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Economic Diversity Rises Bringing Home Prices With it

On Thursday, Trulia released a housing trends report that found that in the last five years while expensive neighborhood prices maintained their high-prices, previously moderately-priced neighborhoods are seeing  affordability fall. In its “Housing Diversity: What Home Values Say About Inequality” report, the real estate site also found that there is a strong correlation between decreasing housing affordability and the increasing racial and income divide within a metro.

In order to gauge the unevenness found, Trulia created an index that measures the segregation of home values in metros across the U.S. by looking at the median prices in the lowest and highest tiers and comparing that to the average price in that metro.

Neighborhoods were ranked based on how far the average home value strays from the metro’s average home value. The index measures segregation of home values on a 100-point scale and reflects the share of neighborhoods in the very high value and very low value category. The closer the index is to 100, the more segregated the area is by home values.

Trulia used Detroit as an example of how their index is capturing growing inequity tied to affordability,  reporting that in 2016 the home value index for the Motor City was 72.2, meaning that Detroit had a high level of home value segregation with 72.2 percent of its neighborhoods falling in the most extreme value categories.

Trulia hopes that local governments will use the index to better identify and address persistent economic and racial segregation in their neighborhoods. Other findings from the report:

·         A little more than half of the 100 biggest metros have less neighborhoods classified as very low value compared to five years ago, indicating that recovery from the housing crisis

·         As home values become more polarized in a market, racial segregation increases. Among the largest 100 metros, home-value segregation tends to increase as racial segregation increases.

·         The largest segregation of home values in the last year were Detroit, Milwaukee, Fairfield County, Connecticut, Birmingham, Alabama, and Dayton, Ohio.

To see the full findings, including which markets are closing the gap in terms of home value segregation, click here.

 

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