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

Craig J. Richardson () and Zachary D. Blizard ()
Additional contact information
Craig J. Richardson: Winston-Salem State University
Zachary D. Blizard: Winston-Salem State University

Public Choice, 2023, vol. 197, issue 3, No 8, 433-454

Abstract: 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.

Keywords: Dodd–Frank Act; Property values; Small dollar loans; Neighborhoods; Forsyth County; N.C.; Winston-Salem; N.C. (search for similar items in EconPapers)
JEL-codes: R23 R28 R30 R39 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11127-023-01084-7 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:197:y:2023:i:3:d:10.1007_s11127-023-01084-7

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

DOI: 10.1007/s11127-023-01084-7

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().