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Did the 2010 Dodd–Frank Banking Act deflate property values in low-income neighborhoods?

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  • Craig J. Richardson

    (Winston-Salem State University
    Winston-Salem State University)

  • Zachary D. Blizard

    (Winston-Salem State University)

Abstract

In the wake of the 2008 Great Recession, a section of the Dodd–Frank Act (DFA) ostensibly provided greater protection to low-income borrowers by capping bank charges on small dollar mortgages (defined here as less than $100,000) and requiring more bank oversight by outside auditors. Previous research has shown that both actions had the perverse consequence of reducing the availability of mortgage credit to low-income borrowers. Building on these findings, we investigate the following question: Did the decline in access to credit lead to a decrease in demand for homes in high poverty census tracts, and a corresponding decline in property values in these areas? Using an OLS regression model of home values and census tract data in Forsyth County, North Carolina from 2007 to 2020, we calculate that nominal home values dropped by over 40% in the county’s lowest income census tracts after the institution of the DFA, relative to the rest of the county. Our paper offers evidence that DFA has harmed those that the Act was intended to help.

Suggested Citation

  • Craig J. Richardson & Zachary D. Blizard, 2023. "Did the 2010 Dodd–Frank Banking Act deflate property values in low-income neighborhoods?," Public Choice, Springer, vol. 197(3), pages 433-454, December.
    • Handle: RePEc:kap:pubcho:v:197:y:2023:i:3:d:10.1007_s11127-023-01084-7
    DOI: 10.1007/s11127-023-01084-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Dodd–Frank Act; Property values; Small dollar loans; Neighborhoods; Forsyth County; N.C.; Winston-Salem; N.C.;
    All these keywords.

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other

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