Introduction

According to a group of Harvard researchers, affordable housing is crucial as wages stagnate and housing costs rise, causing millions of Americans to be housing cost-burdened (Joint Center for Housing Studies at Harvard University, 2018). Housing cost-burdened means that a household is spending more than 30% of its income on housing. Approximately 50% of renting households are categorized as housing cost-burdened (National Low Income Housing Coalition, 2020). This means that families are unable to grow wealth or consider purchasing homes. Many low-income families live in low social mobility areas, areas with less opportunity for quality education and intergenerational income growth, due to lack of the financial means to move. Affordable housing provides stability for families by keeping housing costs constant and allowing to increase savings over time. In order to combat high rent prices, the Twin Cities approved a rent control proposal in which landlords are restricted from raising rent prices over 3% (Parker, 2021). This will likely result in a lower probability of displacement for tenants, but could also lead to less incentive for landlords to invest in maintenance or upgrades. Trying to understand the impact of affordable housing on communities through the social lens, the question emerges, how do efforts to provide affordable housing in the Twin Cities affect low-income households? This question allows for the determining of the effects financial stability has on next-generation education and career outcomes in a household.

Effects of Housing on Social Mobility

During the 1950s, practices of redlining and predatory lending were prominent in areas such as the Twin Cities, where these practices were products of systemic racial steering in real estate that prevented Black families from building wealth and accessing better infrastructure (Miller, 2020).  

In 1968 redlining was ended by the Fair Housing Act. However, today there are many families living in previously redlined areas and still financially disadvantaged as a result of the policies that were in effect over 50 years ago. During this period of redlining, many minority families were hard-pressed to qualify for conventional loans, as a result, they had to pay higher mortgage rates, straining families’ incomes and landing those same payments on the shoulders of the next generation. We see redlined areas  “drawn by the federal Home Owners’ Loan Corp (HOLC) from 1935 to 1939 are today much more likely than other areas to comprise of lower-income, minority residents” (Jan, 2018). Many families were unable to move out of low-income areas because they were only offered high-interest rate loans. While the Fair Housing Act was meant to decrease housing discrimination, it does not address discrimination in the form of evictions.In June 2021, the Department of Housing and Urban Development (HUD) released the Affirmative Further Fair Housing policies as a part of President Biden’s administration’s goal to reduce housing segregation in cities, but President Biden’s new Affirmative Further Fair Housing policies have overlooked eviction (Rutan & Louis, 2021). The Fair Housing Act prohibits discrimination during the house searching stage but has no restrictions on eviction bias. Minority and family renters are more likely to be evicted due to discrimination and the landlord’s perspective of children as liabilities (Shelly, 2020). This means that in order for President Biden’s Affirmative Fair Housing policies to serve their purpose there must be restrictions around the reasoning for eviction in order to prevent the displacement of minority families.

As a result of challenges such as housing discrimination and building intergenerational wealth, a team of researchers from Opportunity Insights, a Harvard University non-profit organization, created a solution to help low-income families move from low to high opportunity areas. They calculated ‘opportunity’ based on the quality of education and potential earnings in different neighborhoods in Seattle, Washington. They provided advisors that showed participants which neighborhoods had better opportunities, settling their participants into these optimal neighborhoods. The Seattle County housing authorities provided funding to pay for any increase in living costs participants would require after a move. These moves from low to high opportunity neighborhoods often added an additional $210,000 in income throughout a child’s future career (Chetty et al., 2020). This effort to provide low-income families with affordable housing resulted in better education and career outcomes for their children without high-interest loans. Also, eviction discrimination was improved by this experiment because participants were taught how to have positive landlord-renter interactions, which built confidence for the renters and a trusting relationship with landlords. Ultimately, the families involved were given financial stability and the appropriate counseling to find a home that would connect the next generations with better opportunities for their future.

References

Chetty, R., Friedman, J., Hendren, N., Jones, M., Abowd, J., Bergman, P., Deming, D., Glaeser, E., Grusky, D., Katz, L., Moretti, E., Sampson, R., Dockes, C., Droste, M., Goldman, B., Hoyle, J., Gonzalez Rodriguez, F., Gracie, J., Jacob, M., & Koenen, M. (2020). The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility *. https://opportunityinsights.org/wp-content/uploads/2018/10/atlas_paper.pdf

Diamond, R. (2018, October 18). What does economic evidence tell us about the effects of rent control? Brookings; Brookings. https://www.brookings.edu/research/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control/

Jan, T. (2018, March 28). Redlining was banned 50 years ago. It’s still hurting minorities today. The Washington Post. https://www.washingtonpost.com/news/wonk/wp/2018/03/28/redlining-was-banned-50-years-ago-its-still-hurting-minorities-today/

Joint Center for Housing Studies at Harvard University. (2018). The State Nation’s Housing 2018. https://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_State_of_the_Nations_Housing_2018.pdf

Miller, G. (2020). When Minneapolis Segregated. Bloomberg https://www.bloomberg.com/news/articles/2020-01-08/mapping-the-segregation-of-minneapolis

National Low Income Housing Coalition. (2020). Housing Cost Burden for Low-Income Renters Has Increased Significantly in Last Two Decades. National Low Income Housing Coalition. https://nlihc.org/resource/housing-cost-burden-low-income-renters-has-increased-significantly-last-two-decades

Parker, W. (2021, November 3). Minneapolis, St. Paul Voters Approve Rent-Control Measures. Wall Street Journal. https://www.wsj.com/articles/minneapolis-st-paul-voters-approve-rent-control-measures-11635945438

Rutan, & Louis. (2021). To Root Out Segregation, Biden Must Tackle Evictions. Bloomberg https://www.bloomberg.com/news/articles/2021-07-12/evictions-are-a-part-of-housing-discrimination

Shelly, B. (2020, August 6). Children will bear the brunt of a looming eviction crisis. The Hechinger Report. https://hechingerreport.org/children-will-bear-the-brunt-of-a-looming-eviction-crisis/