Low-Income Neighborhoods Get Their Share of Home Loans

The percentage of loans used to purchase homes in the Southland’s poorest neighborhoods grew at roughly the same rate as in the wealthy ones through the first nine months of this year, according to a study released Wednesday.

The findings contrast sharply from last year, when the housing recovery was more pronounced in wealthier areas.

Overall, mortgages used to purchase homes in the top 10% income areas grew by 27%, about the same rate recorded for the bottom 10%, according to First American Real Estate Solutions, an Anaheim real estate research firm.

In the midst of record mortgage lending in California, home loans among the top 10% of households in Los Angeles County grew 21.9%, while loans in the poorest neighborhoods were up 23%.

In Orange County, loans approved to those living in the lowest appraised neighborhoods grew 39.4%, compared with 34.7% in the most affluent areas.

“This trend is a clear indication that California’s housing recovery has now spread to lower-income areas,” said Nima Nattagh, First American’s research director.

San Bernardino showed the most progress, where loans in less affluent areas surpassed the richest ones by a wide margin, growing 52.9% to 18.6%.

The discrepancy between rich and poor was greatest in San Diego County, where mortgage loans in the most prosperous neighborhoods rose 41%, compared to only 20% in destitute areas.

Despite the gains, the survey also pointed out that there remains significant disparity in homeowners’ ability to obtain refinance or home-equity loans.

Demand for refinance and equity loans has grown by unprecedented amounts this year, the study said, rising 85% from the first nine months of 1997. But such loans soared by 105% in the high-income neighborhoods compared to less than 50% in low-income neighborhoods.

The clearest disparity was found in Los Angeles, where such loans grew by 110.2% in the richest areas, compared to only 23.7% in the poorest areas. In Orange County, the number of such loans grew 138.5% in wealthy neighborhoods, compared to 112.5% in the lowest-income neighborhoods.

The biggest reasons for the discrepancy, Nattagh said, is that homes in poorer neighborhoods appreciated at a far lower rate than houses in upper-crust areas. The First American study was based on an analysis of public records, covering 3,390 neighborhoods in California.

In all, the study found that 925,714 loans were made for purchase, refinancing and home-equity loans during the first nine months of the year, in the state’s most populous counties.

Overall, the number of mortgages used for home purchases jumped 26%, to 306,000.