A new study found that homes in predominantly white neighborhoods in the Milwaukee area are worth a staggering 382% more than homes in predominantly Black neighborhoods, making the Milwaukee metropolitan area the sixth-most inequitable region for real estate in the U.S., according to the real estate data company Clever.
The study further confirms that segregation in the Milwaukee area is among the worst in the nation.
The study, “America’s Housing Inequality and the Racial Wealth Divide,” found that listing prices for homes in area ZIP codes where the majority of residents are Black are worth an average of $97,536, compared to an average of $470,030 for homes in ZIP codes where there’s not a Black majority of residents.
The study focused on the housing market in Milwaukee, Waukesha, Washington and Ozaukee counties.
Lead researcher Dr. Francesca Ortegren said the study reinforced recent reports about the racial wealth gap in the nation. A 2019 report from the U.S. Census Bureau found that the average Black household in America has less than one-tenth the wealth of a typical white household.
The Clever study found that homes in predominantly Black neighborhoods are worth less than half as much as homes in predominantly white neighborhoods.
“When we got into those areas, that was really surprising. I didn’t expect to see such a huge difference in home values,” Ortegren said.
‘It’s an extremely unfortunate circumstance’
Mike Ruzicka, president of the Greater Milwaukee Association of Realtors, said the study is disappointing, but he wasn’t surprised.
“It’s an extremely unfortunate circumstance in our market right now,” Ruzicka said.
Ruzicka said the organized real estate community, the nonprofit sector and business leaders understand the inequity in the housing market and are trying to change it.
But it’s not an easy fix.
“It’s just an extremely difficult thing to change,” he said. “I wish it was as easy as picking off one criteria that would make an improvement, but there’s so many factors — poverty, racism, job opportunities, transportation — there’s so many things involved.”
Why Milwaukee ranks so low
The Clever national study found that with each 1% increase in the Black proportion of the population in a particular ZIP code, home values decrease by approximately $2,581.
Milwaukee ranks sixth on the list, behind Flint, Michigan; Kansas City, Missouri; Toledo, Ohio; Miami-Fort Lauderdale-West Palm Beach, Florida; and Bridgeport-Stamford-Norwalk, Connecticut.
Ortegren, along with co-author Michelle Delgado, looked at historical home values in specified ZIP codes, along with 2020 home values, including the median list price, median days on the market and median price per square foot.
The study uses publicly available national housing data from Realtor.com, Zillow and the U.S. Census. It doesn’t include all “for sale” properties available, such as apartment buildings, but rather only single-family homes.
The report includes 76 ZIP codes in the Milwaukee metropolitan region. Of those 76 ZIP codes, only seven have a majority of Black residents, according to recent census data. Those ZIP codes are all in the city of Milwaukee. Those ZIP codes are 53206, 53209, 53210, 53216, 53218, 53224 and 53225.
There were also several ZIP codes throughout the four counties where less than 1% of the population included Black residents.
Some ZIP codes in Washington and Ozaukee counties had a median listing price for homes of more than $450,000. Meanwhile, in ZIP codes where the majority of residents are Black, listing prices hover at about $100,000.
“Part of it (the study) was to show that this disparity does exist in the numbers if you really dive in, and also what can we really do if we really started focusing on closing those gaps?” Ortegren said.
Milwaukee also has the second-lowest Black homeownership rate — 27.2% — among the nation’s largest metropolitan areas, according to a July 2020 report by the University of Wisconsin-Milwaukee’s Center for Economic Development.
Segregation in the area is a multifaceted issue. Redlining, racially restrictive housing covenants and zoning laws, real estate agents who steered potential home buyers to specific neighborhoods and government investments in suburbs, which hastened white flight, all contribute to present-day segregation in the area.
Appraisers of color
A 2018 study from The Brookings Institution compared the values of homes in neighborhoods based on the percentage of the Black population while considering physical qualities of the home and neighborhood amenities.
That study found that the Milwaukee metropolitan area has an average home devaluation of negative 34.3% in majority Black neighborhoods versus neighborhoods with no Black residents. The study found that as the number of Black residents rises, the median list price of owner-occupied homes decreases.
Bethany Sanchez, senior administrator for fair lending with the Metropolitan Milwaukee Fair Housing Council, said there’s a “legacy of discrimination” in the appraisal industry.
She wants to see more appraisers of color who know the areas they’re working in. She’s working with MKE United to help change that.
“We are doing some work to raise awareness, and there’s been discussions about training people of color to become appraisers, because if you’re not familiar with the neighborhood that you’re valuing, how can you give it an accurate assessment,” Sanchez said.
‘It’s never surprising to Black people’
Tim Ball has lived in a home in the 53216 ZIP code for more than 20 years. That’s one of seven ZIP codes in Milwaukee where the majority of residents are Black.
He said the findings in the report weren’t surprising.
“It’s never surprising to Black people,” Ball said of studies that address segregation and inequity in the Milwaukee area.
He paid $146,000 for his home just over 20 years ago.
He recently had his home assessed. That assessment listed his home at $84,000, a drop of $62,000.
He’s looking to move soon.
He’s not worried he won’t be able to sell his home because of the red hot market in the area. But he is worried he’ll get a low offer.
“They keep selling houses over here for low costs,” Ball said.
Crowley promises action
Milwaukee County Executive David Crowley said he believes the coronavirus pandemic also negatively affected the Black community and escalated some of these disparities.
“The county is committed to addressing some of the problems and disparities when it comes to the Black community and homeownership,” Crowley said.
Crowley added that some Milwaukee County municipalities recently addressed adding more affordable housing to the area.
Shorewood decided to invest $2.5 million toward affordable housing. Wauwatosa is also looking at adding more affordable housing soon.
“It’s not just about looking to the future and identifying the future problems that we have ahead of us, but we also have to make sure that we’re righting the wrongs of our past and doing whatever we can to make sure that people are valued, that we want them to be at the table and that we’re willing to invest in their well-being for the long haul,” Crowley said.
Ruzicka said the Greater Milwaukee Association of Realtors has an Equal Opportunity Committee. They’re working on this “multifaceted issue” as well.
Ruzicka suggested looking at other housing markets that have made improvements when it comes to inequity.
“We can’t stop,” he said. “We’ve got to keep pushing to improve things.”
Evan Casey can be reached at 414-403-4391 or firstname.lastname@example.org. Follow him on Twitter @ecaseymedia.