The prior posts in this series have sought to dispel the notion that Montgomery County is universally rich. This post attacks another misconception – that the county is monolithically white. The twin beliefs that Montgomery County is both wealthy and white make it a convenient target for politicians in other parts of the state. Both beliefs are completely wrong.
According to the Census of 2000, Maryland had 5,296,486 residents. Of them, 3.3 million were white non-Hispanic, 1.5 million were black non-Hispanic, 210,000 were Asian non-Hispanic, 104,000 were two or more races and 228,000 were Hispanic (of any race). Foreign-born residents topped half a million. Large percentages of each of the non-white groups lived in Montgomery County. Below we show demographic distributions for the state and its six largest jurisdictions. The column “MoCo Rank” refers to how the county ranks on the number of people in each category when compared to other Maryland counties.
Whites
Montgomery had 16.5% of the state’s total population but only 15.8% of its white population. Even though its total population was 15.8% larger than Baltimore County’s, Montgomery actually had fewer white residents (519,318 vs. 533,980). Montgomery’s white percentage (59.5%) is lower than the state average (62.1%).
Blacks
Montgomery has fewer black residents than Prince George’s County, Baltimore City and Baltimore County. But its black percentage (14.8%) is still higher than the national average (12.1%).
Asians
Forty-seven percent of all Asian residents of Maryland live in Montgomery County. Put another way, more Asians live in Montgomery than in Anne Arundel County, Baltimore City, Baltimore County, Howard County and Prince George’s County combined.
Hispanics
Forty-four percent of all Hispanic residents of Maryland live in Montgomery County. Montgomery’s Hispanic population is nearly equal to the combined Hispanic population of the next five most-populated jurisdictions.
Two or More Races
Again, Montgomery leads the state with 29% of all Maryland multi-racial residents.
Foreign Born
Forty-five percent of all foreign-born residents of Maryland live in Montgomery County, nearly equal to the next five jurisdictions combined. Montgomery leads the state in the number of foreign-born residents from every region of the world.
Non-English Spoken at Home
Forty-one percent of all residents that do not speak English at home live in Montgomery County. The percentages of all state residents who do not speak English who live in Montgomery are highest for Chinese speakers (58%), Arabic speakers (42%), Korean speakers (41%) and Spanish speakers (41%). For each of the eight language groups we examined, Montgomery had more residents than any other jurisdiction in Maryland except for African language speakers (where Prince George’s had a slight lead) and Russian speakers (nearly half of whom lived in Baltimore County).
Again and again, Montgomery County finished first or second (usually first) in terms of the number of minority residents for almost every group we looked at. The data is irrefutable: Montgomery is the most diverse county in Maryland, and possibly one of the most diverse jurisdictions anywhere in the United States.
So dies another myth. And we have killed a number of them recently. In May, we showed how Montgomery County has tremendous income inequality, with the richest neighborhoods enjoying a growing gap with the poorest. In this series, we showed how nominally high incomes in Montgomery are swallowed by high housing and gas prices. We showed one of the consequences of our inability to keep up with the cost of living: foreclosures. And we demonstrated here how Montgomery is far, far more diverse than any other county in Maryland.
We are not all white and wealthy. We are multitudes of different cultures and races, many of whom are struggling to get by just like everyone else.
And it is time for the Lords of Annapolis to relearn everything they think they know about us.
Thursday, September 25, 2008
MoCo: More Diverse Than You Think
Wednesday, September 24, 2008
MoCo: Not as Rich as You Think, Part Three
Have you ever heard of zone pricing for gasoline? Under this practice, energy companies, wholesalers and service stations adjust gas prices for shipping costs and a large variety of geographic characteristics, one of which is rumored to be household income for the areas around the stations. This conforms to the basic realities that most of us have noticed in looking for gas. No one drives into wealthy neighborhoods to fill up – we go into relatively poorer areas instead.
And so we launched an empirical investigation: do Montgomery County residents pay more for gas than other Marylanders because their household incomes are greater?
To find out, we consulted Gas Buddy, a website that relies on volunteers to gather gas prices and report them by service station. During the week of 8/30/08-9/5/08, we tracked every price reported on Gas Buddy in Maryland. This database does not cover every service station, but the volunteers collected 2,947 individual price observations all over the state during that week. Below are the average regular gasoline price levels they reported by county:
Garrett County had the highest average price, but Gas Buddy’s volunteers only made 26 observations there over the week – less than four per day. Given the small sample size, it is doubtful that that accurately reflects gas prices there. Montgomery’s average price ($3.63) was easily the highest among the remaining counties and was significantly higher than the state average ($3.50).
Below are the average regular gasoline price levels for every local area with at least 30 observations, along with their average household incomes in 1999:
The four most expensive areas for gas were all in Montgomery County, as were six of the top ten. Was that because the Montgomery areas had higher incomes than other places around the state? Not necessarily. For example, Silver Spring’s average household income ($51,653) was slightly lower than in Catonsville ($53,061). Yet, gas prices were much higher in Silver Spring ($3.62) than in Catonsville ($3.43). Similar inconsistencies show that average household income and gas price do not track each other very well.
In fact, when we ran a simple regression of household income on gas price, our model found that income only explained 27% of the variation in price. In contrast, a simple regression relating location to price found that whether or not a station was located in Montgomery County explained 37% of the variation in price. In other words, for this rather large sample of price data, whether or not a station was located in Montgomery may actually be a more important determinant of its price than the average household income in the surrounding area. In wealthy local areas (like Bethesda) and in less-wealthy areas (like Silver Spring and Aspen Hill), gas in Montgomery costs more than in the rest of the state.
What is driving this? We don’t have enough data to know (so you statistical geeks out there should forget any multi-variate or logit models). One possible cause may be the higher price of real estate in Montgomery than in other counties. Higher land costs, higher mortgages and higher property taxes may be pushing up gas prices here.
But regardless of the reason, the evidence is clear: Montgomery County residents pay more for gas than other Marylanders. Metro offers no relief because it periodically raises fares and parking charges. And higher gas prices, like higher real estate prices, may very well ripple through and push up prices for goods and services throughout the county’s economy.
So if Montgomery County residents make more money only to pay higher prices for housing, gas and everything else, is their living standard really superior to most people in other counties? Except for the wealthiest residents of Montgomery’s richest neighborhoods, the answer may very well be no.
Tomorrow, we will conclude this discussion by taking a hard look at who exactly is paying these high costs of living.
Tuesday, September 23, 2008
MoCo: Not as Rich as You Think, Part Two
Because people in Montgomery County are wealthy, they can easily afford big mansions, right? WRONG.
The residential real estate boom started in Montgomery County in the late 1990s, as it did in many other parts of the country. According to Zillow.com, the average market value of a home in Montgomery soared from under $200,000 in 1999 to just over $500,000 in late 2006. The county’s Department of Finance estimates that the average residential sales price topped out at $601,995 in July 2007 before falling to $506,151 in May 2008. These are high prices and steep declines, even for “rich” people to bear.
Montgomery County has long been an attractive place to live, but has had problems generating affordable housing. We have previously explored the inadequacies of the county’s Moderately-Priced Dwelling Unit (MPDU) program and the unfortunate tendency of its subsidized housing programs to funnel poor people away from transit. But easy money from sham loan programs convinced many people that high housing prices were no barrier to home ownership in Montgomery County. The inevitable result: massive foreclosures.
The Maryland Department of Housing and Community Development’s property foreclosure report for 2008’s second quarter listed foreclosures by county. Montgomery County’s total of 1,314 ranked behind only Prince George’s County (2,853). Montgomery’s total was almost as high as the combined total of Anne Arundel and Baltimore Counties. Below is a complete list of foreclosures by county from the report.
Montgomery also had two of the top ten foreclosure “hot spots” ranked by total number of foreclosures and foreclosure rates: zip codes 20874 in Germantown and 20877 in Gaithersburg. Below is a complete list of zip codes in Maryland that recorded at least 50 foreclosures in the second quarter.
The second quarter report credits recent state laws lengthening the foreclosure process with reducing foreclosures by 22% since the first quarter of 2008. That effect has been especially strong in Baltimore City, where foreclosures dropped from 1,654 in the first quarter to 832 in the second quarter (down 40%). Montgomery’s foreclosures decreased from 1,646 to 1,314, a more modest drop of 20%. Clearly this county’s foreclosure problem is far from over.
The foreclosure data reinforces a fundamental truth we revealed in Part One: high incomes in nominal dollar terms do not compensate for higher costs faced by Montgomery County residents. In the housing market, that fact contributed to economic pain unsurpassed by the vast majority of the “poorer” counties in Maryland. This is not evidence of wealth – it is evidence of overburdened Montgomery home budgets that is ignored by politicians from elsewhere in the state.
But it does not end here. Tomorrow we examine gas prices.
Monday, September 22, 2008
MoCo: Not as Rich as You Think, Part One
When our state legislators go to Annapolis and look for adequate funding for our schools and transportation facilities, they confront a common attitude from the rest of the state. “You guys in Montgomery County are rich,” a legislator from another area will likely say. “You’ve got more money than you know what to do with. We’re the ones with needs.”
It may be true that there are needs across the state. But the conventional wisdom that Montgomery County is universally wealthy is DEAD WRONG. In this series, you will find out that we are not as rich as you think.
It is true that Montgomery County has a high median household income in nominal terms. The Census Bureau’s American Community Survey estimates a variety of economic data for 16 of Maryland’s 24 counties (including Baltimore City) for 2006. (Caroline, Dorchester, Garrett, Kent, Queen Anne’s, Somerset, Talbot and Worcester Counties had 2000 populations of under 50,000 and their small size probably prevented reliable mid-term estimates). Of those 16 counties, Montgomery’s median household income ($87,624) was higher in 2006 than any other county except Howard ($94,260). In fact, Montgomery’s household income was 35% higher than the state’s. This would seem to support the view that we are rich.
But the factor people miss when they look at household incomes alone is that Maryland’s counties have wildly varying costs of living. This is particularly true of Montgomery, a jurisdiction in which many people work but cannot afford to live. One of the biggest determinants of the cost of living is the cost of housing. Below are the median home values for each of the 16 counties tracked by Census in 2006. Montgomery’s median home value ($527,700) is 58% higher than the state average ($334,700).
For those who have lived in Montgomery a long time and no longer have mortgages, high home values can be a substantial addition to wealth. (Set aside the higher property taxes they create.) But for those with mortgages, higher home values mean higher servicing costs. Below are median monthly housing costs, including mortgage payments, for the 16 counties tracked by Census in 2006. Montgomery is the leader ($2,285 per month), followed by Howard ($2,103).
So Montgomery has higher household incomes, higher home values and higher housing costs than the rest of the state (with Howard as a partial exception). How do those components balance? In the chart below, we calculate median monthly housing costs as a percentage of median household income by county in 2006.
The data above shows that 31% of median pre-tax household income goes to pay for housing in Montgomery County. Only Baltimore City (38%), Prince George’s (34%) and Allegany (34%) rank higher. The other 12 counties tracked by Census all rank lower with Howard – the richest county in nominal terms – at the bottom.
This data illustrates what every resident of Montgomery County knows and is not commonly appreciated in other parts of the state: a dollar does not go far here. Montgomery’s proximity to the nation’s capital combined with its quality schools and modest crime pushes up the price of its real estate, and through it, nearly everything else. Yes, people here have higher incomes in nominal terms, but many here need those incomes to maintain middle-class living standards. For a lot of people in the county, this is not real wealth – it is the illusion of wealth, but one that is believed by politicians from elsewhere in the state.
Tomorrow we will begin to explore the consequences of that illusion.
