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Community Development Reports

Home Lending in Allegheny County Neighborhoods

We begin this report on Allegheny County, home to the city of Pittsburgh, with a broad look at application and origination activity over the past 25 years (1990 to 2015), and then focus on the 12-year period from 2004 to 2015. Using maps and a series of figures and tables, we tell the story of mortgage lending over these time periods from both the neighborhood and borrower perspectives, with a particular focus on the differences observed in the pre- and post-Great Recession periods.

Key Findings

  • In the years leading up to and including the Great Recession (2004 to 2008), loan application rates across all income groups were relatively similar to each other, and all were declining. The year 2009 marked not only the end of the Great Recession (June 2009) but also a divergence in loan application activity. Middle- and high-income neighborhoods saw more erratic changes primarily driven by refinance activity, while application rates in low- and moderate-income (LMI) neighborhoods remained depressed, with only a slight uptick in 2015.
  • Prior to the Great Recession, application rates in low-income neighborhoods were greater than those in high-income neighborhoods. This was also true nationally, but the national rates were substantially higher than Allegheny County’s for all neighborhood income groups. For example, low-income neighborhoods in Allegheny County had an application rate of 190 applications per 1,000 owner-occupied housing units, while the national rate was 291.
  • Origination rates across all neighborhood income groups were relatively flat from 2004 to 2008, but they jumped an average 12 percentage points in 2009. From 2009 to 2015, origination rates in all neighborhood income groups have increased, with these increases ranging from 3 percentage points in high-income neighborhoods to 15 percentage points in low-income neighborhoods.
  • During the Great Recession and in the years shortly after, high-income borrowers were increasingly able to take advantage of lower interest rates as the share of refinance activity in high-income neighborhoods increased 25 percentage points from 2006 to 2012. In 2015, the share remains a shade above 50 percent (51 percent).
  • The rate of home purchase loans per 1,000 households declined for all race and income groups following the Great Recession, but for blacks, the decline was steeper and their recovery has been weaker. However, home purchase rates did increase from 2005 to 2015 for all race and income groups.
  • The share of purchases made in LMI neighborhoods has declined for all race and income groups from 2005 to 2015. Declines were largest for black LMI borrowers, whose share of home purchases made in LMI neighborhoods declined 12 percentage points to 49 percent in 2015. However, the share of black LMI borrowers purchasing in LMI neighborhoods is 2.6 times greater than the share of white LMI borrowers purchasing in LMI neighborhoods, a share relatively unchanged since 2005.

The views expressed in this report are those of the author(s) and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System.

Suggested Citation

Nelson, Lisa A., and Matt Klesta. 2017. “Home Lending in Allegheny County Neighborhoods.” Federal Reserve Bank of Cleveland, Community Development Reports.