Issue 514

Diversity Didn’t Cause the Foreclosure Crisis

Solving the problems of the Cities of Carquinez means embracing the subregion's economic, racial, and social diversity.

Urbanist Article

The combination of municipal bankruptcy, high foreclosure rates and the suburbanization of poverty have landed Carquinez cities like Antioch and Vallejo on the front pages of national newspapers. Because the region is also notable for its increasingly racially diverse communities, some are tempted to link the area’s foreclosure crisis (and the related problems of jobs and municipal insolvency) to its demographics. Yet the people who form the communities of color that now make up more than 60 percent of the Cities of Carquinez were simply pursuing the same American Dream that was foundational to many parts of the Bay Area (not to mention the country) but has increasingly become unattainable for working- and middle-class families. We now face a new map of regional inequality, one for which the entire region bears some responsibility, not simply the residents and leaders of southern Solano and eastern Contra Costa counties.

The subject of racial or ethnic change is a sensitive one, and much less straightforward than an issue like foreclosure. Nobody is in favor of high foreclosure rates, while any discussion of who is moving where becomes a debate about choice, about complex questions of whether people are being forced to move – whether because of unaffordable home prices, bad schools or high crime – or whether they are simply making a choice that so many Americans have made before them. In a forthcoming paper in Urban Geography, Alex Schafran and Jake Wegmann address one of the most racist linkages between race and home values by showing clearly that home prices in both Carquinez and in the high-foreclosure, high-diversity cities of San Joaquin and Stanislaus counties rose for more than a decade following the rise in black and Latino migration. Homebuyers were making a seemingly rational decision: to buy a home in a nice community with rising property values, a place that seemed to offer the same suburban dream so many Americans have pursued for generations. In other words, diversity did not cause a drop in property values.

Part I: The Foreclosure Crisis

Starting in 2000, at the beginning of the unprecedented coastal California housing boom, the Cities of Carquinez experienced an uptick in residential real estate value that was dramatic not only in absolute terms but also – and crucially — relative to the core of the San Francisco Bay region. Thousands of families, including large numbers of people with deep roots in communities of color in San Francisco and elsewhere in the center of the Bay Area, seized upon these rising home values as their chance to finally buy into the American Dream, with its promise of better schools, safe streets and spacious homes. Many of them found what they were looking for in the Cities of Carquinez.
But many of these dreams turned out to be built on a foundation of metaphorical quicksand. The period of massive homebuilding, combined with lending on a vast scale to the same minority households that for decades had often been denied credit, coincided with an unprecedented rise in so-called subprime and “Alt A” mortgages. These low- or no-documentation, low- or no-down-payment, variable-rate or even negative amortization loans departed from the traditional norm of the 30-year fixed mortgage with a 20 percent down payment. These exotic mortages — offered to households with poor credit histories, with incomes too low to qualify for “prime” mortgages or with the simple desire to avoid a repeat of the rejection from Main Street banks they had experienced in the past — seemed to open the door to unprecedented new homeownership opportunities in the Cities of Carquinez and similar areas. Crucially, as has now been well documented, people of color were disproportionately likely to have been the recipients of these mortgages, even after taking into account such obvious factors as household income and education. In case after case, these risky mortgage products were aggressively marketed in predominantly African American, Latino and Asian American neighborhoods, even to people who could have qualified for prime mortgages.

Comparing Average Bay Area Home Sales Prices, 2002 Dollars

In the Cities of Carquinez, the bursting of the housing bubble has pushed prices below where they were even prior to the major uptick in housing prices. For example, in 2002 the average house in Antioch sold for half the price of the average house in San Francisco. By, 2010, it sold for a quarter.

The bloom came off the rose beginning in late 2006 and early 2007. As homeowners began to default in fast-increasing numbers around 2006 (Figure 3), the value of residential real estate in relation to the region’s core, plunged with breathtaking rapidity. During the height of the crisis, in 2008, foreclosure rates in the Cities of Carquinez were in some cases more than 1,000 times those in San Francisco, Marin and Silicon Valley.
This dramatic and persistent plunge in real estate values has had an impact on everyone in the Cities of Carquinez, not simply those who took unstable loans or who bought homes they could not afford. Thousands of homeowners now find themselves trapped in homes that have lost value not only in absolute terms but also when measured against the core of the region from which so many came. This includes even those who bought homes they could afford with solid, fixed-rate mortgages during the late 1990s or early 2000s, before the stratospheric growth in housing prices. Now, homeowners who are “underwater” on their mortgages (i.e., they owe more than their homes are worth) in Solano and eastern Contra Costa Counties find themselves unlikely to regain the ground they have lost in the equity of their homes. In 2002, when the spike in prices began, the average home in Antioch was worth roughly half that of an average San Francisco home (Figure 2). By 2010, it was worth a quarter, appraised at almost half its 2002 value even three years after the crash. Meanwhile, San Francisco is now back above 2002 values, and Palo Alto prices are roughly the same as they were at the peak of the bubble, if not higher.

Total Population, 1980–2010


Today, there are over 640,000 people in the Cities of Carquinez, a population nearing that of San Francisco. Since 1980, the population in this area has more than doubled and includes more total growth than San Jose, the Bay Area's largest city. These cities have also gone from a smaller population than Oakland in 1980 to being 250,000 more people than Oakland by 2010.


Average Sales Prices Per Square Foot, All Homes 1989-2009


Square foot prices for housing in cities like San Francisco and San Ramon have dropped from their mid 2000s peak while prices in the Cities of Carquinez have dropped to levels not seen since the 1990s. Even for people who bought an affordable home in the Cities of Carquinez in the 1990s, long before the housing bubble, it is quite possible their homes are worth less today than when they bought them.


Part II: Fiscal Stress

In the wake of the City of Vallejo’s bankruptcy, and the now-global attention focused on Stockton, Northern California has emerged as a center of deep questions about the solvency of American cities. The factors contributing to fiscal stress are numerous, including spending habits and questions of labor contracts and public safety costs. Fiscal stress varies among communities in the Cities of Carquinez but the contribution of rapid growth during the post–Proposition 13, post-Reagan era must be considered in any understanding of fiscal challenges. Antioch, which grew from a small city of just over 40,000 to more than 100,000 people between 1980 and 2010, provides an instructive example, as it came perilously close to bankruptcy in the wake of the crisis and is still coping with a major reduction in city services that was unthinkable a generation ago.

Racial/ethnic Composition, City of Carquinez, 2010

API=Asian Pacific Islander

AIAN=American Indian or Alaskan Native



While both the Cities of Carquinez and the Bay Area overall are diverse places, the Cities of Carquinez are less white and Asian and more black and Latino than the region overall. This is mainly due to a very diverse population moving to Cities of Carquinez over recent decades. Similarly, for example, the Latino population in the Cities of Carquinez increased from 36,000 to over 180,000 between 1980 and 2010, reflecting a doubling of the share of the region's Latino population from 6 to 11 percent.

As Schafran alludes to in his article, “The Cities of Carquinez,” planners in the 1970s assumed that areas like the greenfields of eastern Contra Costa County wouldn’t be developed without access to regional, state and federal funding for “growth-inducing” infrastructure. In reality, these cities, including Antioch, used a variety of creative, and ultimately unfortunate, local financing mechanisms to pay for infrastructure improvements. Antioch was an early adopter of Mello-Roos, a property tax–based financing mechanism that it used to pay for the development of new schools. Impact fees charged to developers were established to pay for capital projects, including sewers, local roads and more. Antioch also joined forces with the neighboring cities of Pittsburg and Oakley, as well as Contra Costa County, to establish a regional impact fee to fund road and highway improvements, particularly for Highway 4, the lifeline that connects drivers to the rest of the Bay Area. These fees added tens of thousands of dollars to the sales price of each new residential unit.
When the housing market crashed in 2006, these funds dried up, leaving many capital projects with large shortfalls and no funding source in sight. A series of short-term bargains, meant to incentivize new home construction in the near term, will leave these cities — and ultimately their residents — responsible for project costs they just cannot afford.
For those capital projects that were actually completed during the boom years, it will be difficult to find the general revenues needed to pay for their ongoing operations and maintenance. Like many cities throughout California, before the 1978 passage of Proposition 13 businesses and local industry were the largest contributors to Antioch’s local revenues. But the combination of a cap on property taxes and the lack of new job growth shifted the cost burden to homeowners, who now need to pay more just to keep the same level of services, exacerbating inequalities between older and newer residents. And these cities’ revenues have become highly dependent on (severely declining) home real estate values.
Antioch is more reliant on residential property taxes than the average California city, which made revenues particularly vulnerable to the bursting of the housing bubble. But Antioch is not alone in this story, nor is Vallejo, whose bankruptcy is well known. Pittsburg’s plan to build an eBART station at Railroad Avenue is rapidly fading without local funding. This is just one of innumerable stories of strained fiscal models in jurisdictions that became dependent on residential growth.

Racial/Ethnic Composition, Bay Area, 2010


Since 1980, the African-American population in the Cities of Carquinez increased from under 35,000 to nearly 100,000, reflecting an increase in the subregion's share of the region's black population from 7 to 21 percent. During the period from 1980 to 2010, the African-American population in San Francisco declined from 86,000 to less than 50,000, and in the inner East Bay, from 220,000 to less than 160,000. The population center of African-Americans in the Bay Area is increasingly shifting towards the Cities of Carquinez. Although less than 15 percent of the total population of the Cities of Carquinez is black, over one in five of the region's black residents live there.


Part III: Economic Opportunities

Despite an early history as a major industrial and manufacturing hub, the Cities of Carquinez have become a series of bedroom communities stuck in an economic development cul-de-sac. Compared to the wider Bay Area, area workers face few local job prospects, limited transportation options to connect them to jobs elsewhere in the region and scarce social service and job training programs to support entry (or reentry) into the workforce. These last two factors impact the ability of local leaders to bring jobs to the area, despite available land.
While the population in the Cities of Carquinez grew by nearly 70,000 people from 2000 to 2010, only about 7,000 jobs were added — about one for every 10 new people. Compared to the Bay Area overall, a large portion of these jobs (nearly one in four) are in low-wage retail, entertainment and hospitality sectors. The region is also more reliant on public administration and education, both of which have faced severe layoffs during this recession. Though nearly one in six jobs (15.1 percent) in the Bay Area are in the technology, science or information sectors, these sectors make up only one in 22 jobs (4.5 percent) in Carquinez.
With few local prospects, nearly 80 percent of the eastern Contra Costa workforce commutes out of the area to work. Limited public transit options leave these workers with little choice apart from car commutes that average more than 40 minutes, some of the longest in the Bay Area. Not surprisingly, a recent study by the Center for Neighborhood Technology [] shows that Carquinez has some of the highest housing and transportation costs in the Bay Area, even though median household income is about 13 percent below the Bay Area median.
Echoing trends throughout the state and country, poverty in these metropolitan-edge communities is on the rise. Over the last 20 years, the poverty rate in the Cities of Carquinez has grown twice as fast as in the state overall. In unincorporated Bay Point, one in four families are now below the poverty line. Inadequate social services in the area make it exceedingly difficult for local residents to access the workforce training, housing assistance or health services that can help them successfully enter or stay in the workforce. For every $1 in local social services to which a poor person in eastern Contra Costa County has access, $8 is available to a poor person living in western Contra Costa County. [1]
This imbalance is part of the larger infrastructure gap facing leaders and residents in Carquinez. A generation ago, regional leaders knew that growth would happen in this area, but the political will to plan for it, to ensure that the transportation, fiscal, social services and economic infrastructure needed to make this growth financially, environmentally and socially sustainable was never present. And like the map of regional inequality a generation ago, this new map is heavily racialized.

PART IV: Racial and Ethnic Change

Over the past 30 years, the population has exploded in the Cities of Carquinez, especially compared to slow-growing San Francisco and Oakland, and has kept pace with the growth of San Jose, which started off as a much larger place. This growth was exceptionally ethnically and racially diverse, and today Carquinez is now more black and Latino and less white than the region as a whole.
The number of Latinos has increased so rapidly in Solano and eastern Contra Costa counties that by 2000, this region had become a larger center of Latino life than San Francisco, whose Mission District is renowned as perhaps the most famous cradle of Latino culture, art and political activism in the entire Bay Area.
Even more dramatically, the African American community in San Francisco has decreased in absolute numbers even as it has skyrocketed in the Cities of Carquinez. It would be misleading to assume that most African Americans who have left historically black neighborhoods such as the Fillmore District and Bayview-Hunters Point in San Francisco have moved directly to Carquinez (although many certainly have). African Americans have long staked a strong claim to a number of locations throughout the Bay Area, most notably Oakland and the rest of the East Bay urban core (defined here as Richmond, El Cerrito, Albany, Berkeley, Emeryville, Oakland and Alameda), but also East Palo Alto, Marin City and others. These places are linked in a chain, and significant migration between them by African Americans, whether native to or newly arrived to the Bay Area, continues.
While San Francisco and the East Bay urban core remain important, these and other traditional locations have greatly decreased in population relative to newly emergent subregions. South Alameda County (defined here as comprising San Leandro, Union City, Fremont and especially Hayward) has emerged as an important new nucleus of African American life. But no subregion has arisen as rapidly as the Cities of Carquinez, which are now home to 21 percent of the Bay Area’s black population, up from just 7 percent in 1980.
The picture for Asian Americans is less dramatic, since the Cities of Carquinez’s share of Asians and Pacific Islanders has remained roughly constant at 5 percent from 1980 to 2010 even as their overall numbers almost quadrupled in the Bay Area. But that picture changes when we look at particular groups falling under the broad and highly diverse category of “Asian American.” Filipinos, a community with deep roots in the Bay Area, have joined Latinos and African Americans in blazing a trail to the Cities of Carquinez in recent years. By 2010 the Carquinez Filipino community of over 54,000 outnumbered its San Francisco counterpart by more than 15,000 people.

Part V: Embracing Diversity

We have highlighted racial and ethnic diversity in this paper because the fiscal, economic and transportation struggles in Carquinez are very real, and the fact that these communities are more black, Latino and Filipino than the region as a whole is all too reminiscent of the dark days of the Bay Area past. We have much to be proud of in this region, but we have also promulgated some of the worst abuses of exclusionary zoning, urban renewal and restrictive covenants, and we must see the challenges of Carquinez in light of this history.
To their credit, many environmental, smart growth and affordable housing advocates tried valiantly to prevent unsustainable patterns of growth in these cities, but it remains an open question whether they or any other regional actors truly came to grips with the profound legacy of racial inequality in the region. If we as a region are committed to long-held goals of sustainability, we must acknowledge how yet again race has played a role in the development of an unequal Bay Area.
It is also an open question to what extent the communities of Carquinez, and those organizations in the Bay Area who struggle for racial and economic justice, have truly embraced this new and colorful regional geography. Solving the problems of Carquinez means embracing Carquinez's diversity and the fact that it is now an important center of African American, Filipino and Latino life, a network of cities central to an equitable and multicultural future in the Bay Area.
[1] Western Contra Costa County includes the cities of Richmond, San Pablo, El Sobrante, Hercules and Pinole. This measure does not include government-provided services or services provided by satellite offices of regional nonprofits based elsewhere. While including these factors may reduce the disparity, it is unlikely to eliminate it altogether.
Correction: In the print edition of The Urbanist, the Center for Neighborhood Technology was incorrectly referred to as the Center for Neighborhood Studies. We regret the error.

Source: 2010 US Census data.


Chris Schildt is a Masters candidate in the Department of City & Regional Planning at UC Berkeley.

Jake Wegmann is an Oakland-based affordable housing consultant and PhD student in the Department of City & Regional Planning at UC Berkeley.