How Can We Reform the American Housing System to Better Serve the Working Class and Other Marginalized Groups?

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Housing equality and its importance

From the very inception of the United States, the working class has been often abused and mistreated, used for cheap labor and cast aside when it came to their time of need. In fact, the Constitution itself, according to legal historian Michael J. Klarman, was a “conservative counterrevolution […] designed in part to block legislation for tax and debt relief” (Klarman). This exploitation continued through the horrific exploitation perpetrated by the Robber Barons of the Gilded Age, up to the systematic inequalities we see today (Gateway). This brings up an important question: if these class inequalities are this deeply embedded in the fabric of America, what specific steps can be taken to fix it? The housing market has one of the biggest impacts on the welfare of the working class, as houses are the most consequential marker of financial stability and socioeconomic status, and, for the majority of Americans, are their single largest financial asset (Kitces). Thus, inequalities in the housing system cause a ripple effect, furthering class divides in many other spheres. For example, it has a significant impact on inheritance, one of the main ways of retaining intergenerational wealth. Those whose parents couldn’t afford to own their home would be much more limited in housing, education, and investment opportunities than people who could benefit from that inheritance.

The 2008 financial crisis

The 2008 financial crisis was one of the worst in American history, with long lasting harm continuing to affect millions. At the core, the crisis was caused by a mix of deregulation of the banking system by the Clinton Administration, and the resulting surge in subprime lending (Collins). A subprime loan is when a bank grants a loan that’s abnormally high-risk (low chance of the customer being able to pay it back), on predatory terms (that the customer typically can’t understand) (Schuetz). This practice was reaching a peak in 2008, coming to a head when millions weren’t able to pay back their mortgages, resulting in banks scrambling to try and recoup the money they would have otherwise gotten from mortgage payments. This, coupled with the plummeting value of real estate, meant that even by foreclosing those houses banks still couldn’t recoup the money they lost (Collins). This resulted in the collapse of many major banking institutions (Economist), requiring mass Federal bailouts (Invest). Even with these bailouts, the middle and working classes were plunged into turmoil. Family homelessness increased anywhere from 20% – 200% in the years that followed, depending on the city (NextCity). Meanwhile, the wealthy bankers and financiers who caused this recession with their greedy and irresponsible business practices enjoyed life in their multi-million dollar estates, paid for by businesses reliant on federal funds. 

Housing and COVID-19

Adequate and supportive housing policy has become increasingly important of late, as, due to the COVID-19 pandemic, many families have had to survive without their usual flows of income. In a year in which the people all over the world were was being told to stay in their homes, many are in danger of losing them entirely. COVID-19’s effects have been felt unevenly across income strata and professional placement (Goodman). As the Federal Government stepped up its efforts to protect ordinary families through the CARES Act with $4 billion in emergency relief to protect against homelessness, reports showed that small homeowners were protected more than renters were. The CARES Act specifically set aside mortgage assistance for low-income homeowners (Goodman). Mortgage payment deferrals were allowed. This posed only a small risk for lenders because it only delayed the loan payoff, and in any case, the home could be repossessed if absolutely necessary. However, renters as a group are more economically insecure than homeowners, especially during this pandemic, as a higher percentage of workers in the food, transport, entertainment and retail industries are renters. COVID-19 did lead to renter assistance in the form of temporary eviction moratoria, but urban economists have argued that this step shifted the burden to property owners, not all of whom could handle the loss of non-paying units (Goodman). The argument here is not that small homeowners did not need assistance; they did. The argument is that those even more vulnerable, those too insecure even to own property, were given even less help than homeowners, when it was in fact them who needed it the most. 

What can we do?

I originally became interested in this subject after reading up on the finances behind the 2008 housing crisis. The lack of any meaningful criminal investigation into those who were at fault got me thinking about the entire makeup of the government. While we are now seeing many more women and people of color as senators and representatives, one thing that remains still is that almost all powerful government leaders are upper or upper middle class. These ongoing housing inequities are long-standing effects of who this country was built by, and who it was built for, and it crucial we change that. 

 

Thanks for checking out my website! Please feel free to leave some feedback in the comment section below. It is welcome and appreciated. If you’d like, be sure to also include ways you think you could help this issue, and if you have any other interesting relevant information on the subject. Also, if you have any other questions, go ahead and ask them as well, as I’ve written a lot more about this subject that I wasn’t able to include in this presentation (I will be linking the essays below). Thanks for stopping by!

 

Personal Interest Essay: https://docs.google.com/document/d/1_gMgj_Ta3t9CK3t4OVWNwBGHXERvyqV-TcG99L9fpq8/edit?usp=sharing

History of the Problem: https://docs.google.com/document/d/15gAggvErzKdEo_RFiiIVga-2-Qorh7WfJt4nwtKv2mo/edit?usp=sharing

Current Day Problem/Solution Essay: https://docs.google.com/document/d/1jJzEisKDEbA5wXyLGMZn4mk0kQJDFTZXVs43mhzvRO4/edit?usp=sharing

Works Cited: https://docs.google.com/document/d/1Vc-1ATsIQ7i158h28nfA60tb9aU8uhNM6Xh_LbdJL7U/edit?usp=sharing

 

 

 

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