getting a loan than white families do, at all points of the economic strata.  Household income does not make much of a difference.  In fact, the greatest discrepancy in access to mortgage loans is between upper income white and upper income minority borrowers.

Here are a few data points that I am working on right now:

• When low income minorities try to buy a home in a middle income neighborhood in Wake County, they are denied for a conventional home purchase loan at a rate that is 2.25 times greater than the denial rate for white borrowers with similar income profiles.
• When low-income minorities (income less than 80 percent of the average for Wake County) try to buy a home in an upper income neighborhood (greater than 120 percent AMI), they are denied at a rate that is 1.88 times higher than white borrowers with a similar profile.

Even more interesting are the numbers that show how minority and African-Americans are challenged to buy into well-0ff neighborhoods, regardless of income.  I switched my focus from low-income African-Americans to upper income African Americans.  Now we are focusing on only African-Americans with incomes greater than 120 percent of the average.  This is well-off group.  To qualify for this group, a household would have to have an income of at least $84,000.

The picture is even more troubling when minority borrowers are filtered to include only African-American borrowers.  Then, the same comparisons become even greater: 3.28 times more difficult for upper income black borrowers to buy a home in a middle income neighborhood, and 3.63 times more difficult to buy a home in an upper income neighborhood.  Translated simply, this says that even white black households make a lot of money, they have hurdles to go with banks.

This data is from 2008*.

The discrepancies were even greater in 2007: very low income African-America borrowers that applied for a mortgage to buy a home in an upper-income neighborhood were turned down at a rate that was almost five times greater than that of white borrowers with a similar profile.

Research shows that even as incomes between white and African-American households are more equivalent now than there were in the 1960s, there is still quite a lag in terms of assets. The Pew Foundation reported that white households had between 12 and 13 times more in assets, including in home equity, than did African-American households. The ratio was slightly less for Hispanic households.

All of this should underscore that residents will not be able to “vote with their feet” in response to the new neighborhood schools policy. If people try to move to a good school, it may be not be so easy.

We don’t want to consign anyone to being trapped in a bad school.  It is contrary to having an opportunity society, and it makes no sense for the ongoing economic development of our community.

*single-family homes, home purchase only, conventional loans for owner-occupied properties.

News out today shows that our schools are more income-segregated than ever before.  This national trend is only a broader reflection of the same forces that have fostered Wake County, North Carolina’s recent decision to favor “neighborhood schools.”

North Carolina is one of the states with the lowest share of elite schools.  By the measure that drove this study, there were less than 3 percent of students on free-or-reduced lunch in only six schools in North Carolina.  Perhaps that is factored by our states ongoing battle to reverse its high share of poor families, but it also reflects well on decision-making that has avoided narrow zoning to separate elites from the rest of the community.

The location of affordable housing is driven by land-use planning.  My review of some of the schools where elite private-public schools (PPS) have been created suggests that they are most often in white suburbs with very high incomes. Those districts exist even when a larger MSA is well-off.  Certainly, Boston and San Francisco harbor plenty of wealth.  That is why it is so bad that so many of their schools act as filters of opportunity.

The study did not release specific data for any MSA in North Carolina. I’ll offer a more narrow example for Alameda County, California. The largest city in Alameda County is Oakland. Oakland is poor and heavily minority. Its schools are well-known for their efforts to deal with the challenges of poverty.  While Oakland struggles, the community of Piedmont has developed its own “private” school system.  Fewer than 3 percent of its young people live in poverty, compared to more than 28 percent in Oakland.  Median household income in Piedmont is $134,000.  In Oakland, it is just a shade over $40,000.

Without a systematic effort to shape the housing stock in Piedmont, that outcome could not occur.  Only nine percent of households in Piedmont rent, and most rents are greater than $1,500 per month.  There are only 69 multifamily units in the entire city!

Is Wake County near that situation? Certainly there is no Piedmont within its borders.  Yet, it seems all too likely that the County has enough Piedmont-style school zones to bring about some of those same results. I counted 25 census tracts in Wake (in 2000, summary file 3) where less than 3 percent of the residents aged 5 to 17 lived in poverty. In those tracts, there were only 241 school-age children in 2000, compared to more than 10,500 living above the poverty line.  Back in 2000, Wake had about 111,000 school-age students.  Roughly 9.7 percent of them lived in a census tract with fewer than 3 percent of school-age children in poverty. Race is worth mentioning, too: those low-poverty districts have, on average, less than one-third of their share of African-American residents compared to the County as a whole.

Granted, school districts are much larger than census tracts.  Still, elementary schools can sometimes draw from a handful of census tracts.  Some of those tracts overlap. The possibility seems very real that Wake would quickly fall into a new regime where there were a handful of elite schools for the very wealthy.

Affordable Housing is a Determinant of Income Segregation

The Thomas Fordham Institute has published a report entitled America’s Private Public Schools that tracks where public decision-making has led to public schools with few or no poor students. Their indictment is compounded by the perspective of its authors.  Fordham is a conservative research group. Their concern is coincidental to the outcries of groups like the NAACP or Wake parents with a compassionate interest in diversity. Their prescription for this problem is more charter schools, rather than reform through traditional public school systems.

Fordham concluded that New Jersey was the worst offender for income-segregation. That is interesting, as New Jersey was the site for the seminal affordable housing case.  In Southern Burlington County N.A.A.C.P. v. Mount Laurel Township, the NAACP argued that zoning rules conspired to keep affordable housing outside of the municipal boundaries of Mt. Laurel township, thereby excluding low-and-moderate (LMI) residents from obtaining housing in that community. The decision created a new standard for  implementing the goals of affordable housing. Eight years (more…)

I was at a celebration in a successful park last week. There was a tent that covered the audience, who sat in folding metal chairs. It was hot, but not too hot. We had sheet cake.  Grown men held up a small marble trophy and spoke about meaning and purpose. It was a good day.

Afterwards, I spoke with a legislator who was attending the event. She was new to manufactured housing. Roughly paraphrasing her words, she said “I always think of manufactured housing as something to be avoided, people losing their equity and not having good quality homes. This is not like that.”

On this day, she saw Parrish Manor. She saw mobile homes that were outfitted with heat pumps, on manicured lots with sidewalks, street lamps, paved asphalt streetscapes with valley curbs and signage designed for safety. It changed her mind.

But not everyone gets out to visit a good park. Without exposure to these kinds of examples, what is left? Well, a lot of voices will say some of the same comments that this representative was making prior to her epiphany.

I hear people saying that “mobile homes don’t appreciate.” Well, perhaps they do not, but perhaps they do. I would argue that they can. Certainly, those mobile home owners who received $1 million for each of their lots in Florida last year managed to get some equity. For many, it is just the opposite — they are under water. There are all kinds of experiences for residents of mobile homes. The point is, the financial outcomes are hardly homogenous and for the most part are tied up in a number of dependent factors, such as neighborhood quality, location, proximity to jobs or schools, and infrastructure.

It is just as relevant, though, to gauge the suitability of manufactured housing by comparing how they would be if, alternatively, they were renting a home. Of course, there would be no appreciation at all in a rental unit.

It is a favorable comparison. Any equity that a resident of manufactured housing retains is icing on the cake, by comparison.

It is also relevant. The residents at Homestead Village, which this column has featured in recent weeks, would most likely find their next home in an apartment if they had been forced out. If they had to go rent, a 2 bedroom apartment in Raleigh begins at $500. A lot of people in singlewides, if they had to choose a different mode of home residence, would go into an apartment.

In the Triangle, mobile homes are either cheaper or comparable in price to apartments. The difference is slight, but nonetheless it is apparent. More than half (51.3 percent) of mobile home renters pay below 30 percent of their income on rent. By contrast, only 48 percent of renters in large (more than 20 units) multifamily buildings pay below 30 percent of income. (American Community Survey, 2006, table C25073). When you look at people paying an especially high burden, people in large multifamily apartment buildings are even more likely to be struggling. About 45 percent of those renters in Wake County pay more than 35 percent of their income on rent, compared to just 36.8 percent of mobile home residents.