Housing inequality is a disparity in the quality of housing in a society which is a form of economic inequality. The right to housing is recognized by many national constitutions, and the lack of adequate housing can have adverse consequences for an individual or a family.Sen 2004 p. 61 The term may apply regionally (across a geographic area), temporally (between one generation and the next) or culturally (between groups with different racial or social backgrounds).Pryce 2009 p. 145 Housing inequality is directly related to racial, social, income and wealth inequality. It is often the result of market forces, discrimination and segregation.
It is also a cause and an effect of poverty.Yinger 2001p. 360 Residential inequality is especially relevant when considering Amartya Sen's definition of poverty as "the deprivation of core capabilities".Sen 1999 p. 87
Economic inequality Disparities in housing explain variations in the conversion of income into human capabilities in different social climates. Income does not always translate into desirable outcomes such as healthcare, education, and housing quality is a factor which determines if those outcomes are readily available to an individual.Yinger 2001 p. 367 According to economist and philosopher Amartya Sen, an individual's freedoms (or capabilities) are significant indicators of the kind of life they value or have a reason to value.Sen 1999 p. 18 As economic equality varies by economic system, historical period and society, so does housing inequality.
Economic inequality is a primary contributing factor to housing inequality. The distribution of wealth in a region affects who has access to housing, and at what level.
Causes Sociologist John Milton YingerYinger 2001 describes urban residential inequality as a result of housing-market forces. Yinger reasons that, all else being equal, housing becomes relatively more expensive as it is closer to work sites. Because poorer families often cannot afford to pay transportation costs, they may be forced to live in inner-city locations closer to employment opportunities. To win the spatial competition for housing near work sites, lower-income families must compensate for a high-priced location by accepting smaller housing, lower-quality housing or both.Yinger 2001 p. 363 These market forces are subject to other socio-economic factors; no one cause can explain housing inequality. In the United States, Thomas Shapiro and Jessica Kenty-DraneShapiro 2005 point to the wealth gaps between African Americans and other groups as likely causes of the housing disparity between African Americans and the rest of the country. According to Shapiro and Kenty-Drane, historical and social obstacles (slavery and racial segregation) have prevented African Americans from securing and accumulating assets Including quality housing).Shapiro 2005 p. 176 YingerYinger 2001 p. 376 also suggests that racial discrimination still plays a role in housing;Yinger 1997 p. 23 black and Latino households must pay higher search costs, accept lower-quality housing and live in lower-quality neighborhoods due to discrimination. One studyYinger 1997 p. 32 found that 20 percent of potential moves made by African American households and 17 percent of potential moves made by Latino households were discouraged by discrimination in the search process.
Redlining A valiant effort to guide the country's deteriorating housing market amid the Great Depression, the (HOLC) 'Home Owners' Loan Corporation' was founded in 1933 by President Roosevelt. An integrated hierarchical system of stages appraised neighborhoods based on the data obtained from banks and real estate appraisers. The system consisted of 4 stages, A to D. A classified zones as pristine conditions providing minimal risk for banks. Leaving D judged as perilous and a higher investment risk.
HOLC generated a color-coded map to quickly identify an area's letter grade: HOLC generated a color-coded map to quickly identify an area's letter grade:GradeColorLabelAGreenBestBBlueStill DesirableCYellowDefinitely DecliningDRedHazardous Grade D neighborhoods were later coined 'redlined areas'. Grade A areas held the highest percent change of loan approval, and B was 10 – 15% lower. The decline rate was high for zones D and C, they were not considered by conservative banks. When applying for a loan, your residency was more important than race. The race with a majority presence became the zone's identity and the dominant influence in the area. Hence the phrase when a person of color would move into the neighborhood, "Well there goes the neighborhood." This grading system continued to promote segregation as families and businesses who were thriving in Grade A areas wanted to keep their neighborhoods safe. Grades A and B residents developed a stigma believing residents of lower zones were trouble. This spread notion perpetuated by the government encouraged segregation.
Renting vs Buying Income inequality is expressed in the amounts of poor people who cannot afford to buy a house and have to turn to renting a house/apartment instead. In 2017, it was noted that 46% of working renters would use more than 30% of their income for housing costs. The decrease in income and the increase in rent prices leads to double precarity, which causes housing and employment insecurity. In the beginning of 2022, home prices in the United States went up by 9 percent, while apartment prices increased between 12 and 20 percent since the previous year. The rise in housing prices are making new homeowners become rentholders, causing the amount of rentholders to increase, due to the lack of affordable housing. The number of homeowners is decreasing with the constant soaring of rent and down payments and the inability to save enough to transition from a renter to a home buyer.
COVID-19 pandemic In 2020, the pandemic spread across the world causing many people to become unemployed leading to a crisis in the housing market. The United States issued a Federal Eviction Moratorium, which provided federal aid for those in need and provided housing security during the pandemic. Once the eviction moratorium was lifted, a lot of people lost their homes and had to relocate into different areas in search of jobs. The housing market was at an all-time high in construction, in 2021 the single family units hit 1.1 million while the multi-family units hit 470,000, leading it to be the highest amount of housing construction since 1973. The prices of these units are less than modest and exceed the typical median rent. Due to the pandemic, the amount of labor shortages, lack of adequate materials and the runup pricing for products only heightens the rise in housing prices creating instability for homeowners and renters.
Effects The most direct effect of housing inequality is an inequality of neighborhood amenities, which include the condition of surrounding houses, the availability of social networks, the amount of air pollution, the crime rate, and the quality of local schools.Yinger 2001 p. 362 A neighborhood with a certain quality of amenities typically includes individual residences of corresponding quality. Those with lower incomes usually live in areas with poor amenities to win the spatial competition for housing. A neighborhood amenity includes satisfaction derived from living in a nice area, and many studies suggest that growing up in a high-poverty neighborhood affects social and economic outcomes later in life.Yinger 2001 p. 368
Another way the poor compete for housing is by renting homes rather than buying them, which furthers the negative effects of housing inequality by restricting access to household wealth.Krivo and Kaufman 2004
Homeownership and Wealth Accumulation Younger households benefit from homeownership, as it allows them to accumulate wealth early in their careers. This initial wealth accumulation is based on its own. Later in life, accumulated home equity can be used for unexpected expenses, funding children's education, or assisting retirement.
Racial Disparities and the Wealth Gap Racial differences are a crucial component of housing inequality. The racial wealth gap affects the economic security of Americans throughout the United States. These disparities have intergenerational effects, affecting not only the current generation but also the future. In 2019, the median net wealth amongst Black households was seen at $24,000, while white households were seen at $190,000, almost 8 times more than Black households. The contrast amongst these numbers makes it hard for minorities to develop and accumulate wealth through homeownership.
Discriminatory Lending Practices The Great Recession exposed discriminatory lending practices that disproportionately affect minorities. These practices hindered wealth accumulation and caused the racial wealth gap. Addressing housing inequality is essential for promoting economic fairness and ensuring a more equitable economy. The effects of housing inequality directly influence generational wealth, residually reducing financial opportunities and well-being for families across different age groups.
Immediate Impact on Quality of Life Equalization of these factors (housing disparities) would directly enhance Black Americans' quality of life.
Establish a federal postal bank that provides access to low-cost, low-risk financial services to Black households. This can expand financial inclusion and reduce the disparities in financial access and literacy.
Proposed remedies Proposals to remedy the adverse effects of housing inequality include: Subsidized housing, also known as affordable housing. Subsidized housing includes: Co-operative housing: Type of residential housing option that is corporation. Owners do not outright own their units. Non-profit housing: Housing that is intended for low income persons or families, owned by nonprofit organizations. The non profit organizations may receive funding from government grants, donations, or other fundraising efforts. Direct housing: Housing where persons or families receive housing assistance directly from the government. Help can come in the form of subsides, vouchers, and other public housing units. Public housing: Form of housing where the property is owned by the government. There are different types of public housing, from single family houses to high rise apartments. Rent supplements: Short term income assistance for people who cannot afford the costs of their current housing. Private-sector housing - U.S. landlords who provide adequate housing Fair-lending enforcement - Lenders are expected to not discriminate against borrowers because of family status, race, originality, gender, and color Scattered-site housing - A housing system where rent is based on household income This system is popular in Philadelphia in the U.S. Investment in local school systems - According to Ruel Hamilton, financially supporting schools in impoverished areas has a ripple effect which improves school ratings and property values for owners of inner-city housing projects. Land value tax - A progressive tax on land ownership
Why should employers care about Housing? High housing costs can make it difficult for employers to attract and retain workers, particularly for lower-wage roles. This reduces productivity and competitiveness. Employers can attract and retain diverse individuals at all levels. Housing instability can hinder employee productivity, well-being, and retention. Long commutes can lead to stress, depression, and financial issues for workers. Employers should be aware of, care about, and provide affordable housing. Employers can benefit from advocating for and investing in affordable housing policies and programs, which can be beneficial for their workforce and the local economy. Affordable housing can improve the quality of life, access to employment, and economic growth.