Redfin Report: Homes Cost 38% More in Neighborhoods That Offer the Best Shot at Upward Mobility
- None.
- None.
The typical home purchased in high-opportunity
The report is based on an analysis of home sales in 100 of the most populous
People in high-opportunity neighborhoods are more likely than those in low-opportunity neighborhoods to live among highly rated schools, professional networking opportunities, large numbers of college graduates and low rates of poverty and crime. High-opportunity neighborhoods also have larger concentrations of two-parent households, along with high levels of income inequality and segregation—meaning they tend to skew wealthy and white. The methodology Redfin used to measure opportunity was developed by Harvard University researcher Raj Chetty.
“It’s prohibitively expensive for many families—particularly those of color—to access the neighborhoods that offer children the best shot at financial success,” said Redfin Deputy Chief Economist Taylor Marr. “Where you grow up lays the groundwork for your future. Kids raised in low-opportunity neighborhoods have a lower chance of getting a good education and well-paying job, growing a robust professional network, building wealth through home equity and staying out of harm’s way. That can perpetuate a cycle of segregation and wealth inequality that can last for generations, with their children and grandchildren often grappling with the same disadvantages.”
The price premium of high-opportunity neighborhoods has shrunk over time, but that’s not because these areas have become more affordable. It’s because many low-opportunity neighborhoods have gentrified and become less affordable.
High-Opportunity Neighborhoods Have More Homes for Sale, But Those Homes Are Less Affordable—Especially for Families of Color
The good news is the lion’s share (
White families have an easier time gaining access to these areas than many families of color. Just
On average, just over one-third (
The Price Premium for Opportunity Is Highest in Segregated Midwestern and Southern Metros
In
Many of the metros where high-opportunity neighborhoods carry hefty home-price premiums grapple with relatively high levels of segregation.
In
Detroit’s high-opportunity neighborhoods overlap with the metro’s predominantly white, suburban areas, while low-opportunity neighborhoods overlap with predominantly nonwhite parts of the urban core.
“Plymouth screams suburbia. It has a quaint little downtown, cute restaurants and coffee shops, highly-rated high schools and an ice-sculpture festival every winter,” said Kate McNeill, Redfin’s market manager in
McNeill continued: “Take Highland Park, a majority Black area that has seen its population decline by
Opportunities for Change: Provide Home-Search Assistance, Subsidize Affordable Housing and Reform Zoning Laws
While low-income families are often concentrated in low-opportunity neighborhoods, research has shown this is rarely a function of choice. Oftentimes, they end up in low-opportunity areas because there are barriers in the home-search process that prevent them from moving to a high-opportunity neighborhood. A 2020 study of housing-voucher recipients in
“Many families reported that they had limited time and resources to search for housing, as they were facing challenges such as domestic violence, mental health conditions, or holding multiple jobs while caring for children as single parents,” wrote the researchers, led by Columbia University’s Peter Bergman and Raj Chetty. “Redesigning affordable housing policies to provide customized assistance in housing search could reduce residential segregation and increase upward mobility substantially.”
In the study, low-income housing-voucher recipients in Washington’s
These strategies used to help renters in
”Local leaders should seek to remove barriers that prevent low-income families from moving into high-opportunity neighborhoods, while also investing in low-opportunity neighborhoods,” Marr said. “In addition to offering assistance during the home-search process, governments can invest more in public schools in low-opportunity neighborhoods, offer affordable housing subsidies and reform zoning laws to allow for more housing in high-opportunity neighborhoods.”
To view the full report, including charts, tables with metro-level data and methodology, please visit: https://www.redfin.com/news/home-price-premium-high-opportunity-neighborhoods
About Redfin
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Source: Redfin
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