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The Residual Impact of History: Connecting Residential Segregation, Mortgage Redlining, and the Housing Crisis

The Residual Impact of History: Connecting Residential Segregation, Mortgage Redlining, and the Housing Crisis
2009Fair Credit/Fair Housing

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The ongoing wave of foreclosures in Sacramento County have placed the area in a state of economic crisis increasing from a record low of 117 in 2005 to 7,494 in 2007 and 17,801 in 2008. The flurry of news articles covering housing problems in Sacramento reported that the region‟s poorest neighborhoods have been hardest hit by these foreclosures stemming from the current mortgage meltdown. Two neighborhoods in particular have had a more difficult time than others in the region – Oak Park, located a short distance southeast of the central business district, and Del Paso Heights just to the north. Plagued by a rash of abandoned and foreclosed properties, home values in these neighborhoods have plummeted up to 80% of their mid-2006 peak. Many of these properties have remained vacant for over a year causing havoc for local building code inspectors, law enforcement, and residents and add to the growing inventory of homes for sale in the area‟s depressed real estate market. Investors and contractors sifting through the fallout of the mortgage meltdown are now buying houses for what one reporter notes is “less than the cost of a Honda Accord.”

Years of intensive local organizing by community activists and programmatic efforts by the local housing and redevelopment agency have produced increased owner-occupied residency for these neighborhoods. But now, the current wave of foreclosures in Sacramento threatens to strip these neighborhoods of the hard-fought positive gains towards revitalization and stabilization. Confirming the troubling shift from homeowners to investors taking place in these neighborhoods, the local housing agency reported that from August 2007 through July 2008, investors purchased 25 to 50 percent of foreclosed properties in low-income areas.