A History Of Homeownership And Heartbreak In East Winston

Over the past several years, home prices in Forsyth County have soared, and today, it's a
seller's market. But not in many of the region's African-American neighborhoods.

“My house dropped from $128 thousand to $68 thousand. And with a stroke of a pen, I lost $60 thousand dollars in value," says Yolanda Hairston, a homeowner in the East Winston neighborhood. 

This week, WFDD is examining the ongoing struggles of black homeowners in the Triad, ten years after the housing bubble burst.

Salem College Professor of Economics Megan Regan is a Visiting Fellow at the Center for the Study of Economic Mobility (CSEM) at Winston Salem State University. Her current research centers around housing conditions in East Winston. WFDD's David Ford spoke with her to find out why black home values continue to lag far behind, even a decade after the Great Recession.

Interview Highlights

On the North Carolina Machinery Act that's used to appraise properties: 

To me, it's inefficient to reassess values every four years when that makes the home values much more subject to the whim of this market volatility, which should not be in housing. But also from the city's perspective, it costs a lot of money. Every time they have to send assessors out every four years, that's a lot of expense from the payroll perspective. And when they hit it closer to a peak or a trough, they're going to have to do a lot more reassessment as well as deal with public outcry. It's also inefficient when the government is unable to predict from a longer-term perspective what the tax revenue is going to look like. So, both from the consumer up-and-down volatility: "What's my asset worth? Should I buy or sell? Should I be worried?" But also from the city's perspective of, ‘What's our tax revenue going to look like year to year?' It seems very inefficient to me to do it every four years.

From the equation perspective — I'm an economist, and we love a good equation — you have an equation that's said to be fair and equitable, but it's still an equation that's very sensitive to some of the market factors that are known to not be fair and equitable. So, if it is sensitive to immediately [or] recently sold homes, which include foreclosures, short sales, we have to recognize that there is some inequity among which homes go into foreclosure and short sale, which neighborhoods are more likely to attract investors to improve the homes — versus let them go into complete disrepair — than other neighborhoods. So, we have to take a step back from just saying, "Well, I have this equation." That's like saying, I can step on a scale and you can tell me if I'm healthy or not. I'm five-foot-tall, so my weight is going to be very different from someone who's six foot. If you just say, "Well, here's the number — you're healthy," maybe we actually have to look at the scale and say, "the scale is not the best way to measure health."

Some people who hear about someone else's property being assessed for half of its original value will say, "I wish that would happen to me because I'd only have to pay half as much in property taxes each year." Do they have a point?

Perhaps it's a win in the short run…perhaps. But it's not in the long run. First of all, I would be very interested to see if people who are living in upper income neighborhoods would be delighted to see their assessed value go down by fifty percent because they were excited to pay less taxes. People look at a home as an asset investment — a long-term investment that is greater than just a place to live in. So, just like people are panicking when they see the stock market falling, their wealth, their take-home money hasn't directly been affected yet, but it's an indicator of their wealth. They feel poorer when the stock markets are going lower. And so, when you assess someone's home, their long-term investment, at fifty percent of the value it had just a few years ago, they feel less wealthy. Their investment has tanked in the market.

It's not so shortsighted to say this year I pay less taxes. You also have to look at the community impact. If neighborhoods are paying fifty percent less taxes, that's half as much money going to improve their neighborhoods, their roads, their schools. And so, it becomes this negative multiplier effect that the community has less revenue as well as less wealth.

Give us a sense of some of the major economic realities that led us to where we are today in places like East Winston, and African-American neighborhoods across the state.

I think it's fair to say [it's] all across the nation. And it began when cities started developing in the Jim Crow era, post-Civil War, and around the Industrial Revolution. It is not happenstance how communities were set up from the perspective of the land that was relegated for African-American communities. It was always the least valuable, the least economically desirable land.

Let's just look from a geographic perspective of city planning. You often have your black communities, the segregated side of your communities, on the east side of town. That's from a pollution perspective. Air quality is worse on the east side of town in our hemisphere. So, just from an environmental perspective, the air is worse, the land is worse, all of these features start to determine which land is deemed less economically valuable and therefore relegated to black or minority and segregated communities. And that's gone back as far as the United States has developed city planning.

The other economic realities that went on ahead of the housing crisis — when we started deregulating the banking system in the late 90s, early 2000s — is that the subprime lending or predatory lending was not to improve the access to owning a home. It was to profit maximize from a bank's perspective, and they were seeking profit by giving these predatory loans — complex loans that were preying on people's dreams of owning a home — but really were more from that predatory perspective. They were there to inflate the interest rates that people were paying — balloon payments — prey upon that vulnerability of dreaming of owning a home. "Don't worry, you can afford it. Don't worry, the payments won't increase that much." And then these were the loans that were given to people that were perceived as the least credit worthy. So, the loans then ballooned or they became toxic. The banks didn't have to pay the full brunt of the price. Taxpayers bailed out the banks. But from a neighborhood or a local community perspective, the people who did pay the losses who were not bailed out tended to be our most disenfranchised people already. So, they suffered foreclosure at much higher rates than wealthier, more affluent [people] ahead of the recession, tending to be white communities. And during the recession, which banks worked with homeowners and which banks let more properties go into foreclosure was, again, based on different neighborhood perceptions.

So, it's no random chance that more homes in East Winston went into foreclosure ahead of the storm. After the housing crisis, which banks were willing to work with certain homeowners, and not others? And as the spiral of foreclosures went into effect, that lowered and lowered the values of homes in certain neighborhoods which were already perceived as less economically desirable because of their location — less access to quality schools, less access to grocery markets, less access to capital markets, [or] banks that had competitive interest rates.