U.S. Losing Its Middle-Class Neighborhoods

In Los Angeles -- the most hollowed-out metropolitan area in the country over the past three decades -- the share of poor neighborhoods is up 10 percent, rich neighborhoods are up 14 percent and middle-income areas are down by 24 percent.

The Brookings study says that increased residential segregation by income can remove a fundamental rung from the nation's ladder for social mobility: moderate-income neighborhoods with decent schools, nearby jobs, low crime and reliable services.

Alice McCray used to live in just that kind of neighborhood, a postwar suburb on the far east side of Indianapolis. She has not moved since 1971. It's the middle-class character of her neighborhood that has moved away and left her three-bedroom ranch house behind. With higher-income residents gone, McCray's neighborhood has tipped poor in the past decade. A third of the incoming population lives below the poverty line. Crime is up, and schools have deteriorated.

"I had nine block captains on our neighborhood watch group, and seven of them have moved, said McCray, 61, who owns a cleaning business. "They said they were not going to put up with this."

For people who do not want to put up with aging, troubled neighborhoods and have the means to do something about it, escape is remarkably easy -- in Indianapolis and across much of the country.

The housing industry in the Midwest and the Northeast routinely floods local markets with new, ever-larger houses. In greater Indianapolis, more than 27,500 houses were constructed between 2000 and 2004, even though the population grew by only 3,000.

In the process, older houses and many older neighborhoods -- such as McCray's -- have become as disposable as used cars.

Such overbuilding is rampant across the Midwest and Northeast, where the number of new houses -- almost always at the edge of metro areas -- swamped the number of new households by more than 30 percent between 1980 and 2000, according to a study co-written by Thomas Bier, executive in residence at the Center for Housing Research and Policy at Cleveland State University.

"As upper-income Americans are drawn to the new houses, neighborhoods become more homogenous," he said. Echoing the Brookings study, he said: "The zoning is such that it prevents anything other than a certain income range from living there. It is our latest method of discrimination."

In a pattern that is the mirror opposite of what is happening in the Midwest and Northeast, there is a chronic undersupply of housing in many cities on the West Coast. But it, too, has contributed to a decline of middle-income neighborhoods, said Berube, the Brookings demographer.

He said rapid population growth in cities such as Los Angeles and Seattle combines with rigid geographic and legal restraints on construction to limit housing supply. In Los Angeles, for example, the population grew by 11 percent between 1990 and 2002, but the number of housing units increased by just 5 percent.

That has pushed up the price of housing in mixed-income neighborhoods. Gentrification often pushes the poor away to less-desirable suburbs.

In Indianapolis, it is an abundance of housing that lures the middle class out of established neighborhoods.

Until last month, Jim and Lynn Russell lived with their 1-year-old son, Adam, in a middle-income neighborhood called Irvington on the city's near east side. The area of restored historic houses is 20 minutes by car from downtown, where they both work as bank executives.

But the Russells, who have another baby due in the fall, were worried about mediocre test scores at nearby public schools. They were also concerned about safety. A mass killing -- seven people shot in their home -- took place this month not far from their former house.

"Things like that don't happen in Carmel," said Lynn Russell, 31, who grew up in Indianapolis, as did her husband.

Carmel, where the Russells just bought a house, is not a close-in suburb. About 45 minutes north of downtown at rush hour, it is one of the fastest-growing communities in greater Indianapolis. Schools are among the best in Indiana, and housing is abundant and, by national standards, extremely affordable for professional couples. The Russells bought their four-bedroom house on half an acre for $230,000.

Urban planners complain that exurbs such as Carmel are bleeding cities of the middle class. But Jim Russell said he and his wife have made "the logical choice" by moving to a upper-income neighborhood that is safe, comfortable and better for their growing family.