Residential Foreclosures in the City of Buffalo, 1990-2000 - Federal ...

Chapter 2: The Economic Context of Foreclosures
This chapter presents a brief overview of economic conditions in the Buffalo area. We
first examine the broad metro area economy (hereafter referred to as the Buffalo-Niagara
MSA 1 ), then focus on the city itself.
Regional Economic Conditions
A sudden rise in residential foreclosures is often attributable to a shock to the regional
economy, such as a severe recession or a significant decline in an important industry. The
Buffalo-Niagara MSA did not experience severe economic distress in the 1990s, but
employment and income in the region were essentially stagnant. Our 1990-2000 study
period approximately coincides with the previous business cycle, which began with a
national recession that ran from mid-1990 to early 1991 and ended when the ensuing
expansion reached its peak in early 2001. The recession lasted somewhat longer in the
metro area than in the nation as a whole, and the expansion was much less robust. 2
Consequently, by the end of the 1990-2000 period, metro area employment had risen just
1.9 percent compared with 20.4 percent for the nation. 3 The lack of new industry may
have suppressed incomes in the region, as median household income increased just 2.0
percent from 1990 to 2000--about half the increase nationwide. 4 Despite the weak
performance of the Buffalo metro area economy, however, unemployment remained
relatively moderate over the decade, with rates similar to those of the nation (Chart 2).
1
The Buffalo-Niagara MSA (metropolitan statistical area) is defined by the U.S. Census Bureau as Erie
and Niagara counties.
2
Deitz and Garcia, 2002.
3
U.S. Department of Commerce, Bureau of Labor Statistics, 1990, 2000.
4
U.S. Department of Commerce, Bureau of the Census, 1990, 2000.
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