Kensington: The Economics of a Fractured Community

Longtime Kensington resident and self-described activist Jamie Moffett, 36, is working alongside fellow residents to use homeownership as a way to revitalize the neighborhood.

Moffett’s initiative, Kensington Renewal, works to rehab blighted houses and turn them into owner-occupied homes within its targeted area, a triangular block bordered by H and Ontario streets, down to the El.

“The idea that I’m trying to do here is take preexisting families that are renting in the neighborhood and turn them into homeowners which will lock them into the neighborhood, maintain the cultural fabric and decrease their monthly cost,” Moffett said.

Ray Colon, 41, lives adjacent to Moffett’s studio and the Kensington Renewal headquarters at 923 E. Westmoreland St. Colon has been living there for 20 years.

“Only in the past five years have conditions improved, with Jamie and new neighbors moving. Crime and drugs have decreased,” Colon said.

Colon said he believes homeownership has been crucial in transforming his neighborhood.  “That’s what makes the neighborhood better. You don’t have different people coming in every six months, destroying the properties,” Colon said.

“I was deciding to leave when it started getting real bad but now the neighborhood’s turning around. I’ll stay there another 20 more years,” Colon said.

Neighborhood improvement, specifically housing, is feared by many residents in low-income neighborhoods due to the high prices that gentrification brings. However, that is not the goal of Kensington Renewal.

Instead, Kensington Renewal is trying to implement what Moffett calls “gentrification with justice,”  or gentrification that allows current residents to continue to afford their homes.

Kensington Renewal’s goal of homeownership is being implemented in an area with a disproportionately low rate of homeownership. This can be attributed to several things beyond simple poverty, including bank mortgage lending practices.

The practice of relying on comparables, for instance, is a form of appraisal based upon the surrounding properties that have similar characteristics. If a majority of the houses in a specific neighborhood are appraised at $30,000, a potential buyer would not be given a loan for a home that was actually worth $80,000.  This is due to the fact that the bank cannot guarantee it is actually worth the price as based on its surroundings.

“It’s really important to establish a community of owner-occupied homes to create comparables that will allow more available loans, resulting in homeownership,” Moffett said.

Comparables are not the only barrier. The state’s predatory lending laws place numerous restrictions on loans for homes prone to be targeted by predatory lenders.  State law requires closing costs and other such fees to only equal a certain percentage of the overall loan, causing loans for homes valued below $50,000 to trigger red flags.

Both predatory lending laws and comparables are economic barriers to homeownership. Some see it as a logical reality while others see such barriers as having a deeper, more sinister meaning.

Redlining is the historic and discriminatory practice where banks “redline” an area and refuse to invest in it. The practice commonly targeted inner-city, predominantly black neighborhoods. This practice was made illegal by the Fair Housing Act of 1968 in an effort to combat the racist lending practices. Though traditional redlining has been outlawed, Moffett believes it still exists in a more subtle form.

“[Redlining] hasn’t changed,” said Mofett, who claims the housing situation in Kensington is a form of economic redlining. “It’s not racially motivated, but it’s based on a property value and those property values correlate to an area like ours.”

More than just denying people the right to own their own home, the economics of homeownership in the neighborhood are directly linked to the levels of crime in the area.

A study done by researchers at the University of North Carolina Center for Community Capital has found a clear link between homeownership and people’s perception of crime.

The findings of the study show homeownership, coupled with a traditional 30-year fixed-rate mortgage, is a source for social and economic benefit to low-income areas.

Researchers interviewed nearly 2,000 low-income homeowners and renters.  Through the comparison of renters’ perceptions with that of homeowners, researchers found homeownership does cause residents to be proactive in improving their community. However, the renting populations are more inclined to be apathetic and noncommittal in regards to crime.

Kensington Renewal is anything but apathetic to the housing situation. In an effort to validate the assumptions of Kensington Renewal, researchers at Rutgers University Center on Public Security conducted a study on the correlation between vacant properties and gun shootings in Kensington.

Through the use of spatial analysis and risk terrain modeling, researchers from the University Center on Public Security found that “shootings are statistically likely to occur at places in close proximity to vacant parcels.”

Research shows that 73 percent of all gun shooting-related homicides occur within a two-block radius of an abandoned property.

Within Kensington Renewal’s general target area, there are 395 vacant properties, accounting for about three percent of the area’s landscape. Despite this small percentage, gun-related crimes are spatially correlated to that vacant three percent.

In 2011, there were 128 gun related crimes located in this area. All but two of the crimes occurred within one block from a vacant property.

According to the University Center on Public Security, “the chance of a gun shooting decreases by more than 24 percent for every one block (367ft.) moved away from a vacant property.” Crime is often a measure of an area’s livability. Such a high crime rate surrounding abandoned properties is, in addition to bank’s lending restrictions, a major homeownership deterrent.

As vacant properties are rehabbed into home owned properties, crime decreases. A study by the University of Nebraska at Omaha examined the external effect of homeownership on crime. The process of conducting the study is based upon the social interaction model that hypothesizes “individual behavior depends not only on individual incentives but also on the behavior of peers and neighbors,” according to the University of Nebraska of Omaha researchers.

Researchers found a strong relationship between rising city crime rates and urban flight. If a person owns a home, they have more to lose if they’re prosecuted for committing a crime and therefore, obviously have an incentive to follow the law. The study found that renters are more likely to commit crimes due to their emotional detachment from the neighborhood.

According to a study conducted by the University of Nebraska of Omaha, results suggest that “higher homeownership rates lead to lower crime rates in a given time period.”

These studies are what affirmed Moffett’s desire to continue with Kensington Renewal.

A home located at 921 E. Westmoreland St. was nearly burned to the ground in a retaliation against the block residents’ efforts to reduce drug dealing and other related crimes on their street, Moffett said.

Though it was considered by the insurance company to be a loss, Kensington Renewal purchased the home for only $2,800. Funds for the home were provided by the generosity of a local lending organization, as well as a small crowd funding campaign, which raised $1,500.

Employing local workers as well as volunteers, Moffett rehabbed the house in seven months. It was transformed from a burnt shell into a Fishtown-inspired home with exposed brick and beams, a Juliet balcony, plants, hardwood floors and accent lighting hung on the backyard fence, surrounding a small but lush patch of grass.

The home has been claimed by a young couple. After a few months of leasing, they will purchase the home, thus achieving the goal of Kensington Renewal.

Moffett is excited, not only about the future of his initiative, but also the future of the family who will be living in the rehabbed house. The young couple will “have enough equity on their own to take out a second mortgage or a home equity line of credit to help their children go to college. That changes everything ,” Moffett said. “That changes the trajectory of a family for generations.”

For another story on Kensington, visit Kensington: Economics of Property Development .