Banks made nearly $12 billion in home loans to Pittsburghers between 2007 and 2019, but only 6.8 percent of those loan dollars went to the city’s minority residents, according to a new report from Parents Against Violence and the Lower Marshall-Shadeland Development Initiative, or LMSDI. Of that amount, African-American residents received just 3.5 percent, despite comprising more than one-fifth of Pittsburgh’s population.
“That is staggering,” said Dan Holland, the study’s author and director of research for LMSDI. “The private market is not working for many people. And often those people are people of color.”
The report found vast disparities in lending patterns and within the loans themselves: While the average loan size for white residents was $142,218, for Black residents it was $81,553.
In just one striking example of the disparities, Shadyside received more in bank loans during the study period—$1,054,017,000—than all of the city’s minority neighborhoods combined, a total of $807 million. Shadyside’s private-sector total also outstripped even the total public investment—$1,006,735,353—made in Pittsburgh’s minority neighborhoods.
The findings are essential to addressing Pittsburgh’s shortage of affordable housing, Holland said. The vast majority of homes are financed by “the power of the private market,” which helps people build wealth and grow in their communities. He noted that the Strip District has seen an explosion in growth in the last three to five years where there was “nothing” before — and while the same kind of opportunity exists in Homewood, for instance, it’s being ignored.
“There’s nothing that really says that in fact people couldn’t get a loan,” Holland said. “When we talk about minority communities, it’s, ‘OK, well, what’s the public sector going to do?’” That’s not the conversation with neighborhoods like Shadyside, or Squirrel Hill, or Carrick.
“We can’t develop a community with just public dollars,” said Jerome Jackson, the executive director of Operation Better Block in Homewood, and the study’s outreach coordinator.
Jackson used Larimer as an example: In 2014 Larimer received a $30 million federal Choice Neighborhoods grant to help rebuild the community fabric through new mixed housing and amenities such as parks.
“Now, what would Larimer look like today if they got [the federal grant] matched by a $30 million private investment?” He said. “To me it wouldn’t look like there’s all these nice, new houses but Larimer Avenue [the business district] still doesn’t look too good.”
His hope is that the report will push people to reconsider when and how private investments are made. Jackon said that often the highest goal in a neighborhood like Homewood seems to be hoping some residents can be in a solid position, so that when change happens they can stay.
Instead, development should be done “in a way that includes them, that keeps them there, that doesn’t say, ‘The only way this community can be developed is if half of the folks move out,’” Jackson said. “That, to me, is not developing an African-American community.”
Gregory D. Squires teaches sociology, public policy, and public administration at George Washington University, and served as an advisor for the report. He said that he was not surprised by the report, since similar disparities have been documented time and again. However, Squires was taken aback by one finding: The report analyzed the lending activities of 906 private financial institutions, and found that over 13 years, more than 500 banks made 2,800 loans, but zero loans to African Americans.
“For not a single one of them to go to African Americans, that’s a result that I didn’t think you could achieve even if you tried,” Squires said.
It’s important to demonstrate that “we’re not talking about a series of anecdotes, it’s not just the occasional bad apple,” Squires said. “This is the overall general pattern of what’s happening in the market.”
The report links that reality to the city’s ongoing loss of Black residents.
“The opportunities here haven’t been that great for African Americans,” said Holland. “So is it any wonder that we’ve lost more than 10,000 African Americans in the last decade?”
LMSDI’s report urges a number of actions, including greater scrutiny of bank lending practices, and stricter enforcement of the federal Community Reinvestment Act, which is in the process of being amended. Many people want the act to cover entities such as independent mortgage companies and internet banks, which didn’t exist when the law was first written.
Holland stressed that the disparities created by the lending practices of the banks are solvable: PNC Bank and Dollar Bank ranked top for lending to minority residents in Pittsburgh, and other banks can build relationships with communities and their residents to do the same.
In addition, the report called on public agencies, companies, universities, and nonprofits to deposit their funds in banks that have made real commitments to minority neighborhoods. Over 10 years, the report calculated that city government, the Housing Authority, the School Board, and the URA operated with $15 billion, money that was likely held in area banks. “However, it is not clear if these funds are held within financial institutions which have ignored Pittsburgh’s minority neighborhoods.”
The City of Pittsburgh has a law on its books, the Community Reinvestment Depository Policy, that requires the city to be choosy about where it puts its money, and to issue a regular report to City Council. During its analysis LMSDI did not find a single public report nor records of any public meetings on the subject.
