In Memphis, Foreclosure=Wealth Destruction=Paying Rent=Political Decline

I read this last paragraph from a recent blog post by Michael Hudson, ”From the Bubble Economy to Debt Deflation and Privatization.” “This post-bubble environment of debt-strapped austerity is empowering the financial sector to become an oligarchy much like landlords in the 19th century. It is making its gains not by lending money – as the economy is now “loaned up” – but by direct ownership and charging economic rent. So we are in the “economic collapse” stage of the financialized bubble economy. Coping with this legacy and financial power grab will be the great political fight for the remainder of the 21st century.” If you have read this blog over the years (Thanks to those intrepid few), you know I have been fixated on the Foreclosure Crisis and its fallout demographically, economically, and politically. This has been the most important event of the last generation locally because Memphis is unique. We are the only majority black metropolitan area of over a million people in America. We are also the poorest major city in America. Those are linked. The economic and social winds buffeting black and minority people across America are especially felt here. The past fifteen years have been an economic disaster for black people here and it is and will be a political disaster as well. We all know there have been a lot of foreclosures, but we haven’t given much thought to what became of all those foreclosures. For this post, I am interested in who bought up these foreclosures and where do these people live, particularly investors. Here are some quick facts. I looked at residential foreclosures in Shelby County from January 1, 2007 to December 31, 2011. There were 25,967. 75% (19,550) of those foreclosures happened in majority minority census tracts. Another 15% (3,772) happened in census tracts that had 1/3 to 1/2 minority population. This is what these numbers look like.

It seemed it may be helpful to break down the foreclosures into three groupings: Foreclosures that were bought by small investors to be turned into rental properties, foreclosures bought by corporate investors to be turned into rentals, and foreclosures that got bought by people who lived the houses. Almost 10,000 of these foreclosures became owner occupied homes, which is good. Like making lemonade out of lemons. Here's what that looks like.

Around 4,200 foreclosures were bought up by corporate investors. These are LLC's, CO's, Inc's, etc.

The small investor category had bought nearly 12,000 foreclosures.

A lot of the small investor and corporate bought foreclosures were done by people and entities outside of Shelby County, which of course isn't a great thing. Yet a sizable chunk got bought locally, within Memphis and Shelby County. Since the Foreclosure Crisis disproportionately negatively affected minority communities, I thought it would be interesting to see how many owner occupied houses in minority areas ended up getting turned into rental houses owned by people in white areas. (If you are bothered by my using terms like "minority" and "white", remember, because of economic and demographic polarization, race and class are almost entirely interchangeable in the local context. Don't get mad at me, the Federal Financial Institutions Council says so.)

35% of corporate bought foreclosures got purchased by companies based in Arlington, Bartlett, Collierville, Cordova, Eads, Germantown, Lakeland, & Millington and the seven zip codes of the Poplar Corridor (38103, 38104, 38111, 38112, 38117, 38119, & 38120). 32% of small investor bought foreclosures ended up in those local towns and Poplar Corridor zip codes. These maps are kind of cool. Check them out. Click on the map to get a close up view.

You may be wondering why I go to all the trouble of sifting through this data. I do it because two groups of people live in close proximity to each other and one of these groups seems to get shitted on in an ever growing variety of ways and that doesn't seem right. Secondly, this didn't happen in a vacuum. Third, things are going to get worse for the group getting shitted on. Notice any similarities between where small investor and corporate bought foreclosures are and high turnout black voters under 40 are? Those folks aren't going to be building wealth anytime soon and they aren't going to have much political power either by mailing their rent checks to Collierville, Germantown, and East Memphis.

When a group looses a generation of hard fought for wealth in a few short years it is going to cost hard fought for political power. At this moment, I can not see a black candidate winning a countywide election for the foreseeable future and there is a decent chance that a white candidate will win the next mayor's race. I find that shocking for a unique city like Memphis. Locally, 4,800 black owned homes instead of seeing equity building now see black households transferring wealth via rent payments to middle and upper class areas. A rough calculation is a few million dollars a month. When you listen to debates on the city council, close your eyes and don't think what the council members look like. Think about where they live. PS-Be pissed about the fact that Super Districts still exist in Memphis because they sure aren't helping this city.