Real estate is a preoccupation of most American adults in their private lives. Yet it is almost ignored in our public discourse… at least until it becomes unavoidable, as during the current subprime mortgage meltdown, which is endangering the entire economy.
Real estate is famously all about "location, location, location", which generally means "neighbors, neighbors, neighbors". In our era of cheap electronic playthings, the worst aspect of being poor is not that you can't buy enough stuff—it's that you have to live next to other poor people.
In urban America, "location" is in large part about race. Thus, our elites, when choosing where to live and where to send their children to school, exhibit the same race realism in their personal affairs that they persecute when a James Watson displays it in public.
Fortunately, a book by sociologists William Julius Wilson and Richard P. Taub, There Goes the Neighborhood: Racial, Ethnic, and Class Tensions in Four Chicago Neighborhoods and Their Meaning for America, bridges the gaping Real Estate Chasm in American intellectual life by profiling in detail four unfashionable neighborhoods on the South Side of Chicago. It's based on field observations conducted by nine grad students from 1993 through 1995. (No explanation is given for why they waited so long before publishing their results.)
Having lived in Chicago for 18 years, I find There Goes the Neighborhood rings true to me. But it tends to slide over the underlying explanations, which I'll try to supply from my family history at the end of this article.
Although he moved from the University of Chicago to Harvard in 1996, William Julius Wilson is the prime representative today of the most famous tradition of academic sociology in America: the Chicago School. In fact, University of Chicago sociologists defined the 77 neighborhoods of Chicago back in the 1920s.
"These miseducated brothers, like that sociologist at the University of Chicago, talking about 'the declining significance of race.' Now, what country is he living in?"
(P. 283 of Obama's autobiography Dreams From My Father).
And, judging from Wilson's latest book, Obama's Rev. Dr. has a point, at least when it comes to housing. (Indeed, one of the side benefits of There Goes the Neighborhood is that it offers a perspective that the Main Stream Media has been reluctant to share with you about where the supposedly "postracial" Democratic Presidential contender from the South Side is actually coming from.)
Wilson and Taub conclude:
"Indeed, many citizens still cling to the notion that the residential desegregation of neighborhoods is achievable. The research conducted for this book, however, strongly suggests that neighborhoods in urban America, especially in large metropolitan areas like Chicago, are likely to remain divided, racially and culturally."
In these four neighborhoods, each of which was virtually all white in 1960, race remains an obsession. Homeowners who get along OK with people of other races in the workplace do not want their colleagues moving onto their street.
Wilson and Taub give pseudonyms to the four neighborhoods profiled in the book. According to Google, nobody has previously broken their code. It's easy to do, however, just by entering each district's reported population from the 2000 Census into a search engine. For the benefit of Chicagoans, I'll use the real names of the neighborhoods.
As of the 2000 Census, Clearing is 76 percent white and 21 percent Latino, but less than 1 percent black—and the residents intend to keep it that way. The authors comment:
"Residents felt that Beltway [Clearing] was one of the last places where white working-class Chicagoans could live among people whom they felt shared their backgrounds, experiences, and values."
The white Clearingites have built an impressive collection of institutions to put on events such as block parties, church festivals, picnics, and parades. The implicit goal is to make Clearing a friendly, effective community ... for the people who already live there. Homeowners work hard to foster local pride and make sure that everybody keeps their property up, instantly painting over graffiti so that the forces of disorder and decay cannot undermine property values and allow in less house-proud people, which could set off a vicious cycle that might turn Clearing into a slum.
The Wilson-Taub team's observations confirm the finding of prominent Harvard political scientist Robert D. Putnam, the author of the bestseller Bowling Alone on the decline of social capital, that ethnic diversity (especially immigration) undermines trust. In 2006, Putnam blurted out (to his subsequent regret):
"In the presence of diversity, we hunker down. We act like turtles. The effect of diversity is worse than had been imagined."
(That's Bohemian with a capital "B", as in Good King Wenceslas—the small "b" bohemians congregate in Wicker Park and Bucktown, the hipster havens made notorious by alternative rocker Liz Phair's 1993 album Exile in Guyville.)
In contrast to Clearing, where whites were still holding on as the majority, in Brighton by 2000 an influx of Hispanics had left the demographic balance Park almost exactly the reverse of Clearing. Latinos were dominant.
Brighton Park is lacking in the kind of community spirit found in Clearing. Most non-religious organizations, such as Kiwanis, are dying because Hispanics don't volunteer much.
Wilson and Taub note:
"However, whites and Latinos in Dover [Brighton Park] did find common ground in their response to African Americans. Latinos in Dover—even the recent immigrants—were no more open to living with black Americans than were the white residents."
Of course, the reason Brighton Park's public schools are overcrowded is because so many Mexicans with large families have moved in. But many are second generation, and they have started to assimilate toward American norms, such as playing the race card to avoid taking responsibility. A local Latino newspaper framed the overcrowding as the result of … anti-Hispanic discrimination. It editorialized:
"We have 40 to 50 kids in a classroom. Next year they'll be taking the library and the computer room. This is how they discriminate against our kids."
It's worth noting that the Mexicans didn't themselves start crying "discrimination!" White liberals, such as a local school principal, introduced the idea to them. Having heard it, Hispanics hoping to build ethnic activist careers for themselves took it from there.
Whatever you want to call it, Little Village shows the likely future of Brighton Park … and Clearing, too, if Clearing's residents let down their guard. This chapter in the book is entitled "A Taste of Mexico in Chicago".
Little Village is virtually all-Hispanic except for a few elderly whites too poor to move; and an all-black strip along its north edge. It suffers from "extreme overcrowding" and is so depressing that, the authors remark, "it was not a neighborhood that held even the Mexican residents". If the residents of Little Village could get organized enough to agree on a neighborhood motto, it would be "Sal Si Puedes"—"Leave If You Can".
But they can't get organized. Little Village has almost nothing in the way of community associations. In a footnote, Wilson and Taub admit, "Residents of Archer Park [Little Village] do not tend to organize outside of kinship…"
Government officials' attempts to get residents to take some responsibility for their own community have been a complete bust. Indeed,
"Even when people were giving things away, though, organized activity came from the top down and did not necessarily draw a crowd. In a telling example, a city government-organized neighborhood festival at a local park served hamburgers and hot dogs instead of Mexican food. The few neighborhood people who attended brought their own tacos, tamales, and the like with them."
While Clearing bustles with get-togethers of local groups, the coordinating meetings for Little Village's social services organizations were held in downtown Chicago on the top floor of the skyscraper of the First Chicago Bank (which was trying to win pro-minority Brownie points with federal bank regulators):
"The people who seemed most concerned about the community were … service providers who did not live there, but were there in their professional roles rather than as concerned citizens. Meetings could be held downtown at the start of the working day because, in effect, people were being paid to attend them."
Avalon Park is a photographic negative of Clearing. It features many community organizations that are also intended to keep poor blacks out. While Clearing's clubs are have a covert racial agenda, Avalon Park's are overtly so, even though nobody except other blacks is threatening to move in. (Judging from the Afrocentrist attitudes expressed in the book, I would guess that more than a few Avalon Park residents attend Rev. Dr. Wright's megachurch on 95th St.)
Both Clearing and Avalon Park benefit from Chicago's law requiring municipal employees to live in the city. These two places are about as suburban as you can get within Chicago, so government workers comprise 21 percent of the workforce in white Clearing and 27 percent in black Avalon Park.
Civil servants tend to make good, stable neighbors. They have to pass tests to get their jobs, so they can't be really stupid. They don't get fired, so they can put down roots in one place. Many don't work long hours, so they have time to volunteer.
Ironically, the two decent neighborhoods in the study, Clearing and Avalon Park, have been preserved because Chicago's countless bad neighborhoods need so many government workers to babysit their dysfunctions. For instance, There Goes the Neighborhood explains that in heavily immigrant Little Village:
"There was a vast array of paid service providers in the neighborhood. … There was a school for at-risk youth, and clubs … for youth not particularly at risk."
The book goes on to list some of the other taxpayer-supported programs in this neighborhood full of illegal immigrants: programs for pregnant women, for parents, for AIDS patients, for people who don't yet have AIDS, for sick people, for the mentally ill, for gang-prevention, for seniors, for high school graduates, for high school dropouts, and for people who never went to high school and want to learn English so they can vote.
Not many of the Mexican immigrants do become voters, though. So it's easy to see why white and black politicians want more of them, no matter how much the general citizenry doesn't. Illegal immigrants and their descendents provide countless jobs for politically well-connected white and black civil servants, while only very slowly grabbing political power themselves.
Keep in mind that Chicago is, compared to, say, Detroit or Cleveland, a successful city. Under the Daley Dynasty's crooked but sensible leadership, Chicago has been able to hang on to many tax-generating big corporations and tax-consuming but neighborhood-preserving civil servants.
In the long run, though—which might prove to be arriving shortly—this tax gold mine is going to run out. Wilson and Taub warn:
"Moreover, with minorities, notably Latinos, displacing whites as a growing share of the population, the implications for urban tax bases are profound."
Still, as refreshing as There Goes the Neighborhood is in an intellectual culture starved of clear thinking (or any thinking, for that matter) about real estate, it could be even more explicit about the underlying logic.
So, let me tell you some personal real estate stories to illustrate how the world really works.
To begin: Why, besides alliteration, does Lakefront and Liberal always go together in Chicago?
Home prices are so high near Chicago's main asset, Lake Michigan, that only upper-middle class people can afford to live there. Thus, race doesn't much matter. In lower rent districts, however, race trumps class. As many Chicagoans testify in There Goes the Neighborhood, among working class people the traits that make a good neighbor—such as having children who don't commit crimes and who aren't disruptive in school—are most often found among whites, followed by Latinos, followed by African-Americans. (Asians would probably come in first, but they don't live in these four areas.) And whites are distributed higher on the class spectrum on average.
When my wife and I bought a condominium in Chicago in 1988, we picked highly diverse Uptown on the northern lakefront by following the "value investing" logic devised by Warren Buffett's mentor Benjamin Graham: look for stocks that are underpriced relative to their intrinsic value. If the people running the company currently are no good, they are likely to be replaced.
Similarly, we reasoned that Chicago's foremost intrinsic asset is its magnificent lakefront, with parks running for 18 miles along Lake Michigan. In Uptown we could buy a condo on the first block in from the waterfront park, just a ten minute stroll to two beaches, for a small fraction of what we'd pay three miles to the south in stylish Lincoln Park.
The downside was that our neighborhood hadn't been "discovered" yet. So we'd have to put up with a lot of dicey neighbors just a block or two away, until the whole neighborhood was inevitably gentrified.
That was our thinking. But for ten long years the price of condos in the neighborhood was almost dead flat. We kept telling ourselves that the market was wrong, that the intrinsic appeal of living 90 seconds from Lake Shore Drive, with its 20 minute commute to the Loop, would eventually overrule faddish whims that were propelling prices in innately crummy neighborhoods like Bucktown into the stratosphere.
Finally, in the late 1990s, the world suddenly came to agree with us, and we sold out in 2000 at a decent profit.
On the other hand, even in 1988, we still had to pay far more per square foot in Uptown than in Wilson and Taub's four neighborhoods. So we were assured of genteel neighbors, whatever their race. One of the two black owners of units in our six-flat had an MBA from the University of Chicago and the other was a CPA from Trinidad.
Away from the lake, though, there are fewer intrinsic assets to distinguish one area from another other than the people who live there and the strength of their will to stay there.
The architectural quality of the housing stock only matters in extreme cases. The now-poorer South Side often has better-designed vintage buildings than the now-richer North Side.
Yet, there's one place in the Chicago area where architecture really did make a difference. When I moved to Chicago to take a job in 1982, my father wanted to visit his old house in Oak Park, the first suburb west of the worst ghettos of Chicago, which he had lived in until his family moved to California in 1929. I tried to talk him out of it, assuming that his neighborhood in Oak Park would now be a slum.
Yet when we arrived at 1028 Superior St., the sidewalk was full of tourists snapping photographs—not of his house, although it was beautifully preserved, but of the one next door at 333 Forest. This Moore-Dugal House was originally designed by America's most famous architect, Frank Lloyd Wright, in 1895 as a large Tudor cottage. After it burned in a Christmas Day fire 85 years ago that my father still remembers, Wright rebuilt it for the Moores as an immense Anglo-Japanese curiosity. There are a dozen other Wright-designed homes, including Wright's own house, within two blocks.
Oak Park, where Wright invented his "Prairie Style", survived the racial changes of the 1960s and 1970s, when much of adjacent Chicago, including the Austin neighborhood right across the street, turned into a giant slum.
Why? Because, with a total of 25 Frank Lloyd Wright buildings as well as many other superb structures, it has the most architecturally significant housing stock in America.
Oak Park homeowners, with so much to lose, successfully resisted tipping to all black by instituting "a black a block" program in which real estate agents were only allowed to sell one home per block to blacks. It was flagrantly illegal under the 1968 Fair Housing Act, but it did save America's most aesthetically important neighborhood. [Reconsidering The Oak Park Strategy: The Conundrums Of Integration, by Evan McKenzie and Jay Ruby, (PDF)]
In contrast, Chicago's working class Austin neighborhood, just to the east of Oak Park, didn't have any epochal architecture. So it wasn't as lucky. There, my in-laws suffered the dire consequences of rapid ethnic change.
My late father-in-law was a classical musician and union leader and my late mother-in-law, who may have been an even better musician but who suffered too much stage fright to play concerts, was a public school special education teacher. As late as 1966, Austin was all-white, with so little crime that my future wife walked a mile to first grade with her third grade sister every day. After school, the sidewalks of this neighborhood of three story condominiums were packed with children out playing while their mothers made dinner. (These days, when kids are chauffeured everywhere by their parents, the old Austin sounds like it was a paradise for both children and parents.)
After World War One, most blacks in Chicago had been restricted by chicanery and violence to living in a small, densely populated district on the South Side. This complete segregation broke down in the late 1950s. And then the increase in welfare payments in the progressive Illinois of the 1960s brought up from the rural South a lower class of blacks.
When Austin started to integrate around 1966, many of my in-laws' friends told them to sell out as soon as possible, before the neighborhood went all black.
But, as good liberals, my in-laws stood up for integration. And the first blacks moving in were middle class. So, they joined an anti-tipping liberal group of neighborhood home-owners started by fellow musician Father Edward McKenna—a composer who has written a couple of Irish-themed operas with librettos by Father Andrew Greeley. Members swore to each other they wouldn't sell no matter how black the neighborhood got.
Well, the crime rate, which had been non-existent when the neighborhood was all white, started to soar. Housing prices fell, and soon the middle class blacks were selling out because underclass blacks were moving in. The members of the pro-integration group started to break their promises and move out. My in-laws stuck with their vows. But, then in 1968, rioters looted all the stores in the neighborhood after Martin Luther King was murdered. (My future wife called her mother to the window: "Hey, Mom! Look—free TVs! Let's get some!" Her mother sent her to her room). And their small children, my future wife included, were mugged three times on their street.
So, my in-laws finally sold, losing about half of their life savings. They bought a farm 65 miles out of town, where they didn't have indoor plumbing for their first two years of fixing it up.
The last time I visited Austin—in the 1990s, three decades later—it looked like a war zone, with about one third of the houses abandoned or torn down.
Today, immigration causes similar, although perhaps generally not quite as tumultuous, disruptions in the lives of American citizens.
It has been exhaustively demonstrated that there is no economic rationale for the post-1965 influx.
Why do we need the aggravation?