Real Estate Research provides analysis of topical research and current issues in the fields of housing and real estate economics. Authors for the blog include the Atlanta Fed's Kristopher Gerardi, Carl Hudson, and analysts, as well as the Boston Fed's Christopher Foote and Paul Willen.
August 23, 2013
Does Sprawl Really Cause Segregation?
Many commentators have argued that urban sprawl is highly correlated with racial and income segregation, using places like Atlanta and Detroit as examples of cities with high sprawl and high segregation. But the evidence shows that income segregation is high in dense cities, too.
Two weeks ago, the Economist profiled Atlanta's Cobb County as the poster child for suburban poverty. Then the New York Times, NPR, and other major media outlets reported on a study by the Harvard/Berkeley Equality of Opportunity Project that showed that, of the top 50 cities in America, Atlanta has the lowest rates of intergenerational mobility. That's right—when it comes to the American dream of working hard and seeing your children grow up with more than you did, Atlanta comes in dead last.
So why is income mobility so low in Atlanta? The Equality of Opportunity study was correlational, not causal, leaving commentators a wide open field to speculate. The authors themselves suggest that factors such as residential segregation by income and race, school quality, and social capital are to blame. But many of the media reports blame Atlanta’s sprawl for creating this residential segregation and low upward mobility.
So, for example, Paul Krugman writes, "in Atlanta poor and rich neighborhoods are far apart because, basically, everything is far apart; Atlanta is the Sultan of Sprawl, even more spread out than other major Sun Belt cities.... As a result, disadvantaged workers often find themselves stranded; there may be jobs available somewhere, but they literally can't get there." In other words, Krugman is arguing that sprawl creates increased racial and income segregation, and this segregation creates spatial mismatch between jobs and residences. Consequently, individuals have lower incomes and higher frictional unemployment, and there is lower income mobility.
However, I would argue that it’s far from clear that sprawl causes, or is even correlated with, segregation. The map below shows the isolation of low-income households nationwide. Notice that dense cities in the Northeast and on the West Coast have levels of poverty segregation just as high as the sprawling metropolises of the South and Southwest.
The bar chart below shows the largest cities in America, arrayed from most integrated to most segregated. The cities with the most sprawl are colored red; the most compact are colored teal. We can see that compact New York and sprawling Atlanta have similarly high levels of income segregation, as do Chicago and Detroit. At the lower end of the spectrum, dense Portland and sprawling Tampa are similarly well-integrated.
Is there any relationship between sprawl and segregation? This is a difficult question to answer in part because there are so many different ways to measure sprawl. Some focus on simple population density, others on the presence of a defined cluster at the center of the city. Other metrics of sprawl focus on the connectivity of the street network, or mixed land uses—that is, whether retail, residential, and employment centers are mixed together or require long drives between.
Evidence suggests that in some ways, sprawl increases segregation, and in other ways, it reduces it. One well-regarded study finds that sprawl reduces the black-white housing gap by flattening the bid rent curve in a metro area and making housing affordable to all (Kahn 2001). Another 2003 study by Glaeser and Kahn distinguishes between older cities that mix car and public transportation modes and newer, typically more sprawling cities where cars are the only mode of transit. This 2003 study finds that where residents have a choice between public transport and more expensive, car-based transport, segregation is the result. But new cities where driving is the only option tend to be more integrated than their older, denser counterparts (Glaeser and Kahn 2003).
To take another look at the relationship between sprawl and segregation, below is a scatter plot of poverty segregation against a sprawl index created by Professor Reid Ewing, a pre-eminent expert in the study and measurement of sprawl. A few quick observations: First, the chart shows no strong relationship between sprawl and income segregation. We see the most compact and most sprawling cities at either ends of the spectrum. Second, if there is a general trend, it appears to be slightly positive; more compact development corresponds to higher levels of income segregation.
If we plot a line of best fit, it's in fact slightly positive. That is, income segregation is higher in more compact cities. This positive relationship is true for most measures of sprawl: density, mix of uses, and street connectivity.
Atlanta's high levels of income segregation are troubling, and this recent evidence regarding Atlanta’s low-income mobility is sobering. It's possible that there is some indirect relationship between sprawl and segregation—perhaps sprawl interacts with segregation to produce poor outcomes like low upward mobility. But it's not clear that the cause of Atlanta’s segregation is simply and directly due to sprawl. Compact cities suffer from the same economic segregation, and many sprawling cities enjoy high levels of economic integration.
By Elora Raymond, graduate research assistant, Center for Real Estate Analytics in the Atlanta Fed's research department/PhD student, School of City and Regional Planning, Georgia Institute of Technology
- The Effectiveness of Restrictions of Mortgage Equity Withdrawal in Curtailing Default: The Case of Texas
- Bringing Foreign Investment into Economically Distressed Markets: The EB-5 Immigrant Investor Program (Part II)
- Can the Atlanta Fed Construction and Real Estate Survey Predict Home Sales?
- Bringing Foreign Investment into Economically Distressed Markets: The EB-5 Immigrant Investor Program (Part I)
- The Economic Effects of Urban Renewal
- Real Estate Business Contacts on Target
- Signs Point to Slow but Steady Construction Growth
- Are Single-Family Rental Securitizations Here to Stay?
- Two Views of the Involvement of Credit Rating Agencies in the Mortgage Crisis
- Limiting Property Tax Assessments to Slow Gentrification
- January 2015
- November 2014
- October 2014
- September 2014
- August 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- Affordable housing goals
- Credit conditions
- Expansion of mortgage credit
- Federal Housing Authority
- Financial crisis
- Foreclosure contagion
- Foreclosure laws
- Government-sponsored enterprises
- Homebuyer tax credit
- House price indexes
- Household formations
- Housing boom
- Housing crisis
- Housing demand
- Housing prices
- Income segregation
- Individual Development Account
- Loan modifications
- Monetary policy
- Mortgage crisis
- Mortgage default
- Mortgage interest tax deduction
- Mortgage supply
- Negative equity
- Positive demand shock
- Positive externalities
- Rental homes
- Subprime MBS
- Subprime mortgages
- Supply elasticity
- Upward mobility
- Urban growth