Hispanic communities were particularly vulnerable to unscrupulous lenders during the last housing boom and the hardest hit by the bust, experiencing the sharpest drop and slowest recovery in home values, according to a study to be released Monday.
The study, by the online real estate company Zillow, found that home values in Greater Boston’s Hispanic communities are still 11 percent below the pre-crisis peak, even as non-Hispanic white neighborhoods have recovered their values and African-American areas have nearly regained what they lost.
Nationwide, Hispanic areas also suffered the biggest declines, with home values still down 24 percent from their peak nearly a decade ago, according to the study.
Hispanic neighborhoods tend to have higher populations of immigrants who were first-time home buyers and were put at risk by lenders who waived credit checks and minimum-income levels, housing specialists said.
Many of these subprime loans were for multifamily homes, which are popular among low-income residents because they can rent out units to generate income.
All of this activity led to an increase in home sales and skyrocketing prices in lower-income neighborhoods. But then the housing bubble burst in the middle of the last decade, the financial crisis followed, and many workers lost jobs.
The result: People who were barely making mortgage payments before the recession went into foreclosure, causing home prices around them to plummet.
“It’s the old story of what goes up fastest falls fastest,” said Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University.
Yanko Matias, a native of the Dominican Republic, wanted a house where he and his wife could raise their two young children. So they bought a single-family home in Lynn in 2007, taking out a loan for the entire purchase price of $232,000.
But in early 2009, Matias lost his landscaping job. He found another job at a rental company, but was making considerably less money and called the bank about modifying his loan to reduce the payments. The bank refused, telling him his house was worth only $180,000, less than what he owed on his mortgage.
By the end of the year, he was in foreclosure.
Matias, 39, who now works as a taxi driver and still lives in the house, has been fighting the bank ever since. But he has little hope his home will regain its value and fears he will eventually lose it.
“I worry every day about it,” he said.
To analyze housing values, Zillow used Census data to categorize ZIP codes by racial or ethnic groups that make up a plurality of the population and estimated the median home value within each area. In Greater Boston, six communities were identified as having more Hispanics than any other ethnic group: Chelsea, Lynn, East Boston, and three in Lawrence.
‘They were basically the most innocent consumers on the marketplace. They knew the least about what was happening, and they were the most eager to climb onto the first rung of the American dream.’ --Eloise Lawrence, Harvard Legal Aid Bureau, on immigrant home buyers
Hispanic communities in Springfield also fared worse than white neighborhoods.
“In many ways, it’s a spatial story, but spatial is racial,” said Zillow senior economist Skylar Olsen, noting that lower-income residents tend to congregate in less expensive neighborhoods like Chelsea and East Boston, and in more affordable outlying communities, like Lawrence.
Homes in Hispanic neighborhoods in Greater Boston have a median value of $226,357, according to Zillow, down from a peak of $253,667 in late 2005. Houses in black communities are at $307,597, down from $313,645, and the median home value in non-Hispanic white areas is $417,873, just above the high of $417,055.
Many housing specialists, however, see the uneven housing recovery breaking down not by race, but by immigrant status.
“They were basically the most innocent consumers on the marketplace,” said Eloise Lawrence, a staff attorney at Harvard Legal Aid Bureau who works with struggling Lynn tenants and homeowners. “They knew the least about what was happening, and they were the most eager to climb onto the first rung of the American dream.”
Because Zillow analyzed housing values by geographic area, not homeownership, the study does not necessarily mean that Hispanic homeowners are suffering more than white or black homeowners. In low-income neighborhoods, properties are often owned by people who don’t live in the area, said Paul Willen, a senior economist at the Federal Reserve Bank of Boston.
The Boston Fed has access to data that allow it to determine the race of homeowners, and in a 2008 study, Willen found that black homeowners in Massachusetts had a higher foreclosure rate than whites or Hispanics.
Still, there’s no denying that many Hispanics were devastated by the housing crisis. A number of Hispanic men work in industries hardest hit by the recession, such as construction, and Hispanic women who run home day-care centers had their livelihoods disrupted as their houses were foreclosed on, said Maria Christina Blanco, a community organizer at City Life/Vida Urbana, a Jamaica Plain housing advocacy group.
“You can see the disproportionate effect,” she said.
As disconcerting as it is that Hispanic homeowners were hurt so much by sagging home values, Lawrence, of the Harvard Legal Aid Bureau, said the recovery of home values in white and black communities is almost as worrisome: “We may be in another speculative bubble.”