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The Three Reasons Why Housing Matters

In the last blog post, I laid out the concerns that housing is growing increasingly unaffordable to the middle class in the United States and other nations around the world. This post focuses on why we should care, hopefully making the case at several levels: based on individual and family impact, community and national and finally world impact.



Housing is Destiny for Individuals and Families


Affordable and safe housing is the key driver of economic and desirable social outcomes for individuals and families. Matthew Desmond eloquently wrote in his Pulitzer Prize winning book, Evicted: Poverty and Profit in the American City “without stable shelter, everything else falls apart” and “Eviction is a cause, not just a condition, of poverty.” Safe and stable housing is a necessary (albeit not sufficient) condition to better health, access to education, and stable employment. Housing is a precursor to enabling an individual to be a productive member of their community. This is not surprising. While stories of individuals overcoming great odds make a compelling story, research consistently shows that for the most part our environment drives outcomes. This is particularly poignant today, as we watch the disparate impact of coronavirus on Black Americans, which can be linked to housing segregation.


Beyond access to safe and stable housing, housing ownership is key to long term financial stability and wealth for families over the generations. According to the Federal Reserve, for middle income families, housing comprises approximately 60% of their wealth. Therefore, most meaningful transfers of wealth between generations for all but the very wealthy are connected to home ownership. The history of US Government policies in the US, which had the impact of blocking Black homeownership has been one of the primary drivers of the racial wealth gap in the US that has been compounding for generations.


Housing is a Driver of Community Inequality


While increasing inequality is a problem unto itself, the larger problem is the increasing lack of social mobility. The Brooking article Seven Reasons to Worry About the-American Middle Class shows the rates of upward social mobility declining precipitously over time. The chart is from a paper called The Fading American Dream from the National Bureau of Economic Research. It refers to the belief that anybody can rise above their birth circumstances as the American Dream, but it is no accident that homeownership is also called the American Dream. Home ownership is the manifestation of achieving the dream and the inability to achieve it creates societal dissatisfaction that impacts us all in a multitude of ways.


Lack of affordable housing also leads to poorer outcomes for communities. Employers and public entities cannot find the workers to meet the needs of their business. Teachers, police and firefighters, sanitation workers, grocery store clerks – all the people we are deeming essential during the COVID 19 public health crisis cannot live in the communities they serve. Some of the impacts are clear – employers cannot find talent and grow their businesses and increased commute times degrade quality of life both for those who commute and those who are impacted by the carbon dioxide given off during their commute. There are other more nuanced impacts on communities though when socioeconomic groups do not readily mix and the working class is unseen by the privileged. Communities can care for the less privileged, when they are well integrated, but when inequality becomes enshrined through housing to creating separate but unequal communities, our civic institutions – schools, religious institutions, other nonprofits – cannot serve their purpose – to create a civil society.


Solving the Housing Crisis is Key to any Climate Change Initiative


Finally, solving the affordable housing crisis is at the core of solving a great many of the world’s ills. This article from the Centre for Affordable Housing Finance in Africa posits that housing is central to achieving the United Nation's Sustainable Development Goals. While there is a direct connection to UN Sustainable Development Goal 11: Sustainable Cities and Communities, housing as discussed above is a necessary condition for many other goals. The one connection that deserves some description is the outsized role that housing plays in climate change. Housing produces waste and carbon emissions in numerous ways

According to the UN Environment Program, buildings and their construction account for 36 percent of global energy use and 39 percent of energy-related carbon dioxide emissions annually and building operations account for about 28 percent of emissions annually. This does not account for the emissions from transportation that people use to commute from their homes to their distant offices as affordability forces them farther from city enters. This Curbed article on how buildings impact carbon emissions and shows why the path to sustainability is through housing.


The Road to Solving the Housing Affordability Crisis


There needs to be a focused effort on creating and operating affordable, sustainable housing and it is clear that we won’t get there by doing the same things we have always done. This is the time for investing in housing innovation:

  • Technologies are maturing to the point that they can be used to address the problem;

  • Governments, nonprofits, and private industry are acknowledging that the problem has reached the level of crisis

It won’t be easy, but few problems worth solving are.


If you would like to learn more about FinTech4Good's efforts in applying digital technology to affordable and sustainable housing or would like to join us in our efforts please sign up here Digital Innovations For Affordable and Sustainable Housing Interest Group.


Article by Ann Epstein

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