tag:theconversation.com,2011:/us/topics/homeownership-46163/articlesHomeownership – The Conversation2024-03-07T13:28:59Ztag:theconversation.com,2011:article/2170552024-03-07T13:28:59Z2024-03-07T13:28:59ZHow Florida’s home insurance market became so dysfunctional, so fast<p>Imagine saving for years to buy your dream house, only to have <a href="https://www.insurancebusinessmag.com/us/news/property/homeowners-to-face-huge-premium-jump-as-insurers-seek-50-premium-hike-476805.aspx">surging property insurance costs</a> keep homeownership forever out of reach. </p>
<p>This is a common problem in Florida, where average insurance premiums cost homeowners an eye-watering <a href="https://www.newsnationnow.com/business/your-money/florida-home-insurance-prices">US$6,000 a year</a>. That’s <a href="https://www.npr.org/2023/10/26/1208590263/florida-homeowners-insurance-soaring-expensive">more than triple</a> the national average and about three times what Floridians paid on average for insurance premiums in 2018. </p>
<p>What’s more, several major insurance carriers have <a href="https://www.pnj.com/story/money/2023/07/12/florida-insurance-crisis-farmers-insurance-home-insurance-what-to-know/70407302007/">left the state</a> over the past year, leaving residents with <a href="https://www.bloomberg.com/news/articles/2023-08-10/hurricane-season-2023-florida-s-biggest-property-insurer-is-nonprofit-citizens?sref=Hjm5biAW">limited alternatives</a>.</p>
<p>As <a href="https://www.ju.edu/directory/latisha-nixon-jones.php">a law professor</a> who specializes in disaster preparedness and resilience, I think it’s important to understand what’s driving costs higher – not least because other states could soon face a similar predicament. </p>
<p>Three primary factors are driving the insurance challenge. First, natural disasters are becoming more common and costly. Second, <a href="https://www.investopedia.com/terms/r/reinsurance.asp">the price of reinsurance</a> is skyrocketing. And finally, Florida’s litigation-friendly environment compounds the issue by making it easy for customers to sue their insurers.</p>
<h2>Disasters, like sea levels, are on the rise</h2>
<p>With its location on the beautiful-yet-hurricane-prone Gulf of Mexico, Florida has long been vulnerable to the elements. Natural disasters cost the state <a href="https://edis.ifas.ufl.edu/publication/FE1075">$5 billion to $10 billion</a> every year, the federal government estimated in 2018, the last year for which data was available.</p>
<p>Yet that likely understates the case today, since disasters have only become bigger, more common and more expensive since then. For example, climate change has <a href="https://abcnews.go.com/US/climate-change-making-atlantic-hurricanes-strengthen-weak-major/story.">made oceans warmer</a>, which <a href="https://doi.org/10.1038/s41598-023-42669-y">research suggests</a> fuels stronger, more intense hurricanes. </p>
<p>As a result, Florida has experienced billion-dollar disasters an average of <a href="https://www.ncei.noaa.gov/access/billions/state-summary/FL">four times annually</a> over the past five years – up from about one each year in the 1980s.</p>
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<p>This surge in disasters doesn’t just put lives at risk; it also wreaks havoc with the insurance market, as carriers are inundated with claims from one catastrophe after another. This makes it harder for them to turn a profit or obtain reinsurance to protect their stakeholders.</p>
<h2>Why reinsurance matters</h2>
<p>Insurance companies, in essence, make money two ways. First, they <a href="https://doi.org/10.1038/s41562-021-01121-9">pool risk</a> among policyholders. Risk-pooling is the practice of taking similarly situated individuals or properties, grouping them together, and charging similar prices for insurance since they face the same risk.</p>
<p>Second, they reduce risk by acquiring reinsurance. Reinsurance acts as a safeguard for insurance companies – it’s essentially insurance for the insurers. Reinsurers pledge to cover a specified portion or type of insurance claim – for instance, catastrophic hurricanes – which provides a layer of financial protection.</p>
<p>The new era of climate disasters has thrown a wrench into the process. Reinsurance companies, grappling with a surge in claims due to more frequent and severe disasters, have found themselves forced to <a href="https://www.law.com/dailybusinessreview/2023/07/12/floridas-critical-reinsurance-market-improves-but-at-a-price/?slreturn=20231012224549">raise their premiums</a> for insurance carriers. Carriers, in turn, have passed the burden to policyholders.</p>
<p>To try to navigate these challenges, some companies have chosen to limit coverage for specific types of damage. For example, some insurance companies in Florida will no longer offer hurricane or flood coverage. And in extreme cases, insurance companies have withdrawn entirely from the state. </p>
<p>Understanding this complex relationship between insurers, reinsurers and policyholders is key to understanding the broader implications of the <a href="https://www.fox13news.com/news/florida-home-insurance-crisis-cost-price-premium-institute-rates">Florida insurance crisis</a>. It underscores the urgent need for comprehensive solutions and collaborative efforts to address evolving challenges in the insurance ecosystem.</p>
<h2>Learning from Florida … one way or another</h2>
<p>Florida isn’t taking all this sitting down. In December 2022, state lawmakers responded to growing property market instability by passing <a href="https://www.flsenate.gov/Session/Bill/2022A/2A">Senate Bill 2A</a>, a package of insurance reforms. </p>
<p>One major part was a rule change designed to discourage policyholders from suing their insurers. Previously, Florida law let insured individuals recover attorney fees if they secured any amount through litigation against their insurer. </p>
<p>The idea is that making this change will discourage needless lawsuits. However, my research as an <a href="https://engagedscholarship.csuohio.edu/clevstlrev/vol71/iss3/5/">environmental justice professor</a> shows that attempts to exclude attorneys from the negotiation process often lead to more expensive litigation and less access to justice.</p>
<p>The bill also restricts <a href="https://www.myfloridacfo.com/docs-sf/insurance-consumer-advocate-libraries/ica-documents/aob-consumer-protection-tips-brochure.pdf?sfvrsn=690bdde6_5">assignment of benefits</a>, a mechanism that permits third-party entities like roofing companies to negotiate with insurance companies on behalf of Florida residents. While assignment of benefits <a href="https://www.myfloridacfo.com/division/consumers/consumerprotections/assignmentofbenefits">increased advocacy</a>, it was also linked to skyrocketing claims costs.</p>
<p>The balancing act between providing ample opportunities and containing costs has <a href="https://floridaphoenix.com/2023/10/13/advocates-hailed-a-new-law-to-help-stabilize-fls-housing-crisis-but-implementation-has-been-rocky/">sparked debate</a> among justice advocates. Florida’s legislative response reflects an ongoing effort to strike an equilibrium, ensuring fairness and accessibility while addressing the challenges faced by both insurers and policyholders.</p>
<p>Florida’s actions to address the property insurance crisis raise a critical question: Will the state serve as a blueprint for disaster-prone regions, or act as a cautionary tale? After all, states such as California and Louisiana have also seen insurance companies withdrawing from their markets. Will their legislatures draw inspiration from Florida’s? </p>
<p>For now, it’s too early to tell: The policies have only been in place since the latest round of hurricanes. But in the meantime, the rest of the U.S. will be watching – especially policymakers who care about resilience, and those who want to make sure vulnerable populations don’t get the short end of the stick.</p><img src="https://counter.theconversation.com/content/217055/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Latisha Nixon-Jones does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Florida home insurance premiums have shot up threefold in just five years.Latisha Nixon-Jones, Associate Professor of Law, Jacksonville UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2151472023-11-05T19:13:05Z2023-11-05T19:13:05ZHomeowners often feel better about life than renters, but not always – whether you are mortgaged matters<p>Homeownership has long been thought of as the <a href="https://www.abc.net.au/news/2017-08-23/why-australians-are-obsessed-with-owning-property/8830976">great Australian dream</a>. For individuals, it’s seen as the path to adulthood and prosperity. For the nation, it’s seen as a cornerstone of economic and social policy.</p>
<p>Implicit in this is the assumption that owning a home rather than renting one makes people better off.</p>
<p>It’s an assumption we are now able to examine using data from the government-funded <a href="https://melbourneinstitute.unimelb.edu.au/hilda">Household, Income and Labour Dynamics in Australia</a> (HILDA) survey, which for two decades has asked questions both about homeownership and satisfaction with life.</p>
<p>The <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0007/4694137/ContinuingPersonQuestionnaireW23M.pdf">overarching question</a> asks</p>
<blockquote>
<p>all things considered, how satisfied are you with your life? Pick a number between 0 and 10 to indicate how satisfied you are</p>
</blockquote>
<p>We also looked at people’s satisfaction with their financial situation, their home and the neighbourhood in which they live.</p>
<p>In a study published in the journal <a href="https://journals.sagepub.com/doi/10.1177/00420980231190479">Urban Studies</a>, we linked those answers to home ownership and characteristics including age and income.</p>
<p>As expected, we found homeowners were generally more satisfied with their lives than renters. But we also find the extent to which they were more satisfied depended on whether or not they were still paying off a mortgage.</p>
<h2>Mortgaged homeowners about as satisfied as renters</h2>
<p>Outright home owners were 1.5 times as likely to report high overall satisfaction as renters. But home owners still paying off a mortgage were only a little more likely to feel high overall satisfaction. </p>
<p>Similarly, outright owners were 2.3 times as likely to report high financial satisfaction as renters – but mortgaged owners were only 1.1 times as likely.</p>
<p>When it comes to satisfaction with their home and neighbourhood, the differences were less extreme. </p>
<p>Outright home owners were 3.1 times as likely to report high satisfaction with their home as renters, while mortgaged owners were 2.8 times as likely. </p>
<p>Outright owners were 1.6 times as likely to report high satisfaction with their neighbourhood as renters, and mortgaged owners 1.4 times as likely.</p>
<p>The results also varied with age and income.</p>
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<p>As shown in the graph above, outright owners were more likely to report high financial satisfaction than renters across almost the entire age range.</p>
<p>But mortgaged owners only showed a demonstrably greater financial satisfaction than renters between the ages of 25 and 50. </p>
<p>Beyond age 50, the existence of a mortgage debt burden appeared to cancel out any boost to financial satisfaction from homeownership. This potentially reflects the growing financial stress of making mortgage payments as retirement approaches.</p>
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<p>By income, mortgaged owners reported experiencing more financial satisfaction compared to renters the more they earned between A$80,000 and A$240,000. Outright owners experienced more financial satisfaction than renters up to A$320,000. </p>
<p>Beyond these income levels, owners did not have greater financial satisfaction than renters, perhaps because high-earning renters have other sources of financial satisfaction.</p>
<h2>How satisfied people feel beyond 60</h2>
<p>In other respects, outright owners and mortgaged homeowners showed similar patterns, becoming more satisfied with their homes relative to renters the more they age up – until the age of 60. That’s when their satisfaction relative to renters declined, as illustrated below. </p>
<p>This decline might reflect the growing physical burden of maintaining an owned home as people age.</p>
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<p>Our study has important implications. One is that age matters.</p>
<p>Although older people consistently express a desire to <a href="https://www.ahuri.edu.au/analysis/brief/whats-needed-make-ageing-place-work-older-australians">age in place</a>, we found satisfaction among those who owned vs rented their home declined beyond age 60. This suggests better integration between housing and care is critical to support people ageing in place. </p>
<p>Another implication is that as low-income owners are more reliant on their homes as a source of relative financial satisfaction than high earners, they are <a href="https://www.cambridge.org/core/journals/journal-of-social-policy/article/housing-equity-withdrawal-perceptions-of-obstacles-among-older-australian-home-owners-and-associated-service-providers/268F54A8EAA1E9ECA118E243505AA9FD">more exposed</a> in times of crisis. They may face the risk of being forced to sell suddenly with little time to consider the consequences.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-housing-wealth-gap-between-older-and-younger-australians-has-widened-alarmingly-in-the-past-30-years-heres-why-197027">The housing wealth gap between older and younger Australians has widened alarmingly in the past 30 years. Here's why</a>
</strong>
</em>
</p>
<hr>
<p>And another implication is as the relative financial satisfaction of mortgage holders disappears after the age of 50, and as more of us approach retirement with mortgages intact, more of us will either <a href="https://journals.sagepub.com/doi/10.1177/00420980211026578">postpone retirement</a> or become dissatisfied.</p>
<p>Our findings suggest the extension of mortgage debt into later life should be discouraged if the benefits of the Australian dream are to be preserved.</p><img src="https://counter.theconversation.com/content/215147/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Ong ViforJ is the recipient of an Australian Research Council Future Fellowship (project FT200100422). </span></em></p><p class="fine-print"><em><span>Hiroaki Suenaga and Ryan Brierty do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We found people who own their home outright were 1.5 times as likely to be highly satisfied with life as renters. But it can be a different story if you have a mortgage – especially if you’re 50-plus.Rachel Ong ViforJ, ARC Future Fellow & Professor of Economics, Curtin UniversityHiroaki Suenaga, Senior Lecturer School of Accounting, Economics and Finance, Curtin UniversityRyan Brierty, PhD candidate, School of Accounting, Economics and Finance, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2114782023-10-26T12:32:45Z2023-10-26T12:32:45ZI studied 1 million home sales in metro Atlanta and found that Black families are being squeezed out of homeownership by corporate investors<figure><img src="https://images.theconversation.com/files/554093/original/file-20231016-21-isn6c7.jpg?ixlib=rb-1.1.0&rect=40%2C32%2C5414%2C3026&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Corporate investors own nearly one-third of all single-family rental properties in Atlanta.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/atlanta-georgia-usa-downtown-skyline-aerial-royalty-free-image/1184733973">Kruck20/iStock via Getty Images</a></span></figcaption></figure><p>In the years since the Great Recession, when <a href="https://www.federalreservehistory.org/essays/great-recession-and-its-aftermath">housing prices dramatically fell</a>, Wall Street investors have been buying large numbers of single-family homes to use as rentals. As of 2022, big investment firms <a href="https://www.urban.org/research/publication/profile-institutional-investor-owned-single-family-rental-properties">owned nearly 600,000 such properties nationwide</a>.</p>
<p><a href="https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html#title">Critics say</a> this practice drives up home prices and worsens the housing shortage, making it harder for families to afford to buy. Industry advocates <a href="https://thehill.com/opinion/congress-blog/3496390-providers-of-single-family-rental-homes-are-an-important-part-of-americas-housing-ecosystem/">dismiss such charges</a>, arguing that large investment firms own a tiny fraction of single-family rental housing across the U.S. – <a href="https://www.urban.org/research/publication/profile-institutional-investor-owned-single-family-rental-properties">less than 4%</a> of the total.</p>
<p>As a <a href="https://scholar.google.com/citations?user=cxLejGQAAAAJ&hl=en&oi=ao">professor of public policy at Georgia Tech</a>, I wanted to understand how this trend was affecting my neighbors. So I analyzed <a href="https://doi.org/10.1177/0739456X231176072">more than 1 million property sales</a> in the Atlanta metropolitan area from 2007 to 2016. Since the study period included the <a href="https://www.federalreservehistory.org/essays/subprime-mortgage-crisis">mortgage crisis</a>, I excluded bulk sales, such as the packages of
foreclosed homes, that aren’t available to typical homebuyers. I examined only <a href="https://www.investopedia.com/terms/a/armslength.asp">arm’s-length transactions</a> of single-family detached homes, where buyers and sellers act independently. </p>
<p>I found that global investment firms buying up local properties are indeed hurting Atlanta families – specifically, Black ones. </p>
<h2>Neighborhood transformations</h2>
<p>In the period I studied, homeownership declined across the Atlanta metro area by <a href="https://www.census.gov/housing/hvs/data/rates/tab6a_msa_05_2014_hmr.xlsx">more than 5 percentage points</a>, similar to a nationwide trend. For an average neighborhood, home purchasing by large corporate investors explained one-quarter of that decline. </p>
<p>But when I broke the analysis down by race, I found that Black families were hit much harder: Large investment firms buying up local properties explained fully three-quarters of the decline in African American homeownership. In contrast, non-Hispanic whites were largely unaffected. </p>
<p>It turns out that while Wall Street firms control just a sliver of the single-family rental market nationally, they can have much more influence at the local level. In the Atlanta metro area, these firms own nearly one-third of all single-family rental properties. They’re even more concentrated <a href="https://www.washingtonpost.com/business/interactive/2021/investors-rental-foreclosure">in predominantly Black neighborhoods</a>, where <a href="https://www.ajc.com/american-dream/investor-owned-houses-atlanta/">more than 10 houses in a row</a> can be owned by the same corporation.</p>
<p>In my study, I found that large investors tend to snap up housing in majority-nonwhite, lower-income suburban neighborhoods. This makes homebuying even more challenging for middle-class families of color, as they get <a href="https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html">pushed out of the bidding market</a> by global investors. </p>
<h2>Home is where the financial security is</h2>
<p>Homeownership has long been one of the main pathways for the American middle class to accumulate wealth. Despite this, the national homeownership rate declined <a href="https://fred.stlouisfed.org/series/RHORUSQ156N">by 5.5 percentage points</a> between 2007 and 2016, reaching a five-decade low of 62.9%. Although homeownership has rebounded somewhat since 2016, it remains below pre-2008 levels. </p>
<p>And who owns these homes is starkly divided by race. Between 2015 and 2019, more than 70% of white families owned a home, compared with <a href="https://www.jchs.harvard.edu/blog/nearly-every-state-people-color-are-less-likely-own-homes-compared-white-households">just 41% of Black families</a>, according to an analysis by Harvard University’s Joint Center for Housing Studies. </p>
<p>To be sure, policies like <a href="https://www.nytimes.com/2021/08/17/realestate/racism-home-deeds.html">racial covenants</a>, <a href="https://uncpress.org/book/9781469663883/race-for-profit/">discriminatory mortgage lending practices</a> <a href="https://www.epi.org/publication/the-color-of-law-a-forgotten-history-of-how-our-government-segregated-america/">and redlining</a> fueled low homeownership rates for Black Americans long before the Great Recession. But global investors’ growing control of single-family homes only widens existing racial gaps in homeownership and wealth.</p>
<h2>Directions for new research</h2>
<p>While my study focused on Atlanta, it’s not the only place where residents are <a href="https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html">competing with global investors</a> for housing. Investment firms’ single-family rental portfolios are largely <a href="https://www.urban.org/sites/default/files/2023-08/A%20Profile%20of%20Institutional%20Investor%E2%80%93Owned%20Single-Family%20Rental%20Properties.pdf">concentrated in Sun Belt metro areas</a>, including Phoenix, Charlotte and Jacksonville. It wouldn’t be surprising to see similar conflicts playing out in those cities. </p>
<p>Since my analysis stopped in 2016, I can’t be sure that Black Atlanta residents are still affected by Wall Street firms buying up housing. Many investment firms have recently been <a href="https://www.wsj.com/real-estate/americas-biggest-landlords-cant-find-houses-to-buy-either-ea893213">switching from a buy-to-rent</a> business model to a <a href="https://www.wsj.com/articles/building-and-renting-single-family-homes-is-top-performing-investment-11636453800">build-to-rent model</a>, which could complicate matters.</p>
<p>In the meantime, while <a href="https://www.banking.senate.gov/hearings/how-institutional-landlords-are-changing-the-housing-market">residents and policymakers have claimed</a> that large corporations don’t invest in local communities, researchers lack robust evidence this is the case. Academics should study whether properties owned by institutional landlords are more likely to be <a href="https://www.ajc.com/american-dream/investor-owned-houses-atlanta/">poorly maintained</a> or have <a href="https://www.washingtonpost.com/business/2022/07/12/invitation-homes-corporate-landlord-permits/">code violations</a>, as anecdotal evidence suggests.</p>
<p>It’s also worth investigating whether big investment firms undermine local revenue collection by <a href="https://www.charlotteobserver.com/news/business/article277638663.html">serially filing property tax appeals</a>. </p>
<h2>An open-source tool for housing policy research</h2>
<p>It’s been hard for researchers to identify corporate-owned, single-family homes, since it requires proprietary real-estate data and labor-intensive number crunching. In a separate project, my colleagues and I have developed a <a href="https://repository.gatech.edu/entities/publication/472788f9-a5e6-4d9b-8238-422d20333bcb">simple, user-friendly methodology</a> that gets around such challenges with the use of open-source software and public tax parcel data. </p>
<p>Local governments and nonprofits can use our methodology to unveil all the corporate-owned residential properties in any neighborhood and link them to outcomes such as code violations. Using data-driven approaches like this is an important step toward developing policy solutions.</p><img src="https://counter.theconversation.com/content/211478/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brian Y. An does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Black would-be homeowners pay the price when big investors buy up the neighborhood.Brian Y. An, Director of Master of Science in Public Policy Program & Assistant Professor of Public Policy, Georgia Institute of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2112002023-08-22T20:07:44Z2023-08-22T20:07:44ZHigher prices have hit most people but homeowners have felt it harder than renters<p><em>This article is part of The Conversation’s series examining Australia’s cost of living crisis. You can read the other articles in the series <a href="https://theconversation.com/au/topics/cost-of-living-series-144357">here</a>.</em></p>
<hr>
<p>Cost of living pressures are acute for some, but in different ways for different types of household.</p>
<p>The Australian Bureau of Statistics consumer price index has climbed by 6% per year for each of the past two years. </p>
<p>In the decade before that, it only climbed by an average of 1.8% per year.</p>
<p>So, on the figures, cost of living pressures suddenly became acute, but if you had been paying attention to the media for those previous ten years you would have thought Australia had been in a cost of living crisis the entire time.</p>
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<p>Some people <em>have</em> been under financial pressure the entire time, but it’s instructive to look at whose living costs have increased the most.</p>
<p>The best guide is a different set of indexes to the consumer price index, also produced by the bureau.</p>
<p>Called <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release#">selected living cost indexes</a>, they are better because they include mortgage costs, which the consumer price index does not, measuring the cost of home ownership by the cost of purchasing a home instead of the upfront cost of building a new home.</p>
<p>The bureau presents living cost indexes based on the spending patterns of: </p>
<ul>
<li><p>employees </p></li>
<li><p>beneficiaries on pension-like payments</p></li>
<li><p>beneficiaries on other payments including JobSeeker</p></li>
<li><p>age pensioners </p></li>
<li><p>self-funded retirees.</p></li>
</ul>
<p>But it turns out the main factor that differentiates the new price pressures facing households is whether or not they have a mortgage, and in particular how recently they bought their first home.</p>
<p>At the Australian National University, my team has used the Bureau of Statistics’ methodology and data to calculate cost indexes based on the spending patterns of different types of households including those headed by:</p>
<ul>
<li><p>first homebuyers and recent buyers who’ve bought in the past three years</p></li>
<li><p>all homeowners with a mortgage</p></li>
<li><p>outright owners</p></li>
<li><p>renters.</p></li>
</ul>
<p>Homeowners with a mortgage turn out to have experienced a very large cost increase over the past two years of 17.5% – much more than renters who have had an average increase of “just” 10.8%, and outright owners who’ve had 11.7%.</p>
<p>First homebuyers who bought within the past three years faced the biggest living cost increase, of 20.5%. Those who bought within the past three years but were “changeover” buyers had an increase of 18.4%. </p>
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<p>Younger Australians (under 35) are more likely to rent than have a mortgage. As a result, their costs increased by “only” 13.1% over the past two years, whereas the living costs of older Australians (aged 50–64) increased by 15.1%.</p>
<p>Perhaps for the same reason, the living costs of group households increased by “only” 13.1%, while the living costs of couples with children increased 15.2%.</p>
<h2>Those on benefits are best protected</h2>
<p>We found very little difference in the percentage cost of living increase based on income level alone, and also very little difference based on gender. But the source of income mattered.</p>
<p>Households whose main income was wages suffered cost increases of 14.6%, whereas households whose main income was government benefits had a lesser increase of 12.7%.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/rent-crisis-average-rents-are-increasing-less-than-you-might-think-189154">Rent crisis? Average rents are increasing less than you might think</a>
</strong>
</em>
</p>
<hr>
<p>Each of these increases was far more than the average increase in incomes of 4.7%, but Australians on benefits got much bigger increases in incomes because their payments were linked to the consumer price index, meaning their incomes increased roughly in line with their costs.</p>
<h2>Longer term, renters, homeowners treated the same</h2>
<p>Although in the past two years costs have turned against mortgage holders more than renters and outright owners, this isn’t the case in the longer term.</p>
<p>The first years of COVID, 2020 and 2021, were especially good for mortgage holders (and renters), with mortgage rates (and rents) cut to long-term lows after years of very little growth.</p>
<p>The chart below shows that over the longer term, the living costs associated with all three types of housing have climbed more or less together, and have climbed by less than household income.</p>
<hr>
<p><iframe id="3CKNM" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/3CKNM/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
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<p>This isn’t to say those households whose living costs have climbed sharply over the past two years (mortgaged households) are suffering. Many have built up significant financial buffers in the years when interest rates were ultra-low, and many have high incomes and substantial wealth.</p>
<p>Nor is it to say that those households whose living costs have increased less sharply (renters) are not suffering. </p>
<p>Lower-income households, single parents and welfare recipients’ households were in the greatest financial stress five years ago, 10 years ago and 20 years ago, and remain in the greatest financial stress today.</p><img src="https://counter.theconversation.com/content/211200/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ben Phillips does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Mortgaged households have faced a 17.5% increase in living costs over the past two years, compared to 10.8% for households who rent.Ben Phillips, Associate Professor, Centre for Social Research and Methods, Director, Centre for Economic Policy Research (CEPR), Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2098322023-08-13T13:34:33Z2023-08-13T13:34:33ZHow Airbnb may be fuelling gentrification: A case study in Toronto<figure><img src="https://images.theconversation.com/files/541098/original/file-20230803-27-7ead3f.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3610%2C2399&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A new study sheds light on how short-term rentals like Airbnb make housing less affordable.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>The average asking price for a rental unit in Canada <a href="https://www.ctvnews.ca/business/average-asking-price-for-canadian-rental-unit-hits-record-high-in-june-rentals-ca-1.6478222">reached $2,042 in June</a>, marking a 7.5 per cent increase from 2022. Metropolitan districts are particularly affected by rising rental costs, with some local families forced to <a href="https://www.cbc.ca/news/canada/british-columbia/single-dad-affordable-housing-vancouver-1.6899715">relocate due to a lack of affordable housing</a>.</p>
<p>While several factors may contribute to this, some have pointed to <a href="https://hbr.org/2019/04/research-when-airbnb-listings-in-a-city-increase-so-do-rent-prices">Airbnb as one of the reasons</a> for the rental crisis. Airbnb <a href="https://globalnews.ca/news/9758708/airbnb-short-term-rentals-affordable-housing/">says it is not the cause of the housing affordability crisis</a>.</p>
<p>Despite the significant public interest in how short-term rentals like Airbnb might make housing less affordable, empirical evidence of exactly how, and to what extent this is happening, is sparse.</p>
<p>Our preliminary study of Toronto’s rental market (which will be submitted later this summer to the <a href="https://www.ssrn.com/index.cfm/en/">Social Science Research Network</a>, an open-access repository of academic research papers), used data from Toronto Regional Real Estate Board and <a href="http://insideairbnb.com/get-the-data/">Airbnb listings from 2015 to 2020</a>, and suggested there were two ways Airbnb was affecting the rental market during this period: reducing the number of available rentals and contributing to the gentrification of neighbourhoods.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/airbnbs-adverse-impact-on-urban-housing-markets-109772">Airbnb's adverse impact on urban housing markets</a>
</strong>
</em>
</p>
<hr>
<h2>How Airbnb may lead to gentrification</h2>
<p>Short-term rentals, like those offered by Airbnb, bring in outsiders, often with little regard for local community norms, <a href="https://www.businessinsider.com/how-an-airbnb-guest-trashed-a-penthouse-2014-3">leading to conflicts and complaints</a>.</p>
<p>While dealing with these temporary disturbances is usually possible with <a href="https://www.cbsnews.com/news/airbnb-anti-party-crackdown-tip-line/">traditional policing and communication</a>, such short-term rentals can have lasting impacts on neighbourhoods.</p>
<figure class="align-center ">
<img alt="A map displaying a number of available rental properties at various prices" src="https://images.theconversation.com/files/541099/original/file-20230803-27-km6l0a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541099/original/file-20230803-27-km6l0a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=431&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541099/original/file-20230803-27-km6l0a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=431&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541099/original/file-20230803-27-km6l0a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=431&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541099/original/file-20230803-27-km6l0a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=541&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541099/original/file-20230803-27-km6l0a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=541&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541099/original/file-20230803-27-km6l0a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=541&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Airbnb affects the rental market by reducing the number of available rentals and contributing to the gentrification of neighbourhoods.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>When homeowners convert their properties into Airbnb rentals, it may reduce the long-term rental supply in their neighbourhoods. This could increase rental prices, <a href="https://www.acto.ca/a-new-poll-shows-the-majority-of-ontario-renters-are-having-to-choose-between-food-and-paying-their-rents-when-it-comes-to-housing-affordability-this-province-is-on-fire/">stretching the budget</a> of lower-income families.</p>
<p>The lucrative short-term market may also attract new housing <a href="https://journals.sagepub.com/doi/10.1177/0308518X18778038?icid=int.sj-full-text.similar-articles.2">investments targeted at Airbnb rentals</a>. This could further squeeze local families, who may find themselves in bidding wars. Eventually, the economic pressure could force these families out of their neighbourhoods, leaving only the wealthier population in place.</p>
<p>Property values could increase as vacated homes are filled by wealthier families moving in from outside, who can afford the high prices. Over time, the neighbourhood could change to comprise mostly relatively wealthier citizens in a process called <a href="https://theconversation.com/centring-race-why-we-need-to-think-about-gentrification-differently-199168">gentrification</a>.</p>
<h2>Is Airbnb driving up prices in Toronto?</h2>
<p>With <a href="https://news.airbnb.com/about-us/">6.6 million active listings spanning over 220 countries and 100,000 cities</a>, Airbnb offers three types of accommodations: entire homes or apartments, private rooms and shared rooms.</p>
<p>Our analysis focused on the entire homes or apartments category. In the time period of the study, owners of these accommodations were able to choose between the long-term and short-term rental markets, but those who only rented out a portion of their residence were less likely to be part of the long-term market.</p>
<p>We found that Airbnb rentals can squeeze out long-term rentals in neighbourhoods. As the number of Airbnb rentals in a neighbourhood increased, the availability of long-term rentals decreased and vice versa.</p>
<figure class="align-center ">
<img alt="A graph illustrating that long-term rental supply decreases when new Airbnb listings increase" src="https://images.theconversation.com/files/540203/original/file-20230731-24-u4e3ln.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/540203/original/file-20230731-24-u4e3ln.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=308&fit=crop&dpr=1 600w, https://images.theconversation.com/files/540203/original/file-20230731-24-u4e3ln.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=308&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/540203/original/file-20230731-24-u4e3ln.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=308&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/540203/original/file-20230731-24-u4e3ln.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=388&fit=crop&dpr=1 754w, https://images.theconversation.com/files/540203/original/file-20230731-24-u4e3ln.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=388&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/540203/original/file-20230731-24-u4e3ln.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=388&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A graph comparing a) excess supply in the long-term rental market to b) the ratio of new Airbnb listings relative to the supply of long-term rentals.</span>
<span class="attribution"><span class="source">(Iman Sadeghi and Sourav Ray)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>On average, we estimate that an increase of one per cent in Airbnb listings per square kilometre in a district, is associated with a 0.09 per cent increase in long-term rental rates. A <a href="https://pubsonline.informs.org/doi/abs/10.1287/mksc.2020.1227">similar study</a> conducted in the United States, estimated an average increase of 0.018 per cent. While the numbers may not be easily comparable since one is for a metropolitan area and another is for the whole country, they are indicative of the potential impact.</p>
<p>We found evidence that Airbnb may be leading to higher potential rent income for property owners. This difference in income between the potential short-term rentals and traditional long-term rentals, known as the rent gap, draws investors to properties that can be used for short-term rentals.</p>
<p>The reduced availability of long-term rentals can lead to bidding wars for housing, which can lead to even higher rents. As telltale evidence we found that a 10 per cent increase in this rent gap is associated with a 3.1 per cent surge in long-term rental prices. This is equivalent to a $80 monthly rent hike for the average one-bedroom property in Toronto. </p>
<p>These results offer tentative evidence of the potential impact of Airbnb on long-term rental rates during the time period of the study.</p>
<figure class="align-center ">
<img alt="A graph showing the rent gap in Toronto increasing from 2015 to 2020" src="https://images.theconversation.com/files/540204/original/file-20230731-21-vlfbz7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/540204/original/file-20230731-21-vlfbz7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=262&fit=crop&dpr=1 600w, https://images.theconversation.com/files/540204/original/file-20230731-21-vlfbz7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=262&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/540204/original/file-20230731-21-vlfbz7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=262&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/540204/original/file-20230731-21-vlfbz7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=330&fit=crop&dpr=1 754w, https://images.theconversation.com/files/540204/original/file-20230731-21-vlfbz7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=330&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/540204/original/file-20230731-21-vlfbz7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=330&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The average rent gap in Toronto from 2015 to 2020.</span>
<span class="attribution"><span class="source">(Iman Sadeghi and Sourav Ray)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>Mixed social impact</h2>
<p>Despite evidence that Airbnb may be associated with rising rents, its <a href="https://www.epi.org/publication/the-economic-costs-and-benefits-of-airbnb-no-reason-for-local-policymakers-to-let-airbnb-bypass-tax-or-regulatory-obligations/">broader social impact</a> remains <a href="https://www.cbc.ca/news/canada/british-columbia/airbnb-study-vancouver-1.3830803">controversial</a>.</p>
<p>For homeowners, Airbnb offers a new income source. Travellers can boost local employment opportunities as retailers, restaurants and other businesses cater to their needs. A flow of young people can energize neighbourhoods with their joie de vivre and creativity.</p>
<p>Yet affordable housing is a basic need for our society. With almost 40,000 total listings in <a href="http://insideairbnb.com/toronto/">Toronto</a>, <a href="http://insideairbnb.com/vancouver/">Vancouver</a> and <a href="http://insideairbnb.com/montreal/">Montréal</a>, Airbnb is a big player in the economy, but is only one part of the larger picture affecting the availability of affordable housing.</p>
<p>Attempts to mitigate Airbnb’s effect on housing affordability have had <a href="https://www.cbc.ca/news/canada/edmonton/canadians-are-being-crushed-by-a-housing-crisis-are-short-term-rentals-to-blame-1.6911344">challenges</a>. <a href="https://www.cbc.ca/news/canada/toronto/toronto-airbnb-ruling-1.5364775">Toronto’s short-term rental bylaw</a>, which was upheld in 2019, limits Airbnb stays in principal residences to a maximum of 180 days per year. The city subsequently began <a href="https://www.toronto.ca/legdocs/mmis/2021/cc/bgrd/backgroundfile-163225.pdf">enforcing the licensing and registration of short-term rentals in 2021</a>.</p>
<p>Narrowly focused policy interventions may not only be ineffective, but may have unexpected negative impacts. In fact, there is also evidence that <a href="https://hbr.org/2021/11/research-restricting-airbnb-rentals-reduces-development">restricting Airbnb rentals reduces the development of new housing units</a>, leading to less housing availability. These factors illustrate how Airbnb is part of a bigger picture and addressing this complex issue will require more studies and creative policy measures.</p>
<p><em>This is an updated version of a story originally published on Aug. 13, 2023. The updated version makes clear the context of the research cited in the article is for the period 2015-20 only and does not analyze the rental market since then.</em></p><img src="https://counter.theconversation.com/content/209832/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Iman Sadeghi received funding from MacData, an institute affiliated with McMaster University, in 2020. The current project, while related, is distinct from the aforementioned MacData-funded initiative.</span></em></p><p class="fine-print"><em><span>Sourav Ray does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Do you ever worry about how Airbnb rentals might be affecting your neighbourhood? Your concerns might not be misplaced.Iman Sadeghi, PhD Candidate, DeGroote School of Business, McMaster UniversitySourav Ray, Lang Chair and Professor of Marketing, University of GuelphLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2079382023-06-23T13:39:43Z2023-06-23T13:39:43ZHouse prices are falling, but that doesn’t mean you should buy now – here’s what first-time buyers should consider<figure><img src="https://images.theconversation.com/files/533158/original/file-20230621-17-zukczo.jpg?ixlib=rb-1.1.0&rect=616%2C174%2C5518%2C3228&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/two-young-lesbian-women-family-couple-2297606011">Andrii Iemelianenko/Shutterstock</a></span></figcaption></figure><p>House prices in the UK fell by 3.4% in the last year, the biggest annual fall in <a href="https://www.nationwidehousepriceindex.co.uk/reports/annual-house-price-growth-slips-back-in-may">nearly 14 years</a>. The inflation-adjusted average house price is now what it was in 2014.</p>
<p>While this may seem like good news, it doesn’t necessarily mean it’s the right time to get on the property ladder. Today, many in their 20s and 30s face difficulties buying their first house mainly due to increasing borrowing costs. </p>
<p>Average mortgage lending rates (based on a two-year fixed rate with a 10% deposit) are now close to 6% compared to <a href="https://www.bankofengland.co.uk/statistics/visual-summaries/quoted-household-interest-rates">2% in January 2022</a>. For a £200,000 mortgage, <a href="https://www.statista.com/statistics/915977/average-value-of-mortgage-granted-in-the-united-kingdom/">the average for UK households</a>, this 4% difference increases monthly payments by almost <a href="https://theconversation.com/five-ways-to-reduce-your-mortgage-repayments-in-2023-and-why-rates-have-risen-so-high-196327">£480 a month</a>.</p>
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<figure class="align-right ">
<img alt="Quarter life, a series by The Conversation" src="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><strong><a href="https://theconversation.com/uk/topics/quarter-life-117947?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">This article is part of Quarter Life</a></strong>, a series about issues affecting those of us in our twenties and thirties. From the challenges of beginning a career and taking care of our mental health to the excitement of starting a family, adopting a pet or just making friends as an adult. The articles in this series explore the questions and bring answers as we navigate this turbulent period of life.</em></p>
<p><em>You may be interested in:</em></p>
<p><em><a href="https://theconversation.com/why-youre-less-likely-to-get-rich-these-days-if-your-parents-arent-already-wealthy-194321?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Why you’re less likely to get rich these days if your parents aren’t already wealthy</a></em></p>
<p><em><a href="https://theconversation.com/managing-people-for-the-first-time-expert-tips-on-how-to-succeed-198615?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Managing people for the first time: expert tips on how to succeed</a></em></p>
<p><em><a href="https://theconversation.com/owning-houseplants-can-boost-your-mental-health-heres-how-to-pick-the-right-one-202197?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Owning houseplants can boost your mental health – here’s how to pick the right one</a></em></p>
<hr>
<p><a href="https://www.bbc.co.uk/news/business-12196322">Soaring inflation</a> is not helping either. It is becoming more difficult to afford basic living expenses (including <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/march2023">rental costs</a>), and also to save for a deposit required for a mortgage.</p>
<p>The benefit of decreasing house prices may be offset by interest rate hikes and inflation. What’s more, the prices for typical first-time-buyer properties, such as flats, have not eased as much as the other sectors of the market. Since the start of the pandemic, the price increase, and the recently observed drops, have been less for flats and maisonettes than for other properties.</p>
<figure class="align-center ">
<img alt="Chart showing that prices for flats and maisonettes have not increased or dropped at the same levels as other properties." src="https://images.theconversation.com/files/533128/original/file-20230621-18-2m3krj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/533128/original/file-20230621-18-2m3krj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=316&fit=crop&dpr=1 600w, https://images.theconversation.com/files/533128/original/file-20230621-18-2m3krj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=316&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/533128/original/file-20230621-18-2m3krj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=316&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/533128/original/file-20230621-18-2m3krj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=397&fit=crop&dpr=1 754w, https://images.theconversation.com/files/533128/original/file-20230621-18-2m3krj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=397&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/533128/original/file-20230621-18-2m3krj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=397&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Alper Kara/Land Registry Data</span>, <span class="license">Author provided</span></span>
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</figure>
<h2>What to ask a mortgage adviser</h2>
<p>The idea of buying a first home is exciting. However, it is best to act with caution and consider the various factors carefully. One important factor is, of course, what mortgages are available. </p>
<p>Mortgage comparison <a href="https://www.moneysavingexpert.com/mortgages/best-buys/">websites</a> are a good starting point. Once you familiarise yourself with those, the best approach is to use a qualified, independent mortgage adviser. They often have access to mortgages exclusive to them, often with better rates, than those available publicly or from a bank.</p>
<p>After checking that they are a regulated and independent adviser, and asking about their fees, here are three important questions to ask and discuss with the broker. Don’t be shy, and make sure you are comfortable with all the details before deciding.</p>
<h2>1. How much can I borrow?</h2>
<p>Find out how much you can borrow <a href="https://www.moneysavingexpert.com/mortgages/how-much-mortgage-borrowing/">using a mortgage calculator</a>. Often, couples who are both in work are at an advantage and can borrow more. </p>
<p>Be on the conservative side when considering how much you can pay for a mortgage after living expenses. Don’t stretch your income to the limit, as interest rates could increase in the future. It is best to talk to a mortgage adviser if you are worried about this.</p>
<p>If you are renting, compare your current rent payment to what you would potentially be paying for a mortgage. If they are similar, then it may be worth buying as a mortgage helps you to own your home over time.</p>
<h2>2. What are my deposit options?</h2>
<p>Check the size of the deposit needed for the property you want to buy. With the government’s <a href="https://www.gov.uk/government/news/government-extends-mortgage-guarantee-scheme">mortgage guarantee scheme</a>, this could be as low as 5%. To support first-time buyers, there are also <a href="https://www.skipton.co.uk/press-office/press-release-article?BlogID=%7B13A47958-66DB-4D1A-B686-F7BFCF3FD742%7D">0% deposit mortgages</a>. However, be aware that a no-deposit mortgage comes with risks. If house prices fall further, you may be left in negative equity instantly – meaning that your house is now worth less than your outstanding mortgage. </p>
<p>Other mortgage products may be available if you have support from <a href="https://www.nationwide.co.uk/mortgages/family-deposit-mortgage/">family</a> or <a href="https://www.generationhome.com/">friends</a> for a deposit. Bear in mind that deposit size matters as banks charge lower rates if you have a higher deposit – this is known as the <a href="https://www.halifax.co.uk/mortgages/help-and-advice/what-is-loan-to-value.html">loan-to-value ratio</a>.</p>
<h2>3. What other costs might I face?</h2>
<p>Buying and selling properties involves high extra costs, <a href="https://www.thetimes.co.uk/money-mentor/answer/hidden-costs-house-buying/">such as legal, survey, mortgage or estate agent fees</a>. The good news is that first-time buyers are <a href="https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers/stamp-duty-land-tax-relief-for-first-time-buyers">exempt from stamp duty</a>, a substantial cost, for properties up to £300,000. </p>
<p>Make sure you have savings beyond your deposit. If you anticipate needing to move again soon, for example, to move in with a partner or be closer to family, then it may not be the best option to buy a home before you settle.</p>
<p>Also, be aware that <a href="https://www.gov.uk/leasehold-property/service-charges-and-other-expenses">leasehold properties</a> (typically flats or apartments) often have monthly service charges, usually <a href="https://www.redbrickpm.co.uk/blog/how-are-the-average-service-charges-for-flats-calculated/#:%7E:text=What%20is%20the%20average%20service,London%20and%20new%2Dbuild%20flats.">between £1,000 to £2,000 a year</a>. </p>
<figure class="align-center ">
<img alt="A young man and woman sitting on a couch, looking stressed. He is looking at a document, she has her head in her hands." src="https://images.theconversation.com/files/533156/original/file-20230621-27-7iw1na.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/533156/original/file-20230621-27-7iw1na.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/533156/original/file-20230621-27-7iw1na.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/533156/original/file-20230621-27-7iw1na.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/533156/original/file-20230621-27-7iw1na.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/533156/original/file-20230621-27-7iw1na.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/533156/original/file-20230621-27-7iw1na.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">There are more financial factors to consider than house price.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/frustrated-young-couple-checking-financial-documents-1902150268">fizkes/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Understanding mortgage products</h2>
<p>Understanding mortgage products and comparing them is a daunting task. It is best to discuss these in detail with a mortgage adviser to make the right choice. A key feature of mortgages is interest charged. You’ll need to have a plan for how to pay this, especially as interest rates go up. </p>
<p>A fixed-rate mortgage gives you certainty for a period of time (typically two to five years). With a fixed rate your monthly payments will not change, regardless of the <a href="https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate">Bank of England base rate changes</a>. There are now also <a href="https://www.moneysupermarket.com/mortgages/ten-year-fixed-rate/">ten-year fixed rates</a> offered in the market, but such deals would not allow you to benefit from any long-term drop in the interest rates.</p>
<p>A variable-rate mortgage is adjusted automatically to Bank of England rate changes. So your monthly payments may increase or decrease unexpectedly. The <a href="https://www.bbc.co.uk/news/business-65966723">higher than expected inflation figures</a> could be a signal that interest rates may increase further in the coming months. </p>
<p>Check if a deal allows you to <a href="https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/#:%7E:text=Note.,more%20than%20once%20a%20year.">overpay</a> your mortgage, typically around 10% of the borrowed amount. In a high-interest-rate environment like now, having the option to make additional payments whenever you can, will reduce your overall borrowing costs.</p>
<p>Buying your first home is likely the most important financial decision of your life so far. Don’t rush into things. Speak to experts, and consider inflation and other costs. </p>
<hr>
<p><em>This article is not intended to be in-depth financial advice. If you have questions about your situation, talk to a qualified, independent mortgage adviser.</em></p><img src="https://counter.theconversation.com/content/207938/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alper Kara does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The questions you should be asking a mortgage broker.Alper Kara, Professor and Head of Department - Accounting, Finance and Economics, University of HuddersfieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1967752023-02-21T13:23:31Z2023-02-21T13:23:31ZThe ethics of home ownership in an age of growing inequality<figure><img src="https://images.theconversation.com/files/509272/original/file-20230209-20-t2n615.jpg?ixlib=rb-1.1.0&rect=12%2C6%2C4184%2C2787&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Purchasing property as a primary home is considered more ethical than acquiring property for investment.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.co.uk/detail/photo/gavel-wooden-and-house-for-home-buying-or-selling-royalty-free-image/1203206439?phrase=property%20ethics&adppopup=true">Ilya Burdun via Getty Images</a></span></figcaption></figure><p>For many Americans today, <a href="https://www.pewresearch.org/fact-tank/2022/03/23/key-facts-about-housing-affordability-in-the-u-s/">homeownership is an unattainable dream</a>. </p>
<p>In 2022, the average <a href="https://apnews.com/article/inflation-business-economy-prices-mortgages-b3d20020ecddf7a13bd62fb7b5ed7c0c">long-term U.S. mortgage rate rose to 7%</a> for the first time in more than two decades. The median sales price of existing homes <a href="https://www.wsj.com/articles/u-s-home-sales-fell-again-in-june-economists-estimate-11658309401">climbed to a record US$416,000</a> while demand for mortgages dropped to a <a href="https://www.cnbc.com/2022/10/19/mortgage-demand-drops-to-a-25-year-low-as-interest-rates-climb.html">25-year low</a>. </p>
<p>Experts forecast a turnaround in 2023, predicting a fall in <a href="https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/">home prices</a> and <a href="https://www.forbes.com/advisor/mortgages/mortgage-interest-rates-forecast/">mortgage rates</a>. With the housing market likely to cool modestly, the prospect of a gradual return to affordability may sound like music to buyers’ ears. </p>
<p>But should people be purchasing property at all?</p>
<p>My <a href="https://hi.psu.edu/scholars/desiree-lim/">research examines</a> the negative impact of property ownership. Despite the current state of the housing market, property is <a href="https://www.forbes.com/sites/qai/2022/08/30/housing-prices-are-dropping---yes-a-house-is-still-a-good-investment/">still considered a sound investment</a> – at least for the limited group who can afford it. However, property ownership can have serious consequences on others’ lives. </p>
<h2>Buying to make a profit?</h2>
<p>There is a difference between the two main categories of property buyers: those purchasing property as a primary home versus property for investment.</p>
<p>Purchasing property as a primary home is considered more ethical than acquiring property for investment, as housing is considered a basic necessity. </p>
<p>Property for investment, however, is owned for personal profit, often without the owner’s intending to ever live there. Investors may purchase homes that can be “fixed and flipped” and sell them at a profit or lease them to renters. </p>
<p>As of 2019, renters headed around <a href="https://www.pewresearch.org/fact-tank/2021/08/02/as-national-eviction-ban-expires-a-look-at-who-rents-and-who-owns-in-the-u-s/">36% of the nation’s 122.8 million households</a>. Census data shows that <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf">there are 48.2 million rental units</a> in the U.S., roughly 70% of which are owned by individual landlords.</p>
<h2>Landlordphobia?</h2>
<p>Landlords have often been <a href="https://jacobin.com/2021/07/abolish-landlords-cancel-rent-eviction-homelessness">criticized for being callous</a> and <a href="https://www.theguardian.com/commentisfree/2018/apr/16/landlords-social-parasites-last-people-should-be-honouring-buy-to-let">greedy</a>. <a href="https://doi.org/10.1007/s11524-020-00502-1">COVID-19</a> exacerbated landlords’ poor reputations because the pandemic increased <a href="https://doi.org/10.1080/10511482.2021.2020866">renter payment difficulties</a> and <a href="https://doi.org/10.2105/AJPH.2021.306353">triggered widespread evictions</a> and <a href="http://dx.doi.org/10.2139/ssrn.3613030">homelessness</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A sign saying, 'For rent: Evicted.'" src="https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509280/original/file-20230209-26-1wycav.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The COVID-19 pandemic triggered widespread eviction of tenants of rental properties.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.co.uk/detail/photo/apartment-or-house-for-rent-sign-after-eviction-royalty-free-image/1218065305?phrase=for%20rent%20evicted&adppopup=true">pcess609 via Getty Images</a></span>
</figcaption>
</figure>
<p>Some renters complained about uncaring landlords who were <a href="https://doi.org/10.1111/josi.12555">accused of pressuring and threatening vulnerable tenants</a>. The federal and state governments stepped in to help people with such interventions as the <a href="https://nlihc.org/coronavirus-and-housing-homelessness/national-eviction-moratorium">federal eviction moratorium</a> and New York City’s <a href="https://www.nyc.gov/site/rentfreeze/index.page">rent freeze program</a>. </p>
<p>Yet landlords also provide rental opportunities for those who prefer not to buy and for those who wish to buy their own home but cannot afford it. Furthermore, landlords can be seen as offering a <a href="https://www.businessinsider.com/personal-finance/reasons-renting-a-house-is-better-than-buying-one-2019-8?r=US&IR=T">valuable service to those who are not seeking long-term occupancy</a>, such as university students who plan to leave upon graduation or temporary visitors to the U.S. </p>
<p>The ethics of renting out property, then, seems to turn partly on whether renters need it for long-term basic shelter. </p>
<p>Landlords are often blamed for the housing crisis. However, it is the responsibility of the government to ensure the <a href="https://www.ohchr.org/en/special-procedures/sr-housing/homelessness-and-human-rights">right to long-term shelter</a>. </p>
<p>Individual landlords may contribute toward a poor housing system, but they act within the confines of the system. Only governments have the power to change the system, through investment in affordable housing. </p>
<h2>The ethics of owning a home</h2>
<p>Homebuyers also have ethical obligations to others.</p>
<p>Choosing to own property in a <a href="https://bayareaequityatlas.org/indicators/gentrification-risk#/">gentrifying neighborhood, or one considered at risk of gentrifying</a>, may contribute to the forced displacement of <a href="https://www.law.georgetown.edu/poverty-journal/blog/examining-the-negative-impacts-of-gentrification/">existing long-term residents</a>. The harms of having to leave one’s former neighborhood include the severing of community networks or enduring the strain of <a href="https://www.nytimes.com/2017/08/17/business/economy/san-francisco-commute.html">extraordinarily long work commutes</a>. Additionally, persons of color <a href="http://www.wipsociology.org/2021/05/20/how-gentrification-reproduces-racial-inequality">are disproportionately affected by gentrification</a>, which may create new patterns of racial segregation.</p>
<p>Given these consequences, aspiring homeowners should perhaps avoid purchasing homes in neighborhoods with vulnerable residents. But, with housing unaffordability writ large, first-time buyers may be able to afford properties only in neighborhoods at risk of gentrification.</p>
<h2>Mitigating risk</h2>
<p>How can governments mitigate risks like racial segregation while also providing affordable housing? </p>
<p>One example is Singapore’s system of <a href="https://www.bloomberg.com/news/articles/2020-07-08/behind-the-design-of-singapore-s-low-cost-housing">affordable public housing</a>. To prevent segregation, Singapore introduced racial quotas in public housing that require minimum levels of occupancy of each of its main ethnic groups – Chinese, Malay, Indian, and others, which includes all other ethnicities. Though intrusive and <a href="https://www.cigionline.org/static/documents/documents/PB%20no.128web.pdf">imperfect in its execution</a>, the Singaporean approach shows that a more proactive approach to housing is possible.</p>
<p>Landlords may have moral duties, but the government’s role in recognizing and protecting the right to stable long-term housing must not be ignored.</p><img src="https://counter.theconversation.com/content/196775/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Désirée Lim does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A scholar who examines the impact of property ownership explains why purchasing a home comes with many moral obligations.Désirée Lim, Assistant Professor of Philosophy, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1973832023-01-12T19:34:31Z2023-01-12T19:34:31ZCanada’s ban on foreign homebuyers is unlikely to affect housing affordability<figure><img src="https://images.theconversation.com/files/503906/original/file-20230110-5012-e6jept.jpg?ixlib=rb-1.1.0&rect=545%2C427%2C5051%2C3297&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A new act in Canada bans non-citizens, non-permanent residents and foreign commercial enterprises from buying Canadian residential properties.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/canada-s-ban-on-foreign-homebuyers-is-unlikely-to-affect-housing-affordability" width="100%" height="400"></iframe>
<p>As of Jan. 1, 2023, foreign buyers are banned from buying homes in Canada for two years under the <a href="https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html">Prohibition on the Purchase of Residential Property by Non-Canadians Act</a>. The ban was passed in June 2022, but only came into effect this month.</p>
<p>Under the act, non-citizens, non-permanent residents and foreign commercial enterprises are banned from buying Canadian residential properties. The act also has a $10,000 fine for anyone who knowingly assists a non-Canadian and is convicted of violating it.</p>
<p>The law does not include recreational properties or larger buildings with multiple units. It exempts individuals with temporary work permits, refugee claimants and international students if they meet certain criteria. </p>
<p>It also excludes homes outside of the <a href="https://www12.statcan.gc.ca/census-recensement/2021/ref/dict/az/Definition-eng.cfm?ID=geo009">Census Metropolitan Areas (CMA) or Census Agglomerations (CA)</a>. A CMA has a total population of at least 100,000, of which 50,000 or more live in the core area. A CA has a core population of at least 10,000.</p>
<h2>The housing crisis</h2>
<p>The two-year ban is part of the federal government’s effort to ease Canadians’ struggle to afford homes. According to the <a href="https://stats.crea.ca/en-CA/">Canadian Real Estate Association</a>, the average home price in Canada was above $800,000 in 2022, compared to $500,000 in 2015. </p>
<p>Meanwhile, <a href="https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2022040-eng.htm">median after-tax household income</a> in 2020 was $73,000, up from $66,500 in 2015 — a meagre annual growth of two per cent compared to the seven per cent annual growth in average house prices. Canadians were eyeing houses with prices more than 10 times their incomes.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Houses for sale in a new subdivision in Airdrie, Alta., in January 2022.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span>
</figcaption>
</figure>
<p>In a <a href="https://www.gensqueeze.ca/straddling_the_gap_2022_housing_affordability">recent report published by his think tank</a>, Paul Kershaw, a policy professor at the University of British Columbia, found that average home prices would need to fall $341,000 — half of the 2021 value — to make them affordable for a typical young person at current interest rates. Either that or full-time earnings would need to increase to $108,000 per year — 100 per cent more than current levels.</p>
<h2>Who’s the culprit?</h2>
<p>Some believe that foreign investors and speculative activities have fuelled Canada’s surging housing prices and spurred the affordability crisis.</p>
<p>“Homes should not be commodities,” Housing Minister Ahmed Hussen said in a <a href="https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2022/housing-market-remains-available-canadians">December 2022 news release</a>. He continued: </p>
<blockquote>
<p>“Through this legislation, we’re taking action to ensure that housing is owned by Canadians, for the benefit of everyone who lives in this country. We will continue to do whatever we can to ensure that all residents of this country have a home that is affordable and that meets their needs.”</p>
</blockquote>
<p>How many foreign homeowners are there in Canada? Data that tracks foreign buyers and owners in Canada are scarce and patchy. The <a href="https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=4610002701">Canadian Housing Statistics Program</a> shows that non-residents only own about two to six per cent of Canadian residential properties in 2020.</p>
<figure class="align-center ">
<img alt="A middle-aged South Asian man in a suit and tie gestures while speaking" src="https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=395&fit=crop&dpr=1 600w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=395&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=395&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=496&fit=crop&dpr=1 754w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=496&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=496&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Housing Minister Ahmed Hussen rises during Question Period in November 2022 in Ottawa.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Adrian Wyld</span></span>
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<p>The number of foreign participants is scantly relative to the volume of transactions in the market. Foreigners’ contributions to the housing crisis are puny and paltry in comparison with everyone else’s, many of whom have eagerly traded up for bigger homes or down for smaller ones and benefited from the lucrative market.</p>
<h2>Is the policy justified?</h2>
<p>The law is more of a political gesture than an effective tool. The fact that foreign owners represent a tiny segment of the market suggests the new law is unlikely to exert much impact on making homes more affordable to Canadians.</p>
<p>This gesture, however, does send a signal to Canadians that the government is willing to impose heavy-handed policies to address the housing crisis. The gesture, together with rising interest rates, will cool down the red-hot housing market in the short run.</p>
<p>When a policy aims to push one group into a corner, it is likely to create new challenges elsewhere. Foreigners, for example, can still buy recreational properties in less populated areas. It would be interesting to see if and how the policy might stir up challenges in these exempted areas.</p>
<p>More importantly, the ban is a form of restriction on foreign direct investment in domestic assets and the flow of foreign capital into the housing market. The question is: are we using the policy’s minute impact to justify protectionism?</p>
<h2>Encouraging home ownership</h2>
<p>The <a href="https://theconversation.com/housing-is-both-a-human-right-and-a-profitable-asset-and-thats-the-problem-172846">housing crisis is a tricky issue</a>. There is no single policy that could address the affordability issue without introducing other challenges. In fact, most policies would essentially lead one to rethink about what “affordability” actually means. </p>
<p>For one, any housing policies need to achieve a balancing act between two notions of affordability. One notion is based on prices; the other, which tends to receive less attention in the conversation about housing affordability, is about maintaining home ownership status.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/canadas-housing-crisis-needs-answers-but-first-we-need-to-ask-the-right-questions-162745">Canada's housing crisis needs answers — but first we need to ask the right questions</a>
</strong>
</em>
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<p>Take the <a href="https://theconversation.com/the-bank-of-canada-just-hiked-interest-rates-for-the-sixth-time-is-it-too-late-193371">recent interest rate hikes</a> as an example. On the one hand, increasing interest rates have lowered house prices to become slightly more affordable to home buyers. On the other hand, the same interest rate hikes have burdened existing homeowners with a heavier mortgage expense alongside other costs in their daily budgets.</p>
<p>Buying a home, and being a homeowner, is not like buying a piece of fine art, which often stays with the owner with little maintenance. Instead, home ownership — a crucial piece of the affordability puzzle — requires people to maintain their cash flow. If we consider affordability from this broader view, it is not surprising to see that the ban is unlikely to affect housing affordability.</p><img src="https://counter.theconversation.com/content/197383/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diana Mok does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Since foreign owners only represent a tiny segment of the housing market, it’s unlikely that Canada’s new ban on foreign homebuyers will make homes more affordable for Canadians.Diana Mok, Associate Professor of Real Estate Finance and Economics, Western UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1943212022-12-05T12:28:35Z2022-12-05T12:28:35ZWhy you’re less likely to get rich these days if your parents aren’t already wealthy<figure><img src="https://images.theconversation.com/files/497414/original/file-20221125-34343-wo3crj.jpg?ixlib=rb-1.1.0&rect=17%2C17%2C5971%2C3968&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Younger generations are finding it harder to meet traditional financial milestones.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/stressed-financial-owe-asian-young-couple-2149463023">Kmpzzz / Shutterstock</a></span></figcaption></figure><p>Improvements in living standards over generations have been taken for granted in recent history, but these days young people are looking worse off than their parents in one major area: wealth.</p>
<p>Income and wealth have evolved at very different rates in the UK in recent decades, mostly due to sky-rocketing house prices. As a result, millenials and those in younger age groups are much less likely to be on the property ladder by their thirties than their parents. This has significantly restricted younger people’s prospects for future social mobility.</p>
<p>The last 60 years have seen large increases in income inequality in the UK, but most of this change occurred in the 1980s, and on most measures income inequality has been relatively steady over the three decades since. House prices and other assets have been growing in value for decades, but this has benefited all property owners and so inequalities in the relative amounts of wealth held by rich and poor have not changed drastically as a result.</p>
<p>But, as recent findings from the <a href="https://ifs.org.uk/inequality/trends-in-income-and-wealth-inequalities/">Institute for Fiscal Studies Deaton Review of Inequality</a> show, the key change in economic inequality in the UK has been the rising importance of wealth relative to income. This has significantly shifted the balance of economic power between the generations.</p>
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<img alt="Quarter life, a series by The Conversation" src="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><strong><a href="https://theconversation.com/uk/topics/quarter-life-117947?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">This article is part of Quarter Life</a></strong>, a series about issues affecting those of us in our twenties and thirties. From the challenges of beginning a career and taking care of our mental health, to the excitement of starting a family, adopting a pet or just making friends as an adult. The articles in this series explore the questions and bring answers as we navigate this turbulent period of life.</em></p>
<p><em>You may be interested in:</em></p>
<p><em><a href="https://theconversation.com/the-last-two-recessions-hit-young-people-hardest-heres-how-you-can-protect-yourself-for-the-next-one-184783?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">The last two recessions hit young people hardest – here’s how you can protect yourself for the next one</a></em></p>
<p><em><a href="https://theconversation.com/entrepreneurs-know-that-failure-is-sometimes-necessary-heres-what-we-can-learn-from-them-192438?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Entrepreneurs know that failure is sometimes necessary – here’s what we can learn from them</a></em></p>
<p><em><a href="https://theconversation.com/quiet-quitting-why-doing-less-at-work-could-be-good-for-you-and-your-employer-188617?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Quiet quitting: why doing less at work could be good for you – and your employer</a></em></p>
<hr>
<p>Since 1995, average house prices in the UK have risen from £56,000 to over <a href="https://landregistry.data.gov.uk/app/ukhpi">£290,000</a> by August 2022. This huge growth (which went into a temporary reverse after the 2008 global financial crisis) has far outpaced general price inflation. The price of other assets, such as equities, has also risen during this time, boosted in part by a period of <a href="https://www.bankofengland.co.uk/boeapps/database/fromshowcolumns.asp?Travel=NIxAZxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=2007&TD=31&TM=Dec&TY=2022&FNY=Y&CSVF=TT&html.x=66&html.y=26&SeriesCodes=CFMHSDE&UsingCodes=Y&Filter=N&title=CFMHSDE&VPD=Y">very low interest rates</a> over the last decade. This has allowed large proportions of the population to build up significant wealth because around 65% of UK households are homeowners.</p>
<p>On the other hand, a sizeable minority of the population – those that do not own property or other assets – has almost no wealth at all, and will have gained nothing from this period of huge wealth accumulation. As a result, even though the proportion of wealth owned by richer people hasn’t changed much, the size of the gap between the haves and the have-nots has grown.</p>
<h2>Earnings have stagnated</h2>
<p>But while wealth has soared, earnings from work have stagnated since the Great Recession of 2008. The average worker’s real (inflation-adjusted) earnings haven’t increased at all during this time, which means their nominal earnings (not adjusted for inflation) have not risen any more than prices. Total household disposable income has also grown slowly, which makes it harder for people to become more wealthy by earning and saving. </p>
<p>The gap between the middle and the top of this wealth distribution grew from 10 years’ worth of earnings to almost 16 years in the decade after 2008, making it harder to climb the wealth ladder. And even before that, earnings were growing more slowly than house prices. Since the mid 1990s, average earnings (adjusted for inflation) grew by around 37%, while average house prices grew by 188%, meaning they almost tripled in value.</p>
<p><strong>The growing gap between earnings and house prices</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Line graph showing the growing gap between earnings and house price growth. Fairly steady earnings growth since April 1995 versus rising average house prices." src="https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=341&fit=crop&dpr=1 600w, https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=341&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=341&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=428&fit=crop&dpr=1 754w, https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=428&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/498247/original/file-20221130-14-q5rw62.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=428&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Author’s chart using land registry data and ONS average weekly earnings series. Earnings and house prices have been adjusted for inflation.</span>
<span class="attribution"><span class="source">Land Registry, ONS</span></span>
</figcaption>
</figure>
<p>This means that saving for a deposit and earning enough to qualify for a mortgage has become much harder for recent generations, for reasons unrelated to <a href="https://www.theguardian.com/lifeandstyle/2017/may/15/australian-millionaire-millennials-avocado-toast-house">excessive consumption of avocado on toast</a>. More than 60% of those born in the 1950s and 1960s were homeowners by age 30, but only 36% of those born in the 1980s were.</p>
<h2>Addressing the wealth gap</h2>
<p>The combination of rising wealth and stagnating and unequal incomes means older people own increasingly larger shares of wealth, threatening the historic pattern of each generation being financially better off (on average) than the last. Younger generations must rely more on inherited wealth, rather than climbing the wealth ladder with their own earnings. This puts those whose parents and grandparents have little wealth to pass on at an increasing disadvantage. It also risks creating a crisis of worsening social mobility.</p>
<p>The need to tackle inequalities in income and wealth has been <a href="https://ifs.org.uk/articles/have-poor-got-poorer-under-labour">a key dividing line</a> in British politics in recent years, both <a href="https://progressiveeconomyforum.com/blog/new-labour-inequality-and-the-1/">within</a> and between the <a href="https://www.ft.com/content/b017ae0c-36ba-11ea-ac3c-f68c10993b04">main parties</a>. But people are likely to find these income and wealth inequalities far more worrying as they become more entrenched and start to threaten <a href="https://www.britannica.com/topic/social-mobility">social mobility</a>.</p>
<p>The economic outlook has become increasingly uncertain. Without fundamental improvements to <a href="https://ifs.org.uk/articles/productivity-problem">productivity</a> to facilitate greater earnings growth, and an increase in the <a href="https://commonslibrary.parliament.uk/research-briefings/cbp-7671/">supply of housing</a>, it is difficult to see the recent trends of a growing wealth gap and stagnating incomes coming undone any time soon.</p><img src="https://counter.theconversation.com/content/194321/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Wernham works for the Institute for Fiscal Studies. </span></em></p>Owning a home by age 30 is increasingly a distant dream thanks to a growing generational wealth gap.Tom Wernham, Research Economist, Institute for Fiscal StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1930052022-11-03T12:00:53Z2022-11-03T12:00:53ZA brief history of the mortgage, from its roots in ancient Rome to the English ‘dead pledge’ and its rebirth in America<figure><img src="https://images.theconversation.com/files/492228/original/file-20221028-27-xjagjx.jpg?ixlib=rb-1.1.0&rect=280%2C16%2C5155%2C3337&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Mortgages can haunt homeowners.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/illustration-of-a-mortgage-monster-looming-over-a-family-news-photo/584042598?phrase=mortgage%20homes&adppopup=true">GraphicaArtis/Getty Images</a></span></figcaption></figure><p>The average interest rate for a new U.S. <a href="https://www.cbsnews.com/news/home-loan-mortgage-interest-rate-7-percent-highest-since-2001/">30-year fixed-rate mortgage topped 7% in late October 2022</a> for the first time in more than two decades. It’s a sharp increase from one year earlier, when <a href="https://www.valuepenguin.com/mortgages/historical-mortgage-rates">lenders were charging homebuyers only 3.09%</a> for the same kind of loan. </p>
<p>Several factors, including <a href="https://www.nerdwallet.com/article/mortgages/fed-mortgage-rates">inflation rates and the general economic outlook</a>, influence mortgage rates. A primary driver of the ongoing upward spiral is the <a href="https://abc7chicago.com/fed-interest-rate-decision-today-hike-federal-reserve-meeting-november/12408055/">Federal Reserve’s series of interest rate hikes</a> intended to tame inflation. Its decision to increase the benchmark rate by <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm">0.75 percentage points on Nov. 2, 2022</a>, to as much as 4% will propel the cost of mortgage borrowing even higher.</p>
<p>Even if you have had mortgage debt for years, you might be unfamiliar with the history of these loans – a subject I cover <a href="https://scholar.google.com/citations?user=KVv47noAAAAJ&hl=en&oi=ao">in my mortgage financing course</a> for undergraduate business students at Mississippi State University.</p>
<p>The term dates back to <a href="https://www.english-heritage.org.uk/learn/story-of-england/medieval/">medieval England</a>. But the roots of these legal contracts, in which land is pledged for a debt and will become the property of the lender if the loan is not repaid, go back thousands of years. </p>
<p><iframe id="1rD9w" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/1rD9w/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Ancient roots</h2>
<p>Historians trace the <a href="https://www.kingjamesbibleonline.org/Nehemiah-5-3/">origins of mortgage contracts</a> to the reign of King Artaxerxes of Persia, who ruled modern-day Iran in the fifth century B.C. The Roman Empire formalized and documented the legal process of pledging collateral for a loan. </p>
<p>Often using the <a href="https://www.biblegateway.com/passage/?search=John%202%3A13-16&version=NIV">forum and temples as their base of operations</a>, <em>mensarii</em>, which is derived from the word <em>mensa</em> or “bank” in Latin, would set up loans and charge <a href="https://www.biblegateway.com/passage/?search=John%202%3A13-16&version=NIV">borrowers interest</a>. These government-appointed public bankers required the borrower to put up collateral, whether real estate or personal property, and their agreement regarding the use of the collateral would be handled in one of three ways. </p>
<p>First, the <a href="https://www.merriam-webster.com/dictionary/fiducia"><em>Fiducia</em></a>, Latin for “trust” or “confidence,” required the transfer of both ownership and possession to lenders until the debt was repaid in full. Ironically, this arrangement involved no trust at all.</p>
<p>Second, the <a href="https://www.merriam-webster.com/dictionary/pignus"><em>Pignus</em></a>, Latin for “pawn,” allowed borrowers to retain ownership while <a href="https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1684&context=penn_law_review">sacrificing possession and use</a> until they repaid their debts. </p>
<p>Finally, the <a href="https://legaldictionary.lawin.org/hypotheca/"><em>Hypotheca</em></a>, Latin for “pledge,” let borrowers retain both ownership and possession while repaying debts. </p>
<h2>The living-versus-dead pledge</h2>
<p><a href="https://www.britannica.com/biography/Claudius-Roman-emperor">Emperor Claudius</a> brought Roman law and customs to Britain in A.D. 43. Over the next <a href="https://www.english-heritage.org.uk/learn/story-of-england/romans/">four centuries of Roman rule</a> and the <a href="https://www.english-heritage.org.uk/learn/story-of-england/early-medieval/">subsequent 600 years known as the Dark Ages</a>, the British adopted another Latin term for a pledge of security or collateral for loans: <a href="https://worldofdictionary.com/dict/latin-english/meaning/vadium"><em>Vadium</em></a>.</p>
<p>If given as collateral for a loan, real estate could be offered as “<a href="https://www.merriam-webster.com/dictionary/vadium%20vivum"><em>Vivum Vadium</em></a>.” The literal translation of this term is “living pledge.” Land would be temporarily pledged to the lender who used it to generate income to pay off the debt. Once the lender had collected enough income to cover the debt and some interest, the land would revert back to the borrower.</p>
<p>With the alternative, the “<a href="https://www.merriam-webster.com/dictionary/mortuum%20vadium"><em>Mortuum Vadium</em></a>” or “dead pledge,” land was pledged to the lender until the borrower could fully repay the debt. It was, essentially, an interest-only loan with full principal payment from the borrower required at a future date. When the lender demanded repayment, the borrower had to pay off the loan or lose the land. </p>
<p>Lenders would keep proceeds from the land, be it income from farming, selling timber or renting the property for housing. In effect, the land was <a href="https://www.jstor.org/stable/pdf/1321129.pdf">dead to the debtor</a> during the term of the loan because it provided no benefit to the borrower. </p>
<p>Following <a href="https://www.royal.uk/william-the-conqueror">William the Conqueror’s victory</a> at the Battle of Hastings in 1066, the English language was heavily influenced by <a href="https://blocs.mesvilaweb.cat/subirats/the-norman-conquest-the-influence-of-french-on-the-english-language-loans-and-calques/">Norman French</a> – William’s language.</p>
<p>That is how the Latin term “<em>Mortuum Vadium</em>” morphed into “<em>Mort Gage</em>,” Norman French for “dead” and “pledge.” “<a href="https://www.etymonline.com/word/mortgage">Mortgage</a>,” a <a href="https://ia600201.us.archive.org/1/items/cu31924021674399/cu31924021674399.pdf">mashup of the two words</a>, then entered the English vocabulary.</p>
<h2>Establishing rights of borrowers</h2>
<p>Unlike today’s mortgages, which are usually due within 15 or 30 years, English loans in the 11th-16th centuries were unpredictable. <a href="https://www.jstor.org/stable/pdf/1323192.pdf">Lenders could demand repayment</a> at any time. If borrowers couldn’t comply, lenders could seek a court order, and the land would be forfeited by the borrower to the lender. </p>
<p>Unhappy borrowers could <a href="https://www.law.cornell.edu/wex/chancery">petition the king</a> regarding their predicament. He could refer the case to the lord chancellor, who could <a href="https://www.britannica.com/topic/Chancery-Division">rule as he saw fit</a>. </p>
<p><a href="https://www.britannica.com/biography/Francis-Bacon-Viscount-Saint-Alban">Sir Francis Bacon</a>, England’s lord chancellor from 1618 to 1621, <a href="https://www.jstor.org/stable/752041">established</a> the <a href="https://www.law.cornell.edu/wex/equity_of_redemption">Equitable Right of Redemption</a>.</p>
<p>This new right allowed borrowers to pay off debts, even after default.</p>
<p>The official end of the period to redeem the property was called <a href="https://www.law.cornell.edu/wex/foreclosure">foreclosure</a>, which is derived from an Old French word that means “<a href="https://www.etymonline.com/word/foreclose">to shut out</a>.” Today, foreclosure is a legal process in which lenders to take possession of property used as collateral for a loan. </p>
<h2>Early US housing history</h2>
<p>The <a href="https://www.loc.gov/classroom-materials/united-states-history-primary-source-timeline/colonial-settlement-1600-1763/overview/">English colonization</a> of what’s now <a href="https://themayflowersociety.org/history/the-mayflower-compact/">the United States</a> didn’t immediately transplant mortgages across the pond. </p>
<p>But eventually, U.S. financial institutions were offering mortgages.</p>
<p><a href="https://www.huduser.gov/publications/pdf/us_evolution.pdf">Before 1930, they were small</a> – generally amounting to at most half of a home’s market value.</p>
<p>These loans were generally short-term, maturing in under 10 years, with payments due only twice a year. Borrowers either paid nothing toward the principal at all or made a few such payments before maturity.</p>
<p>Borrowers would have to refinance loans if they couldn’t pay them off.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Aerial view of a single-family home community" src="https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Mortgages make it easier for Americans to buy houses like these in Huntington Beach, Calif.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/aerial-view-of-single-family-homes-photographed-during-a-news-photo/1181102068?phrase=single-family%20house&adppopup=true">Jeff Gritchen/MediaNews Group/Orange County Register via Getty Images</a></span>
</figcaption>
</figure>
<h2>Rescuing the housing market</h2>
<p>Once America fell into the <a href="https://www.history.com/topics/great-depression">Great Depression</a>, the <a href="https://www.stlouisfed.org/news-releases/2008/05/02/does-the-great-depression-hold-the-answers-for-the-current-mortgage-distress">banking system collapsed</a>. </p>
<p>With most homeowners unable to pay off or refinance their mortgages, the <a href="https://www.federalreservehistory.org/essays/great-depression">housing market crumbled</a>. The number of <a href="https://www.encyclopedia.com/education/news-and-education-magazines/housing-1929-1941">foreclosures grew to over 1,000 per day by 1933</a>, and housing prices fell precipitously. </p>
<p>The <a href="https://www.fhfaoig.gov/Content/Files/History%20of%20the%20Government%20Sponsored%20Enterprises.pdf">federal government responded by establishing</a> new agencies to stabilize the housing market.</p>
<p>They included the <a href="https://www.hud.gov/program_offices/housing/fhahistory">Federal Housing Administration</a>. It provides <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-mortgage-insurance-and-how-does-it-work-en-1953/">mortgage insurance</a> – borrowers pay a small fee to protect lenders in the case of default. </p>
<p>Another new agency, the <a href="https://sf.freddiemac.com/articles/insights/why-americas-homebuyers-communities-rely-on-the-30-year-fixed-rate-mortgage">Home Owners’ Loan Corp.</a>, established in 1933, bought defaulted short-term, semiannual, interest-only mortgages and transformed them into new long-term loans lasting 15 years.</p>
<p>Payments were monthly and self-amortizing – covering both principal and interest. They were also fixed-rate, remaining steady for the life of the mortgage. Initially they skewed more heavily toward interest and later defrayed more principal. The corporation made new loans for three years, tending to them until it <a href="https://content.time.com/time/subscriber/article/0,33009,858135,00.html">closed in 1951</a>. It pioneered long-term mortgages in the U.S.</p>
<p>In 1938 Congress established the Federal National Mortgage Association, better known as <a href="https://www.fanniemae.com/about-us/who-we-are/history">Fannie Mae</a>. This <a href="https://www.financial-dictionary.info/terms/government-sponsored-enterprise/">government-sponsored enterprise</a> made fixed-rate long-term mortgage loans viable <a href="https://www.investopedia.com/terms/s/securitization.asp">through a process called securitization</a> – selling debt to investors and using the proceeds to purchase these long-term mortgage loans from banks. This process reduced risks for banks and encouraged long-term mortgage lending.</p>
<h2>Fixed- versus adjustable-rate mortgages</h2>
<p>After World War II, Congress authorized the Federal Housing Administration to insure <a href="https://www.govinfo.gov/content/pkg/CPRT-108HPRT92629/html/CPRT-108HPRT92629.htm">30-year loans on new construction</a> and, a few years later, purchases of existing homes. But then, the <a href="https://files.stlouisfed.org/files/htdocs/publications/review/69/09/Historical_Sep1969.pdf">credit crunch of 1966</a> and the years of high inflation that followed made adjustable-rate mortgages more popular.</p>
<p>Known as ARMs, these mortgages have stable rates for only a few years. Typically, the initial rate is significantly lower than it would be for 15- or 30-year fixed-rate mortgages. Once that initial period ends, <a href="https://www.investopedia.com/terms/a/arm.asp">interest rates on ARMs</a> get adjusted up or down annually – along with monthly payments to lenders. </p>
<p>Unlike the rest of the world, where ARMs prevail, Americans still prefer the <a href="https://sf.freddiemac.com/articles/insights/why-americas-homebuyers-communities-rely-on-the-30-year-fixed-rate-mortgage">30-year fixed-rate mortgage</a>.</p>
<p>About <a href="https://data.census.gov/cedsci/table?q=DP04&t=Housing">61% of American homeowners</a> have mortgages today – with <a href="https://doi.org/10.1080/15214842.2020.1757357">fixed rates the dominant type</a>.</p>
<p>But as interest rates rise, demand for <a href="https://www.corelogic.com/intelligence/interest-rates-are-up-but-arm-backed-home-purchases-are-way-up/">ARMs is growing</a> again. If the Federal Reserve fails to slow inflation and interest rates continue to climb, unfortunately for some ARM borrowers, the term “dead pledge” may live up to its name.</p><img src="https://counter.theconversation.com/content/193005/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael J. Highfield does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With 30-year fixed rates hitting a 20-year high of 7%, a finance scholar explains where these life-altering loans originated.Michael J. Highfield, Professor of Finance and Warren Chair of Real Estate Finance, Mississippi State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1908812022-10-11T12:21:02Z2022-10-11T12:21:02ZBlack women endure legacy of racism in homeownership and making costly repairs<figure><img src="https://images.theconversation.com/files/488142/original/file-20221004-19-t0fjc8.jpg?ixlib=rb-1.1.0&rect=138%2C72%2C3887%2C2945&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The removal of drywall during mold remediation is seen after a basement flood. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/removal-of-drywall-along-staircase-leading-to-house-royalty-free-image/1345055192?phrase=home%20repairs%20disaster&adppopup=true">Catherine McQueen/Getty Images</a></span></figcaption></figure><p>Yolanda, 61, owns a home in the predominantly Black 7th Ward neighborhood in New Orleans. </p>
<p>To fix her leaking roof in 2020, she had to borrow money. </p>
<p>“It’s one of them credit card loans,” she said. “Like interest of 30% and all that, you know. I was kind of backed up against the wall, so I just went on and made the loan, a high-interest loan.”</p>
<p>As <a href="https://liberalarts.tulane.edu/departments/sociology/people/faculty/robin-bartram">a sociologist</a> who has spent the past 10 years studying housing conditions in the U.S., I led a research team that conducted interviews with homeowners who are struggling with basic maintenance such as rotting wood siding and floors, mold, crumbling brickwork, outdated plumbing and leaking ceilings. Our first paper from this project is currently under peer review.</p>
<p>Like Yolanda, our interviewees – whom we gave pseudonyms to protect their privacy – were almost all Black women over the age of 60 who lived in old buildings in neighborhoods that have borne the brunt of discrimination – such as <a href="https://www.cambridge.org/core/books/segregation-by-design/9CEF629688C0C684EDC387407F5878F2#fndtn-information">redlining and inequitable land use decisions</a> – and disinvestment.</p>
<p>Once <a href="https://www.datacenterresearch.org/pre-katrina/orleans/4/14/snapshot.html">a lively district</a> of Black businesses and homes, the 7th Ward has become an area of high poverty since <a href="https://www.nola.com/300/article_64e363c2-2c60-5516-90e0-3c904190e27e.html">the I-10 expressway</a> was built during the 1960s directly through its heart. </p>
<p>Yolanda had already been living there for a decade before the highway was built. </p>
<p>Though brightly painted, Yolanda’s home is separated from I-10 only by an empty lot, and the constant noise and higher rates of pollution make it hard to imagine Yolanda would be able to sell her home for a profit or use its declining value as equity. </p>
<p>Did Yolanda take out a high-interest loan for nothing?</p>
<p>Was she throwing good money after bad? </p>
<p>These are not easy questions to answer. </p>
<p>Like other Black female homeowners whom we interviewed, Yolanda had to choose between debt and disrepair. </p>
<p>As she explained, she was “backed up against a wall.”</p>
<h2>The racist and sexist history of disrepair</h2>
<p>According to a 2022 analysis of federal census data by <a href="https://www.jchs.harvard.edu/blog/home-repairs-and-updates-pose-considerable-burdens-lower-income-homeowners">Harvard’s Joint Center for Housing Studies</a>, nearly a third of homeowners who earn less than US$32,000 – about 4.8 million people – spent nothing on maintenance or improvements. </p>
<p>I have noticed worrying trends in the circumstances of those who live in housing in disrepair.</p>
<p><a href="https://press.uchicago.edu/ucp/books/book/chicago/S/bo174780463.html">In my book</a>, “Stacked Decks,” I explore the connections between urban housing, race, gender and income inequality.</p>
<p>Since at least the 1970s, <a href="https://uncpress.org/book/9781469663883/race-for-profit/">real estate agents and lenders have exploited the precarious financial positions of Black women and sold them mortgages on homes in poor condition</a>. </p>
<p>Today – 50 years later – these homes pose even greater health and safety risks to their owners than when they first bought them.</p>
<figure class="align-center ">
<img alt="as seen from this aerial photograph, a major highway cuts through a residential neighborhood." src="https://images.theconversation.com/files/486183/original/file-20220922-30154-avsb6g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/486183/original/file-20220922-30154-avsb6g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/486183/original/file-20220922-30154-avsb6g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/486183/original/file-20220922-30154-avsb6g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/486183/original/file-20220922-30154-avsb6g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=498&fit=crop&dpr=1 754w, https://images.theconversation.com/files/486183/original/file-20220922-30154-avsb6g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=498&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/486183/original/file-20220922-30154-avsb6g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=498&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The I-10 interstate highway cuts through residential neighborhoods in New Orleans shown here after Hurricane Katrina in 2005.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/is-shown-flooded-from-hurricane-katrina-september-11-2005-news-photo/55736407?adppopup=true">Jerry Grayson/Helifilms Australia PTY Ltd/Getty Images</a></span>
</figcaption>
</figure>
<p>Studies show that after less than two years of ownership, <a href="https://www.tandfonline.com/doi/full/10.1080/15575330.2010.491154?casa_token=sh3YscPy7EwAAAAA%3A1kiaOfyDDRuerz_65JPSltmldTZjCk36HKepXokJqrWcBxY3hCZl-GvS7e0rTp7_vguil0xPGBST">disrepair makes maintaining a livable home difficult for low-income homeowners</a>.</p>
<p>Unaddressed repairs such as leaky roofs or broken pipes frequently result <a href="https://press.uchicago.edu/ucp/books/book/chicago/S/bo174780463.html">in code violations</a> and court cases, which prompt liens, foreclosures and the possibility of homelessness.</p>
<p>The situation is worse for Black women, <a href="https://www.taylorfrancis.com/books/mono/10.4324/9780203707425/black-wealth-white-wealth-melvin-oliver-thomas-shapiro">who have much less wealth</a>, on average, than their white or male counterparts. Without money to pay for repairs, female homeowners face incurring more debt if they make repairs.</p>
<p>Climate change means that <a href="https://www.washingtonpost.com/business/2022/03/24/what-climate-change-will-mean-your-home/">these problems are getting worse</a> as a result of increased rainfall and extreme temperatures.</p>
<p>Doris, a homeowner in Chicago, told us in 2021 about her old and leaking roof and the flooding in her basement. She explained that the flooding was partially due to the overflowing of nearby city-owned drainage pipes. </p>
<p>“Every time it rains, the water comes in,” she said. “By the sewer not being clean … so much water came in my basement that my washer and dryer was floating up on the water.” An insurance claim covered some of the costs of this repair for Doris, and the <a href="https://www.chicago.gov/city/en/depts/water/supp_info/basement_floodingpartnership.html">city is experimenting with new ways to tackle floodwater</a>, but water still gets in when it rains hard. </p>
<h2>Racism and sexism in the housing industry</h2>
<p>The racism pervading the housing industry is now well known. The real estate industry has, at different points in history, <a href="https://press.uchicago.edu/ucp/books/book/chicago/C/bo5298959.html">excluded Black Americans from homeownership</a>, <a href="https://uncpress.org/book/9781469663883/race-for-profit/">included them through predatory loans and deals</a> and <a href="https://academic.oup.com/book/39518">reinforced racial segregation</a> by denying loans to Black and other minority residents. Known as redlining, the practice became a self-fulfilling prophecy of disinvestment and declining values.</p>
<p>But real estate agents and mortgage brokers were <a href="https://uncpress.org/book/9781469663883/race-for-profit/">sexist as well</a>. </p>
<p>These real estate agents and mortgage brokers knew Black women had <a href="https://uncpress.org/book/9781469663883/race-for-profit/">limited options and assumed they would be likely to default on their mortgages</a>. </p>
<p>Black women were consistently <a href="https://journals.sagepub.com/doi/full/10.1177/02637758211013041?casa_token=2EwxQlPIkHsAAAAA%3ALCMHw3y5OO72gKleOGaMiAc8hooAQ10vRhMHM1zmfnm9VQbcsQCB3boeSMhmlx48rQSienRO_HTq">sold homes that needed repairs</a>.</p>
<p>A lot can happen to a house in 50 years.</p>
<p>Buildings naturally deteriorate over time, because of the combination of aging construction materials and weather. At some point, all homes need repairs and preventive maintenance. </p>
<figure class="align-center ">
<img alt="The roof of a building is covered in plastic tarp." src="https://images.theconversation.com/files/488139/original/file-20221004-1853-38y6rj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/488139/original/file-20221004-1853-38y6rj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=382&fit=crop&dpr=1 600w, https://images.theconversation.com/files/488139/original/file-20221004-1853-38y6rj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=382&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/488139/original/file-20221004-1853-38y6rj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=382&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/488139/original/file-20221004-1853-38y6rj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=481&fit=crop&dpr=1 754w, https://images.theconversation.com/files/488139/original/file-20221004-1853-38y6rj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=481&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/488139/original/file-20221004-1853-38y6rj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=481&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A damaged building roof covered in plastic tarp.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/damaged-building-roof-covered-in-plastic-tarp-royalty-free-image/680653536?phrase=home%20repairs%20disaster&adppopup=true">Douglas Sacha/Getty Images</a></span>
</figcaption>
</figure>
<p>Chicagoan Kimberly cares for her grandson almost full time and told us about her concerns about the rotted wood that has made her back porch dangerous to stand on. </p>
<p>“We don’t go out of the back door at all,” Kimberly said. “We have not used that in years. Four years now. Four years we have not used the back porch at all.” </p>
<h2>Disrepair and environmental injustice</h2>
<p>Disrepair is an issue of environmental injustice. The government has a responsibility to help with repairs because of its <a href="https://wwnorton.com/books/the-color-of-law/">role in the housing discrimination</a> that has created such racial disparities in housing conditions. </p>
<p>But, like <a href="https://www.dukeupress.edu/markets-of-sorrow-labors-of-faith#:%7E:text=Markets%20of%20Sorrow%2C%20Labors%20of%20Faith%20is%20an%20ethnographic%20account,services%20under%20market%2Ddriven%20governance.">disaster relief</a>, assistance to homeowners is uneven and hard to obtain. </p>
<p>U.S. cities often use <a href="https://www.chicago.gov/city/en/depts/doh/provdrs/homeowners/svcs/home-repair-program.html">lotteries to distribute funds for repairs</a>, barely scratching the surface of the number of homes in need of repair. </p>
<p>Although all homes need repair work over time, disrepair disproportionately affects people with the fewest resources, because maintenance is expensive. Disrepair also causes health and safety issues, as do other environmental injustices, such as the placement of highways and location of polluting factories. </p>
<p>Disrepair can also force people to leave their homes because they cannot afford repairs. </p>
<p>But making repairs can exacerbate debt. </p>
<p>What all this means is that owning a home, or even paying off a mortgage, does not guarantee that homes remain affordable, an asset or a safe shelter. </p>
<p>Recognizing disrepair as environmental racism could be one step in ensuring homes are all these things.</p><img src="https://counter.theconversation.com/content/190881/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robin Bartram does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Routine maintenance is necessary for every homeowner. But for Black women, that burden is complicated by decades of redlining and the impacts of climate change.Robin Bartram, Assistant Professor of Sociology, Tulane UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1917252022-10-04T19:31:45Z2022-10-04T19:31:45ZRecovery from a disaster like Hurricane Ian takes years, and nonprofits play many pivotal roles before and after FEMA aid runs out<figure><img src="https://images.theconversation.com/files/487890/original/file-20221003-14-gj3pmc.jpg?ixlib=rb-1.1.0&rect=181%2C71%2C5086%2C3096&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The rebuilding in places like Matlacha, Fla., won't happen overnight.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/APTOPIXTropicalWeatherFlorida/66355fb223d34b6aaadc61999c9f4c31/photo?boardId=37be9465fcce45d283d5431cccb20a6a&st=boards&mediaType=audio,photo,video,graphic&sortBy=&dateRange=Anytime&totalCount=300&currentItemNo=2">AP Photo/Gerald Herbert</a></span></figcaption></figure><p>Massive <a href="https://www.npr.org/live-updates/hurricane-ian-path-south-carolina-2022-09-30">storms like Ian</a> and <a href="https://www.npr.org/2022/10/02/1126462352/puerto-rico-hurricane-fiona-luma-energy-power-outages">Fiona</a> mark the beginning of a <a href="https://theconversation.com/it-takes-years-to-fully-recover-from-big-storms-like-sandy-118381">long and frustrating process</a> for anyone who loses their home and possessions.</p>
<p>Recovery usually takes years.</p>
<p>Everyone’s experience is unique, but I’ve noticed some common patterns <a href="https://scholar.google.com/citations?user=tvPBT_MAAAAJ&hl=en&oi=ao">while researching disaster recovery</a>. Understanding this complex process, which includes dozens of nonprofit and government programs – along with what resources are available and how aid is distributed – can benefit survivors and those who want to help them.</p>
<h2>Initial relief</h2>
<p>At first, relatives, friends and neighbors may provide basic necessities like shelter, child care, transportation, food and water. They might assist with debris removal.</p>
<p>In addition, nonprofits, religious institutions and groups of volunteers flock to affected areas. They remove debris, <a href="https://www.nbcdfw.com/news/local/help-from-north-texas-headed-to-hurricane-damaged-florida/3085143/">place tarps on houses</a> and <a href="https://wsvn.com/news/us-world/non-profit-organizations-asking-for-donations-to-help-those-impacted-by-hurricane-ian/">clean flooded properties</a>.</p>
<p>These <a href="https://doi.org/10.1007/978-3-319-63254-4_6">clusters of do-gooders</a> often <a href="https://www.news4jax.com/news/local/2022/09/30/crisis-cleanup-hotline-helps-with-debris-removal-following-ians-aftermath/">respond to requests</a> via organizations that match disaster survivors with volunteers. </p>
<p><a href="https://www.researchgate.net/publication/265311797_Social_support_in_the_aftermath_of_disasters_catastrophes_and_acts_of_terrorism_Altruistic_overwhelmed_uncertain_antagonistic_and_patriotic_communities">Once this support dissipates</a>, everything gets much harder – including emotionally. </p>
<h2>Where rebuilding funds come from</h2>
<p><a href="https://theconversation.com/flood-risk-ratings-translating-risk-to-future-costs-helps-homebuyers-and-renters-grasp-the-odds-186798">Homeowner and flood insurance</a>, supplemented by savings, are <a href="https://www.huduser.gov/portal/pdredge/pdr-edge-frm-asst-sec-111819.html">the most common sources of money for rebuilding</a> housing destroyed or damaged by disasters.</p>
<p>Unfortunately, <a href="https://www.nahb.org/blog/2022/04/building-materials-prices-start-2022-with-8-percent-increase">rising building costs</a> and housing values have <a href="https://www.nytimes.com/2021/10/08/realestate/homeowners-flood-insurance.html">exacerbated underinsurance</a> – leaving more people without the right kind of insurance or too little coverage. And <a href="https://www.marketwatch.com/picks/heres-exactly-how-much-americans-have-in-savings-at-every-age-and-yikes-heres-what-they-should-have-01659384531">most Americans have less than US$7,000</a> saved up.</p>
<p>Replacing demolished homes <a href="https://www.carriermanagement.com/brand-spotlight/corelogic/reconstruction-often-costs-new-construction/">usually costs more than new construction</a>. Habitat for Humanity, a nonprofit that builds and renovates homes for people unable to afford them, <a href="https://www.habitatcd.org/news/cost-to-build">spends up to $100,000 per house</a>. That is likely less than an individual would pay because of Habitat’s ability to get discounted supplies and its reliance on volunteer labor.</p>
<p>Even those with insurance covering home reconstruction must document all losses and contact insurers right away – starting what could be years of paperwork for reimbursements and applications for several kinds of aid.</p>
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<h2>FEMA’s role</h2>
<p>Survivors can get up to <a href="https://news.wgcu.org/2022-09-30/federal-disaster-declaration-for-hurricane-ian-impacted-counties-opens-door-for-fema-financial-assistance">$37,900 for home repairs</a> beyond what their insurance covers from the <a href="https://www.fema.gov/assistance/individual">Federal Emergency Management Agency</a>. FEMA also may provide up to $37,900 in individual assistance funds to meet other needs.</p>
<p>Known as IA, these funds can pay for things like child care, funeral expenses, medical costs and furniture after most federally declared disasters. Eligible expenses must be directly linked to the disaster and not covered by insurance or savings.</p>
<p>Survivors <a href="https://www.floridadisaster.org/info/">apply online or at disaster resource centers</a>, which operate in local community centers, gyms or arenas. These temporary offices are one-stop shops where residents learn about and apply for government and nonprofit recovery programs. </p>
<p>I have seen this process frustrate or overwhelm survivors. They find FEMA paperwork grueling because of the details, records and time required.</p>
<p>Even if you qualify for the maximum $37,900 <a href="https://www.federalregister.gov/documents/2021/11/15/2021-24755/notice-of-maximum-amount-of-assistance-under-the-individuals-and-households-program">available in 2022</a>, it is unlikely to fully cover rebuilding costs. And most applicants receive less than that.</p>
<p>Some survivors get only a one-time $500 payment from FEMA to cover what it calls “<a href="https://www.fema.gov/news-release/20200220/bhrany-drwryat-myn-aant">critical needs</a>.”</p>
<p>After <a href="https://doi.org/10.1007/s10584-020-02692-8">Hurricane Harvey struck Texas and Louisiana</a> in 2017, <a href="https://www.politico.com/story/2018/05/29/houston-hurricane-harvey-fema-597912">claimants received an average of about $4,000</a>. In addition, <a href="https://texaslawhelp.org/article/appealing-a-fema-decision">FEMA regularly denies claims</a>. In those cases, FEMA asks disaster survivors for additional documentation if they wish to appeal. Survivors can also appeal to FEMA to increase the amount they were awarded.</p>
<p>Survivors don’t repay FEMA’s individual assistance program if they <a href="https://www.fema.gov/assistance/individual/after-applying">follow all guidelines</a>, such as not using housing funds to get a car. They can also apply for a <a href="https://www.sba.gov/funding-programs/disaster-assistance">Small Business Administration</a> loan to help cover recovery costs for their home or business. </p>
<p>FEMA individual assistance and SBA loan programs usually stop accepting new applications 18 months after a disaster. </p>
<p>People with adequate insurance coverage and enough savings – and who qualify for FEMA grants and Small Business Administration loans – often rebuild their homes as quickly as within six months and generally within two years.</p>
<p>Those ineligible for FEMA’s aid, or those who need more help than it offers, can turn to nonprofits.</p>
<h2>Nonprofits step in</h2>
<p>Many nonprofits aim to support many disaster survivors’ needs, such as housing, mental and physical health care, transportation and employment. They also help survivors file FEMA appeals.</p>
<p><a href="https://www.nvoad.org/all_resources/project-comeback-texas-hurricane-harvey-dcmp-final-report/">Several national nonprofits</a> are experts at disaster case management, helping survivors apply for available services and funding. <a href="https://www.msn.com/en-us/news/us/mennonite-disaster-service-accepting-volunteers-to-help-with-ian-recovery-in-florida/ar-AA12mVc7">Others assist with repairs</a> or complete home rebuilds.</p>
<p><a href="https://www.disastercenter.com/agency.htm">Faith-based nonprofits</a> like United Methodist Committee on Relief, St. Vincent de Paul, Lutheran Disaster Response and INCA Relief USA are among those providing or supporting disaster case management. Mennonite Disaster Services offers much-needed rebuilding and repairs small and large. These organizations stay in affected areas for years to walk survivors through recovery.</p>
<p>I study what are called <a href="https://hazards.colorado.edu/news/research/nonprofit-coordination-and-managing-donations-hidden-keys-to-recovery">long-term recovery groups</a>. They coordinate and collaborate with local and national nonprofits to reduce the burden on disaster survivors so they don’t need to shop around for help at dozens of different organizations.</p>
<h2>HUD’s role</h2>
<p><a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315714462-14/understanding-disaster-recovery-adaptation-michelle-annette-meyer">Local and state governments</a> also play a big role. One way is through distributing the funds that originate with the Department of Housing and Urban Development’s <a href="https://www.hudexchange.info/programs/cdbg-dr/">Community Development Block Grant Disaster Recovery</a> program.</p>
<p>Priorities and eligibility for CDBG-DR aid vary for each place and disaster, and this source of assistance helps more than just homeowners. Examples include issuing <a href="https://scholar.google.com/citations?view_op=view_citation&hl=en&user=tvPBT_MAAAAJ&sortby=pubdate&citation_for_view=tvPBT_MAAAAJ:YFjsv_pBGBYC">forgivable loans to landlords to rebuild rental housing</a>, rebuilding public housing, <a href="https://www.rebuild.nc.gov/homeowners-and-landlords/homeowner-recovery-program">buying out properties in floodplains</a> and providing funds to pay for the elevation of homes to make them less likely to be flooded in the future. </p>
<p><a href="https://www.urban.org/urban-wire/why-does-disaster-recovery-take-so-long-five-facts-about-federal-housing-aid-after-disasters">This funding tends to take a long time</a> to access. In 2022, six years after Hurricane Matthew struck South Carolina and North Carolina, <a href="http://resilience.colostate.edu">I participated in a study</a> that found some survivors were still awaiting a response to their application for funds that would pay for either housing elevation or a buyout. </p>
<h2>Some never reach the finish line</h2>
<p>Some people never return and rebuild after a disaster.</p>
<p><a href="https://fred.stlouisfed.org/series/LAORLE0POP">New Orleans’ population is smaller</a> now than before Hurricane Katrina struck in 2005. The city has <a href="https://www.datacenterresearch.org/data-resources/who-lives-in-new-orleans-now/">become more white and Hispanic</a> – indicating that many Black residents never returned.</p>
<p>Permanent displacement happens even in small towns after smaller-scale disasters. A research partner and I found that <a href="https://doi.org/10.1177/0739456X211002910">12% of the houses in the town of West, Texas</a>, weren’t rebuilt within three years of a tragic fertilizer plant explosion that upended life in that community of 2,800 in 2013.</p>
<p>People who recover first are usually <a href="https://www.youtube.com/watch?v=Zlo7lESKWIo">wealthy and white</a>. Those facing many hardships even before a disaster occurs <a href="https://hazards.colorado.edu/news/research-counts/a-place-to-call-home-planning-for-equitable-post-disaster-housing-recovery">are more likely to never</a> fully recover, <a href="https://theconversation.com/how-hurricane-ian-and-other-disasters-are-becoming-a-growing-source-of-inequality-even-among-the-middle-class-191637">because of inequities</a> at each step.</p>
<p>FEMA has <a href="https://www.npr.org/2021/06/29/1004347023/why-fema-aid-is-unavailable-to-many-who-need-it-the-most">found inequities in its own aid processes</a>, confirming what <a href="https://homeland.house.gov/imo/media/doc/2021-10-27-HRG-Testimony-Peek.pdf">scholars have pointed out</a> for years. </p>
<p>Among homeowners, <a href="https://hazards.colorado.edu/news/research-counts/beyond-damages-social-equity-in-allocating-disaster-assistance">those with high incomes</a> in predominantly white communities get more aid than others. Small Business Administration loans hinge on creditworthiness, privileging those with high credit scores and incomes. <a href="https://earthquake.usgs.gov/contactus/menlo/seminars/1347">People over 65</a> may refuse to take on loans because they live on small pensions or Social Security benefits. </p>
<h2>Who gets less help – or none at all</h2>
<p><a href="https://today.tamu.edu/2022/02/10/disasters-can-wipe-out-affordable-housing-forever-unless-communities-plan-ahead-that-loss-hurts-the-economy/">Renters</a> get little of this aid, even though rental properties are the slowest to be repaired and rents rise after disasters because of high demand and low supply.</p>
<p>People who live in mobile homes, as <a href="https://constructioncoverage.com/research/states-investing-most-in-manufactured-housing-2022">many do in Florida</a>, have trouble finding aid to replace demolished housing. <a href="https://doi.org/10.1061/(ASCE)NH.1527-6996.0000357">Mobile home parks are slow to reopen</a> after disasters, if they don’t close for good.</p>
<p>Survivors who are <a href="https://www.americaadapts.org/episodes/undocumented-workers-wildfires-and-climate-change-with-dr-michael-mendez">undocumented immigrants</a> or were <a href="https://hazards.colorado.edu/news/research-counts/preparing-the-whole-community-including-homelessness-in-disaster-planning">homeless before disasters</a> are left out of most government disaster recovery programs.</p>
<p>While nonprofits do make low-income survivors a priority, they work fastest with the <a href="https://www.wmpllc.org/ojs/index.php/jem/article/view/2421">owners of single-family homes</a>. Nonprofits rarely repair mobile homes, rental units or multifamily housing like apartments and condos.</p>
<p>As a result, it’s up to the state and local government agencies that disburse HUD disaster funds to assist with recovery efforts for people who reside in these kinds of <a href="https://www.researchgate.net/publication/323940057_Post-Disaster_Sheltering_Temporary_Housing_and_Permanent_Housing_Recovery">affordable housing</a>.</p><img src="https://counter.theconversation.com/content/191725/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Annette Meyer receives funding from the National Science Foundation, National Institute of Standards and Technologies, National Oceanic and Atmospheric Administration, Sea Grant, and Department of Energy. She has served as an external evaluation consultant for National Voluntary Organizations Active in Disaster.</span></em></p>Many government agencies help people whose lives are thrown off course, but not everyone is eligible or able to access that aid.Michelle Annette Meyer, Director, Hazard Reduction and Recovery Center; Associate Professor of Urban Planning, Texas A&M UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1822762022-05-02T02:40:42Z2022-05-02T02:40:42ZFor first homebuyers, it’s Labor’s Help to Buy versus the Coalition’s New Home Guarantee. Which is better?<figure><img src="https://images.theconversation.com/files/460647/original/file-20220501-21-nkd6nd.png?ixlib=rb-1.1.0&rect=340%2C355%2C2752%2C1410&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Each side is offering something for first homebuyers this election, but the nature of the support is quite different.</p>
<h2>The Coalition’s Home Guarantee</h2>
<p>The Coalition is promising to expand its <a href="https://www.liberal.org.au/our-plan-housing-and-home-ownership">Home Guarantee Scheme</a>, also known as its <a href="https://www.nhfic.gov.au/what-we-do/support-to-buy-a-home/first-home-loan-deposit-scheme/">First Home Loan Deposit Scheme</a>. It’ll lift the number of places on offer from 10,000 to 35,000 per year, and reserve another 5,000 places for single parents. </p>
<p>As well, it will boost the highest purchase price the scheme can be used for. In Sydney it will climb from A$800,000 to $900,000; and in Melbourne from $700,000 to $800,000. </p>
<p>The scheme enables buyers with deposits as small as 5% (2% for single parents) to avoid paying the mortgage insurance that is normally required for deposits of less than 20%. The Commonwealth “<a href="https://www.nhfic.gov.au/what-we-do/support-to-buy-a-home/first-home-loan-deposit-scheme/">guarantees</a>” the other 15% to 18%.</p>
<p>Mortgage insurance can cost as much as <a href="https://www.yourmortgage.com.au/calculators/mortgage-insurance">$30,000</a> on a $600,000 mortgage. </p>
<p>The guarantee is not a cash payment or a deposit.</p>
<h2>Labor’s Help to Buy</h2>
<p>Labor’s scheme, announced on Sunday is called <a href="https://www.alp.org.au/policies/helping-more-australians-into-home-ownership">Help to Buy</a> and owes something to work done by the Liberal Party’s <a href="https://web.archive.org/web/20170326192927/https://www.menziesrc.org/images/Research/home-ownership/volume_1.pdf">Menzies Research Centre</a> in 2003 for then Prime Minister John Howard.</p>
<p>Labor’s scheme will offer 10,000 homebuyers the opportunity to share ownership with the Commonwealth which will put in up to 40% of the purchase price for a new home, and up to 30% for an existing home. </p>
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<a href="https://theconversation.com/older-women-often-rent-in-poverty-shared-home-equity-could-help-177452">Older women often rent in poverty – shared home equity could help</a>
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<p>As with the Coalition’s Home Guarantee Scheme, eligible homebuyers will avoid the need for lenders mortgage insurance. Under Help to Buy, eligible homebuyers would pay a 2% rather than a 5% deposit.</p>
<p>Labor’s scheme is targeted at lower middle earners on taxable incomes of up to $90,000 for singles and $120,000 for couples, whereas the Coalition’s is available for singles on incomes up to $125,000 and couples up to $200,000.</p>
<h2>Shared ownership isn’t new</h2>
<p>The <a href="https://www.tandfonline.com/doi/abs/10.1080/02673037.2017.1408782">United Kingdom</a> has offered such a scheme for decades, as do state governments in Western Australia (<a href="https://www.keystart.com.au/">Keystart</a>), South Australia (<a href="https://www.homestart.com.au/home-loans/borrowing-boost-loans/shared-equity-option">HomeStart</a>) and Victoria (<a href="https://www.sro.vic.gov.au/homebuyer">Homebuyer</a>).</p>
<p>The report commissioned by <a href="https://web.archive.org/web/20170326192927/https://www.menziesrc.org/images/Research/home-ownership/volume_1.pdf">Howard in 2004</a> found shared ownership “as critical to the welfare of Australian families today as was the emergence of the mortgage market at the turn of the last century”. </p>
<p>A report produced by the <a href="https://grattan.edu.au/news/levelling-the-playing-field-its-time-for-a-national-shared-equity-scheme/">Grattan Institute</a> in 2022 found that while it might cost the government money in the short-term, it might save it money on rent assistance longer term if it got more Australians into home ownership.</p>
<p>Despite many attractive features, shared ownership has remained niche worldwide due to its complexities. In the UK, fewer than <a href="https://commonslibrary.parliament.uk/research-briefings/cbp-8828/">1%</a> of households use it.</p>
<h2>But shared ownership is complicated</h2>
<p>In Labor’s scheme, the Commonwealth wouldn’t charge the owner rent on the portion of the home that it owned, while the owner would be responsible for ongoing costs such as rates and other bills. When the home is eventually sold the Commonwealth will get its money back plus its share of the capital gain.</p>
<p>As in the United Kingdom, at any time the owner can “<a href="https://www.gov.uk/shared-ownership-scheme/buying-more-shares-staircasing">staircase</a>”, buying more of their property from the Commonwealth, although if prices have risen since the initial purchase, the cost of buying further shares will have also risen.</p>
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Read more:
<a href="https://theconversation.com/solutions-beyond-supply-to-the-housing-affordability-problem-67536">Solutions beyond supply to the housing affordability problem</a>
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<p>If the homebuyer’s income exceeds the Help to Buy threshold for two consecutive years, they will be required to repay the government’s financial contribution in part or whole as their circumstances permit. </p>
<p>In other such schemes, owners face restrictions on their freedom to renovate and sub-let their properties. They can also pay more for their mortgages, as not all lenders offer their most competitive loans for such schemes.</p>
<h2>Two very different schemes</h2>
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<a href="https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=837&fit=crop&dpr=1 600w, https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=837&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=837&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1052&fit=crop&dpr=1 754w, https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1052&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/460693/original/file-20220502-23-n08s9e.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1052&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.nhfic.gov.au/media/1684/first-home-loan-deposit-scheme-fact-sheet-19-june-2021.pdf">First Home Loan Deposit Scheme to continue</a></span>
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<p>Regardless of which party gets elected, the <a href="https://www.nhfic.gov.au/what-we-do/support-to-buy-a-home/first-home-loan-deposit-scheme/">Home Guarantee</a> scheme will continue (with more places under the Coalition).</p>
<p>While escaping the cost of mortgage insurance offers buyers a leg up the ladder, most may be close to being able to buy a house without it, meaning it might simply <a href="https://www.ceda.com.au/ResearchAndPolicies/Research/Built-environment-Urban-Planning-Cities/CEDA-Paper-Home-truths-the-role-of-housing-in-econ">bring forward</a> home purchases rather than assisting people unable to buy. </p>
<p>While the Home Guarantee scheme focuses on the deposit hurdle, Labor’s Help to Buy scheme will help with both deposits and repayments.</p>
<p>Such schemes are complex. </p>
<p>Participants will need to read the fine print to ensure that they are prepared to accept the complications that might arise later. </p>
<p>Labor is also promising a <a href="https://www.abc.net.au/news/2022-05-01/federal-election-live-blog-labor-campaign-launch-albanese/101028792">National Housing Supply and Affordability Council</a> and a <a href="https://www.alp.org.au/policies/safer-and-more-affordable-housing">Housing Australia Future Fund</a> to build more social and affordable housing.</p>
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<a href="https://theconversation.com/1-billion-per-year-or-less-could-halve-rental-housing-stress-146397">$1 billion per year (or less) could halve rental housing stress</a>
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<p>In truth, we can’t really hope to make a dent in the housing affordability crisis without hard policy choices such as reforming tax concessions that have pushed up house prices. Labor put forward such measures in 2019. It isn’t this time.</p><img src="https://counter.theconversation.com/content/182276/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Ong ViforJ receives funding from the ARC and AHURI. She is the recipient of an ARC Future Fellowship (project FT200100422). </span></em></p>Labor’s scheme will get people into homeownership who would have otherwise missed out. The Coalition’s will get people already likely to buy into houses sooner.Rachel Ong ViforJ, ARC Future Fellow & Professor of Economics, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1634642021-09-23T13:03:39Z2021-09-23T13:03:39ZSome rich people will love at least one sweetener in Democrats’ $3.5 trillion plan<figure><img src="https://images.theconversation.com/files/422188/original/file-20210920-21-1wp0ud9.jpg?ixlib=rb-1.1.0&rect=125%2C269%2C5865%2C3718&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Several lawmakers from high-tax states like New York are pushing for changes to a key tax deduction in Democrats' $3.5 trillion spending package.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/rep-thomas-suozzi-center-speaks-at-a-news-conference-news-photo/1232332329">Kent Nishimura/Los Angeles Times via Getty Images</a></span></figcaption></figure><p>While liberal lawmakers look for ways to <a href="https://www.cnbc.com/2021/09/13/house-democrats-propose-tax-increases-in-3point5-trillion-budget-bill.html">raise taxes on the rich</a> to finance their US$3.5 trillion spending package, some <a href="https://www.bloomberg.com/news/articles/2021-09-13/democrats-plan-meaningful-change-to-cap-on-salt-deduction?srnd=premium&sref=Hjm5biAW">House Democrats are aiming to lower them</a>. </p>
<p>Specifically, several Democrats from high-tax states such as New York and New Jersey <a href="https://buffalonews.com/news/dems-vow-meaningful-salt-relief-after-latest-tax-proposal/article_d5f228e6-14cb-11ec-a9ce-abb26fa125e4.html">want to eliminate or at least raise</a> the $10,000 cap on the federal deduction of state and local taxes – also known as SALT – as part of the bill. The Democrats argue lifting the cap would help middle-class taxpayers and support homeownership. </p>
<p>“We are committed to enacting a law that will include meaningful SALT relief that is so essential to our middle-class communities, and we are working daily toward that goal,” <a href="https://waysandmeans.house.gov/media-center/press-releases/neal-pascrell-suozzi-path-forward-salt">several lawmakers said</a> in a Sept. 13, 2021, statement. </p>
<p>But our research suggests wealthier Americans would see most of the savings. </p>
<h2>A deduction mainly used by the rich</h2>
<p>Before 2017, taxpayers who itemized <a href="http://www.taxhistory.org/thp/readings.nsf/ArtWeb/663D98E8EB142B3B852581C6005A9982">could deduct every penny</a> of their state and local income or property taxes from their federal taxable income. This benefited homeowners because they are more likely to itemize their taxes due to the mortgage interest deduction. </p>
<p>Over 90% of households that earned $200,000 or more took the deduction in 2017 compared with less than 20% for those making under $100,000, according to the IRS. </p>
<p>That changed after Congress <a href="https://taxfoundation.org/tax-reform-explained-tax-cuts-and-jobs-act/">passed a package of tax cuts</a> in December 2017 that, among other things, increased the standard deduction for all taxpayers but added the cap on the state and local tax deduction for those who itemize. </p>
<p>As a result, the share of households who itemized their taxes <a href="http://dx.doi.org/10.2139/ssrn.3827336">shrank from 31% in 2017 to 11% in 2018</a>. </p>
<p>We examined the impact of the tax code change in a <a href="http://dx.doi.org/10.2139/ssrn.3827336">recent research paper</a>, which used data from the American Housing Survey and a National Bureau of Economic Research <a href="https://users.nber.org/%7Etaxsim/">tax simulator</a>. Primarily, we wanted to estimate the federal income tax liability and tax benefits associated with homeownership for a representative set of taxpayers across the United States. </p>
<p>Our analysis shows that eliminating the cap would result in substantially lower federal income taxes for high-income households, while making little difference for people who earned less. </p>
<p>For example, a typical New Jersey household that earns $400,000 to $1.1 million would see federal income taxes cut by $14,401 if the cap were removed, or 15.7% of all 2018 income taxes paid. Even in a relatively low-cost state such as Ohio, eliminating the cap would reduce federal income taxes for a similar household by $5,466, or 5.2% of its 2018 tax bill. </p>
<p>But, most importantly for <a href="https://www.theatlantic.com/ideas/archive/2019/02/here-are-progressive-tax-policies-democrats-need/581830/">those who favor a progressive tax code</a>, our analysis found that lifting the cap would barely affect middle-income households. </p>
<p>For example, a typical New York household earning $100,000 to $150,000 would see its federal tax bill go down $149 were the cap lifted, while the median savings would be $16 in California and $407 in New Jersey. But for the vast majority of states, getting rid of the cap would have no effect on most people in this income bracket, in large part because the 2017 tax law <a href="https://www.taxpolicycenter.org/briefing-book/how-did-tcja-change-standard-deduction-and-itemized-deductions">doubled the standard deduction</a>. Across all states, the average change in taxes for people earning between $100,000 and $150,000 would be $49. </p>
<p>[<em>Over 110,000 readers rely on The Conversation’s newsletter to understand the world.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=100Ksignup">Sign up today</a>.]</p>
<p>The impact of removing the cap would have a very small impact on most lower-income taxpayers since <a href="https://www.irs.gov/pub/irs-soi/18in21id.xls">less than 5% of them claimed</a> the state and local tax deduction in 2018. </p>
<h2>A middle-class misconception</h2>
<p>The <a href="https://www.cbsnews.com/news/tax-returns-2019-salt-deduction-cap-middle-class-homeowners-hit-by-the-new-tax-law/">association of the state and local tax deduction with middle-class homeownership</a> is likely the reason for this misconception about who would benefit from repealing the cap. </p>
<p>But in fact, one of the main ways middle-income homeowners benefit from the tax code is through the <a href="https://www.irs.gov/taxtopics/tc701">exclusion from capital gains taxes</a> of up to $250,000 in net profit from the sale of a home – $500,000 if filing jointly. </p>
<p>The state and local tax deduction, however, mainly helps the wealthiest Americans.</p><img src="https://counter.theconversation.com/content/163464/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The 2017 tax cuts put a $10,000 cap on the deduction for state and local taxes. The richest households would see the biggest gains from eliminating or raising the cap.Brent W Ambrose, Jason and Julie Borrelli Faculty Chair in Real Estate and Professor of Real Estate, Penn StateDavid C. Ling, Professor of Real Estate, University of FloridaGary McGill, Senior Associate Dean & Professor of Accounting, University of FloridaPat Hendershott, Emeritus Professor of Finance, University of AberdeenLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1665522021-09-09T18:55:37Z2021-09-09T18:55:37ZFirebrands: How to protect your home from wildfires’ windblown flaming debris<figure><img src="https://images.theconversation.com/files/420342/original/file-20210909-17-9vd1ig.jpg?ixlib=rb-1.1.0&rect=289%2C20%2C3715%2C2495&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A photographer stands in a rain of flaming embers during a fire in California in 2019.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/photographer-takes-photos-amidst-a-shower-of-embers-as-wind-news-photo/1177959030">Josh Edelson/AFP via Getty Images</a></span></figcaption></figure><p>As firefighters tried to protect homes near Lake Tahoe from one of California’s <a href="https://www.fire.ca.gov/media/4jandlhh/top20_acres.pdf">largest fires on record</a>, they <a href="https://www.youtube.com/watch?v=WtrQIRwfhHI">battled, windblown embers</a> that kept sparking new small fires, some well away from the fire line.</p>
<p>Those embers, also <a href="https://doi.org/10.1016/j.pecs.2019.100801">known as firebrands</a>, were a powerful and dangerous reminder that protecting homes is about more than avoiding a wall of flames. </p>
<p>Firebrands are pieces of <a href="https://doi.org/10.1016/j.pecs.2019.100801">flaming material</a> that break off from burning vegetation or structures and are transported through the air. They particularly become a problem when heat and drought dry out grasses and trees and the wind picks up. Homes and other structures are at higher risk when they have dry fuel, such as leaves, needles or wood chips, on the structure or nearby. </p>
<p>That risk, and how it can easily be overlooked, crystallized for me in September 2020 when my parents were put on notice to prepare to evacuate as a fire neared their home in Oregon. <a href="https://scholar.google.com/citations?user=I-mYnWwAAAAJ&hl=en">I have studied wildfires for years</a>, particularly how they spread through firebrands. Yet this threat made it real.</p>
<h2>What protecting a home looks like</h2>
<p>I was not concerned about a wall of flames reaching my parents’ home – they had a lush and green yard that was unlikely to ignite. Instead, what concerned me was whether my parents were prepared for ignition by firebrands.</p>
<p>Firebrands can <a href="https://www.frontiersin.org/articles/10.3389/fmech.2021.655593/full">travel over a mile</a> by the wind and can be a major cause of spreading fires. In the Tahoe region, for example, firefighters couldn’t just focus on the main fire line in summer 2021 – they also had to patrol for spot fires.</p>
<p>At my parents’ home and several of their neighbors’, I used a leaf blower to clear potential ignition sources. I removed dried leaves in gutters and needles in valleys of roofs, and watered the dry mulch near houses.</p>
<p>I asked myself, if a lighted match or matches were dropped at a location, could they start a fire? If so, the potential fuel needed to be removed. In every home that I visited, I found locations where firebrands <a href="https://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/1n79h969p">could potentially ignite</a> flammable materials, despite the homeowners’ best preparations.</p>
<figure class="align-center ">
<img alt="An illustration of firebrands from burning trees traveling on the wind to a location well away from the original fire" src="https://images.theconversation.com/files/420112/original/file-20210908-17-50mb5o.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/420112/original/file-20210908-17-50mb5o.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=301&fit=crop&dpr=1 600w, https://images.theconversation.com/files/420112/original/file-20210908-17-50mb5o.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=301&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/420112/original/file-20210908-17-50mb5o.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=301&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/420112/original/file-20210908-17-50mb5o.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=378&fit=crop&dpr=1 754w, https://images.theconversation.com/files/420112/original/file-20210908-17-50mb5o.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=378&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/420112/original/file-20210908-17-50mb5o.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=378&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">How firebrands travel.</span>
<span class="attribution"><a class="source" href="https://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/1n79h969p">Tyler Hudson</a></span>
</figcaption>
</figure>
<p>What surprised me at the time was how little time people applied to preparing for firebrands, despite going to great lengths to protect their homes by watering the grounds. What I realized was that my parents and their neighbors, like many of us, envisioned protecting homes as stopping a wall of flames from reaching their homes. They did not appreciate that in some cases the greater threat could blow in by the wind.</p>
<h2>Three steps to firebrand-started fires</h2>
<p>Fire scientists talk about spot fires as occurring in three steps: how firebrands are generated, how they are carried by the wind and how they land and ignite fuel. Fire scientists, including those from my research group, are actively studying each of these steps to be able to better predict and ultimately reduce the risks to communities from firebrands.</p>
<p>Firebrands are generated from burning vegetation <a href="https://www.nist.gov/publications/performance-wood-and-tile-roofing-assemblies-exposed-continuous-firebrand-assault">or</a> <a href="https://doi.org/10.1016/j.firesaf.2013.11.008">structures</a>. Sizes of the firebrands can vary, but can be as small as several millimeters square.</p>
<p>Firebrands can come from burning pieces of <a href="https://doi.org/10.1071/WF19182">bark, branches, cones or needles</a> if the source is wildfires. For urban fires, firebrands can come from <a href="https://www.nist.gov/publications/performance-wood-and-tile-roofing-assemblies-exposed-continuous-firebrand-assault">roofing</a>, siding, particle boards or other flammable materials.</p>
<p>Over the past two decades, efforts studying <a href="https://doi.org/10.1071/WF19182">generation</a> of firebrands have often focused on quantifying the <a href="https://www.nist.gov/publications/mass-and-size-distribution-firebrands-generated-burning-korean-pine-pinus-koraiensis">number of firebrands</a> that land at particular locations as trees or other vegetation burns. More recently, researchers are working to estimate the total number of firebrands that are released when objects burn.</p>
<figure class="align-center ">
<img alt="A burning fir tree with white square around it." src="https://images.theconversation.com/files/420119/original/file-20210908-17-aqe4eg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/420119/original/file-20210908-17-aqe4eg.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=976&fit=crop&dpr=1 600w, https://images.theconversation.com/files/420119/original/file-20210908-17-aqe4eg.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=976&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/420119/original/file-20210908-17-aqe4eg.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=976&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/420119/original/file-20210908-17-aqe4eg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1226&fit=crop&dpr=1 754w, https://images.theconversation.com/files/420119/original/file-20210908-17-aqe4eg.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1226&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/420119/original/file-20210908-17-aqe4eg.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1226&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Scientists measured how many firebrands were produced and how they traveled by using white squares to catch the flaming embers.</span>
<span class="attribution"><a class="source" href="https://www.frontiersin.org/articles/10.3389/fmech.2021.655593/full">Adusumilli, Chaplen and Blunck, 2021</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>To estimate how many firebrands a fire generates, we set fire-resistant fabric squares around burning trees and shrubs, such as Douglas fir and sagebrush, and collected the firebrands that landed. By determining the total number of firebrands per unit of mass of the tree or shrub that burns, we can incorporate data into computer models to estimate the total number of firebrands released in a fire and where they spread. Ultimately, we hope <a href="https://doi.org/10.1071/WF09146">these</a> <a href="https://doi.org/10.1007/s10694-015-0500-3">models</a> can be used to better understand risks associated with wild or urban fires.</p>
<p>Many research efforts have focused on developing models that <a href="https://www.frontiersin.org/articles/10.3389/fmech.2021.655593/full">capture the physics</a> of <a href="https://doi.org/10.1071/WF09146">how firebrands are transported</a> or where firebrands are most <a href="https://doi.org/10.1016/j.firesaf.2017.04.039">likely to land</a>. The nature of the burning of firebrands as they are being transported is an important factor. Firebrands can be <a href="https://doi.org/10.1016/j.firesaf.2017.04.040">flaming</a> or <a href="https://doi.org/10.1016/j.firesaf.2020.103031">smoldering</a>. Both can cause new fires.</p>
<p>The third step is ignition of fuels – like fencing, mulch and needles – after firebrands land. Researchers are <a href="https://doi.org/10.1016/j.firesaf.2018.10.002">investigating</a> <a href="https://doi.org/10.1016/j.firesaf.2020.103037">the heating potential</a> or temperature of firebrands. Understanding this information is critical for implementing building codes and standards and best practices to better protect homes. We’re also working to better understand which <a href="https://doi.org/10.3389/fmech.2021.653810">characteristics of the fuels</a> <a href="https://doi.org/10.1007/s10694-014-0425-2">determine whether they ignite</a>.</p>
<figure class="align-center ">
<img alt="Scatterplot chart compares number of firebrands per mass to the tree height. Taller trees had fewer firebrands." src="https://images.theconversation.com/files/420117/original/file-20210908-25-lo9qw3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/420117/original/file-20210908-25-lo9qw3.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/420117/original/file-20210908-25-lo9qw3.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/420117/original/file-20210908-25-lo9qw3.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/420117/original/file-20210908-25-lo9qw3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=575&fit=crop&dpr=1 754w, https://images.theconversation.com/files/420117/original/file-20210908-25-lo9qw3.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=575&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/420117/original/file-20210908-25-lo9qw3.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=575&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In experiments, burning sagebrush sent off significantly more firebrands per kilometer of mass than Douglas fir and ponderosa pine trees.</span>
<span class="attribution"><a class="source" href="https://doi.org/10.3389/fmech.2021.655593">Adusumilli, Chaplen and Blunck, 2021</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>How can homeowners reduce the risk?</h2>
<p>So what can homeowners do to protect themselves from the risk of spot fires?</p>
<p>First, start with shifting your mindset about preparation to not if, but when a fire will occur nearby. I will admit that, as a homeowner who lives near a forest, I allow pine needles and leaves to accumulate on my roof. I make the excuse that I will have time to prepare in an actual fire. Yet, as I consider preparing for “when a fire” will be near me, rather than “if,” I feel more of a sense of urgency and responsibility.</p>
<p>Second, people in fire-prone areas need to educate themselves about potential ignition sources. Note that locations that are fire-prone are expanding. My parents’ home hadn’t been threatened by fires in the 30 years they had lived there – until 2020. One resource <a href="https://www.nfpa.org/Public-Education/Fire-causes-and-risks/Wildfire/Preparing-homes-for-wildfire">when figuring out how to audit a home’s risk</a> is the National Fire Protection Association.</p>
<p>Certainly, at a minimum people to need to remove flammable material from on or near homes. In addition, they should consider ignition sources from structures such as decks and ensure that firebrands cannot be pulled into homes through ventilation ducts or other methods. Putting screens on windows and over ventilation ducts, using 1/8-inch holes, can be a simple, low-cost and highly effective way to stop firebrands from entering a house.</p>
<p>Third, consistently act to monitor and eliminate ignition sources, such as needles or leaves, that can gradually accumulate with time. Often it takes little effort to remove the debris, but it requires constant monitoring and prioritizing removal. </p>
<p>[<em>Over 100,000 readers rely on The Conversation’s newsletter to understand the world.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=100Ksignup">Sign up today</a>.]</p>
<p>Certainly taking steps to educate, audit and then remove ignition sources from firebrands will not stop all fires from spreading to homes. But these steps will save many homes and help to reduce the risk to fire responders and communities.</p><img src="https://counter.theconversation.com/content/166552/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Blunck has received funding to study firebrands and ignition from the Joint Fire Science Program (project number 15-1-04-9) and the National Institute of Science and Technology (70NANB19H164 and 70NANB17H281).</span></em></p>A fire scientist explains the risk of flying embers that can travel over a mile from a wildfire and how people can protect their homes.David Blunck, Associate Professor School of Mechanical, Industrial, and Manufacturing Engineering, Oregon State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1405142020-06-18T12:19:43Z2020-06-18T12:19:43ZLand loss has plagued black America since emancipation – is it time to look again at ‘black commons’ and collective ownership?<figure><img src="https://images.theconversation.com/files/342494/original/file-20200617-94086-kk2ia2.jpg?ixlib=rb-1.1.0&rect=4%2C4%2C2965%2C2181&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Former slaves harvesting for their own profit.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/group-of-escaped-slaves-that-gathered-on-the-former-news-photo/615303796?adppopup=true">Corbis via Getty Images</a></span></figcaption></figure><p>Underlying the recent unrest sweeping U.S. cities over police brutality is a <a href="https://www.americanprogress.org/issues/race/reports/2019/08/07/472910/systematic-inequality-economic-opportunity/">fundamental inequity</a> in wealth, land and power that has circumscribed black lives since the end of slavery in the U.S.</p>
<p>The “<a href="https://www.pbs.org/wnet/african-americans-many-rivers-to-cross/history/the-truth-behind-40-acres-and-a-mule/">40 acres and a mule</a>” promised to formerly enslaved Africans never came to pass. There was no redistribution of land, no reparations for the wealth extracted from stolen land by stolen labor.</p>
<p>June 19 is celebrated by black Americans as <a href="https://www.juneteenth.com/history.htm">Juneteenth</a>, marking the date in 1865 that former slaves were informed of their freedom, albeit two years after the <a href="https://en.wikipedia.org/wiki/Emancipation_Proclamation">Emancipation Proclamation</a>. Coming this year at a time of protest over the continued police killing of black people, it provides an opportunity to look back at how black Americans were deprived of land ownership and the economic power that it brings. An expanded concept of the “black commons” – based on shared economic, cultural and digital resources as well as land – could act as one means of redress. As professors in <a href="https://as.tufts.edu/uep/people/faculty/julian-agyeman">urban planning</a> and <a href="https://design.ncsu.edu/staff/kofi-boone-asla/">landscape architecture</a>, our research suggests that such a concept could be a part of undoing the racist legacy of chattel slavery by encouraging economic development and creating communal wealth. </p>
<h2>Land grab</h2>
<p>The proportion of the United States under black ownership has actually shrunk over <a href="https://www.washingtonpost.com/outlook/2019/06/19/why-racial-wealth-gap-persists-more-than-years-after-emancipation/">the last 100 years or so</a>. </p>
<p>At their peak in 1910, <a href="https://psmag.com/news/african-american-farmers-make-up-less-than-2-percent-of-all-us-farmers">African American farmers</a> made up around 14% of all U.S. farmers, owning <a href="https://www.ers.usda.gov/webdocs/publications/46984/19353_ra174h_1_.pdf?v=41056#:%7E:text=Land%20ownership%20by%20Black%20farmers,acres%20owned%20by%20White%20farmers.">16 to 19 million acres of land</a>. By 2012, black Americans represented just 1.6% of the farming community, owning 3.6 million acres of land. Another study shows a <a href="https://thecounter.org/usda-black-farmers-discrimination-tom-vilsack-reparations-civil-rights/">98% decline</a> in black farmers between 1920, and 1997. This contrasts sharply with an <a href="https://www.ers.usda.gov/webdocs/publications/46984/19353_ra174h_1_.pdf?v=41056#:%7E:text=Land%20ownership%20by%20Black%20farmers,acres%20owned%20by%20White%20farmers.">increase in acres owned by white farmers</a> over the same period.</p>
<p>In <a href="https://archive.org/details/timetoact1545usda">a 1998 report</a>, the U.S. Department of Agriculture ascribed this decline to a long and “well-documented” history of discrimination against black farmers, ranging from New Deal and USDA <a href="https://eji.org/news/one-million-black-families-have-lost-their-farms/">discriminatory practices</a> dating from the 1930s to 1950s-era exclusion from legal, title and loan resources. </p>
<p>Discriminatory practices have also affected who owns property as well as land. In 2017, the racial homeownership gap was <a href="https://www.urban.org/urban-wire/breaking-down-black-white-homeownership-gap">at its highest level for 50 years</a>, with 79.1% of white Americans owning a home compared to 41.8% of black Americans. This gap is even larger than it was when <a href="https://www.cbsnews.com/news/redlining-what-is-history-mike-bloomberg-comments/">racist housing practices such as redlining</a>, which denied black residents mortgages to buy, or loans to renovate, property were legal. </p>
<p>The lack of ownership is crucial to understanding the crippling economic disparity that has <a href="https://prosperitynow.org/blog/black-and-latino-households-are-short-road-zero-wealth-hollowing-out-americas-historic-middle">hollowed out the black middle class</a> and continues to plague black America – making it harder to accrue wealth and pass it on to future generations. </p>
<p>A 2017 <a href="https://www.bostonfed.org/publications/one-time-pubs/color-of-wealth.aspx">report</a> found that the median net worth for non-immigrant black American households in the greater Boston region was just US$8, but for whites it was $247,500. This was due to “general housing and lending discrimination through restrictive covenants, redlining and other lending practices.” </p>
<p>Nationally, between 1983 and 2013, median <a href="https://prosperitynow.org/resources/road-zero-wealth">black household wealth decreased</a> by 75% to $1,700 while median white household wealth increased 14% to $116,800.</p>
<h2>Freedom farms</h2>
<p>Land ownership today could look very different. The idea of collective ownership has a long history in the United States. Even during slavery, a piece of ground was granted by slave masters for enslaved African subsistence farming. The <a href="https://www.dukeupress.edu/sylvia-wynter">Jamaican social theorist Sylvia Wynter</a> called this land “the plot.” </p>
<p><a href="https://www.aaihs.org/towards-usable-histories-of-the-black-commons/">Wynter has explained</a> how that these parcels of land were transformed into communal areas where slaves could establish their own social order, sustain traditional African folklore and foodways – growing yams, cassava and sweet potatoes. Plots were often called “<a href="https://english.ucla.edu/wp-content/uploads/DeLoughrey-Yam-Roots-Rot-Small-Axe.pdf">yam grounds</a>,” so important was this staple food. </p>
<p>The connection between food, land, power and cultural survival was subversive in its nature. By appropriating physical space to support collective growing practices within the brutal constraints of slavery, black people also demonstrated the need for common, shared mental space to enable their survival and resistance. Herbalism, medicine and midwifery, and other African American <a href="https://uncpress.org/book/9780807853788/working-cures-/">healing practices</a> were seen as acts of resistance that were “intimately tied to religion and community,” according to historian Sharla M. Fett.</p>
<p>With the end of slavery, these plots disappeared.</p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=896&fit=crop&dpr=1 600w, https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=896&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=896&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1126&fit=crop&dpr=1 754w, https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1126&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/342492/original/file-20200617-94078-18rnrq4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1126&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Fannie Lou Hamer in 1964.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/fannie-lou-hamer-mississippi-freedom-democratic-party-news-photo/1164926996?adppopup=true">Universal Images Group via Getty Images</a></span>
</figcaption>
</figure>
<p>The principles of collective land ownership evolved in post-slavery black America. It was central to civil rights organizer Fannie Lou Hamer’s <a href="https://snccdigital.org/events/fannie-lou-hamer-founds-freedom-farm-cooperative/">Freedom Farms</a>, a <a href="https://www.tandfonline.com/doi/abs/10.1080/07409710.2017.1270647?journalCode=gfof20">cooperative model</a> designed to deliver economic justice to the poorest black farmers in the American South.</p>
<p>In Hamer’s view, the fight for justice in the face of oppression required a measure of independence that could be achieved through owning land and providing resources for the community.</p>
<p>This idea of a black commons as a means of economic empowerment formed a focus of W.E.B. DuBois’ 1907 “<a href="http://scua.library.umass.edu/digital/dubois/dubois12.pdf">Economic Co-operation Among Negro Americans</a>.” DuBois believed that the extreme segregation of the Jim Crow era made it necessary to <a href="https://www.yesmagazine.org/economy/2015/10/07/dangerous-history-what-the-story-of-black-economic-development-means-for-us-today/">ground economic empowerment</a> in the cultural bonds between black people and that this could be achieved through cooperative ownership.</p>
<h2>Credit unions and co-ops</h2>
<p>The accumulation of wealth was not the only desired consequence of a black commons. </p>
<p>In 1967, <a href="https://www.nytimes.com/2005/03/30/us/harold-cruse-social-critic-and-fervent-black-nationalist-dies-at-89.html">social critic Harold Cruse</a> argued for a “<a href="https://www.jstor.org/stable/40034433?seq=1">new institutionalism</a>” that would create a “new dynamic synthesis of politics, economics, and culture.” In his view, economic ventures needed to be grounded in the greater aspirations of black communities – politically, culturally and economically. This could be achieved through a black commons.</p>
<p>As the political economist <a href="https://www.jjay.cuny.edu/faculty/jessica-gordon-nembhard">Jessica Gordon Nembhard</a> <a href="http://www.psupress.org/books/titles/978-0-271-06216-7.html">has noted</a> in reference to black <a href="https://www.essence.com/news/bankblack-listing-black-owned-banks-credit-unions-united-states/">credit unions and mutual aid funds</a>, “African Americans, as well as other people of color and low-income people, have benefited greatly from cooperative ownership and democratic economic participation throughout the nation’s history.”</p>
<p>The nonprofit <a href="https://centerforneweconomics.org/">Schumacher Center for a New Economics</a> is working to rejuvenate the idea of black commons. In a 2018 statement, the <a href="https://centerforneweconomics.org/publications/proposal-for-a-black-commons/">center proposed to adopt a community land trust structure</a> “to serve as a national vehicle to amass purchased and gifted lands in a black commons with the specific purpose of facilitating low-cost access for black Americans hitherto without such access.” </p>
<p>Meanwhile, shared equity housing schemes and <a href="https://www.bloomberg.com/news/articles/2019-04-29/alternative-homeownership-land-trusts-and-co-ops">community land trusts</a> <a href="https://www.lincolninst.edu/publications/working-papers/tracking-growth-evaluating-performance-shared-equity-homeownership">continue to grow</a>, helping black families own property, <a href="https://housingmatters.urban.org/articles/how-community-land-trusts-can-advance-racial-and-economic-justice">advance racial and economic justice</a> and mitigate displacement resulting from gentrification.</p>
<h2>Digital commons</h2>
<p>The disproportionate effects of the <a href="https://www.cdc.gov/coronavirus/2019-ncov/need-extra-precautions/racial-ethnic-minorities.html">coronavirus pandemic</a> and unrest over <a href="https://www.washingtonpost.com/outlook/police-violence-pandemic/2020/06/05/e1a2a1b0-a669-11ea-b619-3f9133bbb482_story.html">police brutality</a> have highlighted deeply embedded structural racism. Organizations such as Black Lives Matter and the <a href="https://m4bl.org/">Movement for Black Lives</a> are demonstrating a renewed vigor around collective action and a blueprint for how this can be achieved in a digital age. At the same time, black Americans are also forging a cultural commons through events such as DJ D-Nice’s <a href="https://www.oprahmag.com/entertainment/a31860967/dj-dnice-instagram-dance-party-coronavirus-quarantine/">Club Quarantine</a> – a <a href="https://www.forbes.com/sites/adriennegibbs/2020/03/28/dj-d-nice-just-had-the-best-quarantine-week-ever/#2c57f81c47dc">hugely popular</a> online dance party. Club Quarantine’s success indicates the potential for using online platforms to facilitate community building, pointing toward future economic cooperation. </p>
<p>That’s what organizations like <a href="http://urbanpatch.org/">Urban Patch</a> are trying to do. The nonprofit group uses crowdsourced funding to build community spaces in inner city areas of Indianapolis and encourage collective economic development that echoes the black commons of years past.</p>
<p>The long history of racism in the United States has held back black Americans for generations. But the current soul searching over this legacy is also an unrivaled opportunity to look again at the idea of collective black action and ownership, using it to create a community and economy that goes beyond just ownership of land for wealth’s sake.</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p><img src="https://counter.theconversation.com/content/140514/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Black farmers own far less land than they did in 1910 and the racial gap in homeownership is at the highest level for 50 years.Julian Agyeman, Professor of Urban and Environmental Policy and Planning, Tufts UniversityKofi Boone, Professor of Landscape Architecture, College of Design, North Carolina State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1347352020-04-01T18:11:25Z2020-04-01T18:11:25ZCoronavirus pandemic is an opportunity to create affordable cities<figure><img src="https://images.theconversation.com/files/324370/original/file-20200331-65547-1tuhn0l.jpg?ixlib=rb-1.1.0&rect=40%2C56%2C5115%2C3290&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Rent strikers from Toronto's Parkdale neighbourhood and fellow protesters gather outside Social Justices Tribunal Ontario in February, 2018. The group refused to pay rent after the landlord applied for an increase in rents</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Chris Young</span></span></figcaption></figure><p>Every crisis shows cracks in the current system and points a glaring spotlight on the inequities that were overlooked before. As rents are due at the end of each month, Canada’s rising neighbourhood and income inequality is hard to ignore.</p>
<p>The COVID-19 pandemic has exacerbated these problems as cities become less affordable. Will the country continue the mistakes of previous decades, leading to even more unequal cities? Or will this crisis offer an opportunity to create truly <a href="http://dx.doi.org/10.1080/12265934.2013.834643">just cities?</a></p>
<p>Through the <a href="http://neighbourhoodchange.ca/">Neighbourhood Change Research Partnership</a>, academics, NGO advocates and municipal policymakers teamed up to document and analyze inequality, income polarization and poverty across seven Canadian cities. <a href="https://www.ubcpress.ca/changing-neighbourhoods">The team’s findings</a> show that as governments shifted from traditional welfare state supports to neoliberal policies, cities became increasingly unequal and segregated.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/324373/original/file-20200331-65522-1le4hwl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/324373/original/file-20200331-65522-1le4hwl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/324373/original/file-20200331-65522-1le4hwl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/324373/original/file-20200331-65522-1le4hwl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/324373/original/file-20200331-65522-1le4hwl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/324373/original/file-20200331-65522-1le4hwl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/324373/original/file-20200331-65522-1le4hwl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Prime Minister Justin Trudeau (right) stands with Jason Chen, development director at Toronto Community Housing, during a visit to a housing development in Toronto’s Lawrence Heights neighbourhood ahead of a policy announcement, on Nov. 22, 2017.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Chris Young</span></span>
</figcaption>
</figure>
<h2>Rising housing prices</h2>
<p>As the country transitioned to a service and knowledge economy during the 1980s and 1990s, it drew more Canadians to cities for work. At the same time, governments deregulated labour, land and financial markets, and promoted private housing construction — all while abandoning the building of social and rental housing. </p>
<p>Old warehouses and urban cores were gentrified during that period. Construction, real estate and finance became <a href="https://doi.org/10.1016/j.geoforum.2013.06.010">increasingly important</a> to the Canadian economy — especially for large Canadian cities.</p>
<p>After the <a href="https://www.theglobeandmail.com/report-on-business/the-2008-financial-crisis-through-the-eyes-of-some-major-players/article14322993/">global financial crisis</a> in the late 2000s, low interest rates and federal government guarantees for private mortgage lenders removed financial risk from banks and stimulated a <a href="https://doi.org/10.1111/j.1468-2427.2012.01184.x">real estate bubble</a> that increased consumer <a href="https://doi.org/10.1080/02723638.2013.778647">debt levels</a>. </p>
<p>Housing prices rose with these changes, and a greater share of new residential units became small condominiums or apartments. This was particularly the case in downtown neighbourhoods. Meanwhile, buyers in suburban areas continued to prefer detached houses that became more expensive and harder to afford.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1242923224855228416"}"></div></p>
<h2>Increasing inequality</h2>
<p>As a result, <a href="https://www.ubcpress.ca/asset/38254/1/9780774862042_Excerpt.pdf">income inequality across cities</a> increased. <a href="https://stats.oecd.org/glossary/detail.asp?ID=4842">Gini coefficients</a>, the gold standard for measuring inequality by social scientists, show this among individuals and among neighbourhoods between 1980 and 2015.</p>
<p>Inequality, however, is experienced differently across Canadian cities. Toronto saw increasing neighbourhood incomes in its urban core, and declining incomes in its aging inner suburbs that have been outflanked by growth in newly developed areas outside Toronto. Similar patterns were seen in Vancouver and Calgary. </p>
<p>In other cities, things are less extreme. Halifax, for instance, experienced <a href="http://perceptionsofchange.ca/Hotspotsofincomeinequality.pdf">hot spots of inequality</a>.</p>
<p>Across the seven cities studied by the Neighbourhood Change Research partnership, between 13 per cent and 32 per cent of neighbourhoods lost ground. That is, the incomes in those neighbourhoods decreased relative to the average income of a city’s neighbourhoods between 1980 and 2015. Winnipeg had the lowest share of neighbourhoods experiencing decline, while Calgary had the most. </p>
<p>Neighbourhoods losing ground tended to house racialized groups and immigrants in larger cities like Montréal, Toronto and Vancouver. Neighbourhood decline tended to occur in areas with urban Indigenous peoples in Winnipeg, refugees in Hamilton and seniors in Halifax.</p>
<h2>Social housing</h2>
<p>Government policies affect what is built in neighbourhoods and how income inequality is experienced across cities. Until the 1970s, federal programs supported the building of <a href="https://www.innovations.harvard.edu/sites/default/files/hpd_0401_dreier.pdf">affordable housing</a> in Canada, but a growing faith in the market to address housing needs undermined that commitment to affordability. By the 1990s, responsibility for social housing was transferred to the provinces. Many of them lacked the resources and the political commitment to invest in social housing. </p>
<p>The federal government instead encouraged building <a href="https://www.ubcpress.ca/changing-neighbourhoods">owner-occupied housing</a>. Provincial policies also pushed urban growth and increased pressures on local governments to allow developers to build luxury units. </p>
<p>By the 2010s, Canada transitioned from having some of the most affordable housing markets around the world to among the <a href="https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1468-2427.2012.01184.x">least affordable</a>. Many Canadians now find themselves shut out of living in the country’s largest cities.</p>
<p>Planning policies and regulations played a key role. As early as the 1970s, Toronto and Vancouver encouraged urban infill and densification in downtown areas that inadvertently stimulated gentrification. It is a trend followed by other cities. </p>
<p>Canadian planners increasingly promoted urban revitalization and regeneration, supported by planning philosophies associated with <a href="https://www.jstor.org/stable/43030662">new urbanism</a>, sustainability, social mix and smart growth — all of which contributed to income polarization across neighbourhoods. </p>
<p>In recent years, programs have been created to renew public housing as seen with <a href="https://www.theglobeandmail.com/real-estate/article-final-phases-of-regent-park-redevelopment-to-be-open-to-tender/">Toronto’s Regent Park</a>. These initiatives apply a mix of neoliberal and new-urbanist ideas to generate massive neighbourhood change. The effectiveness of this approach is yet to be seen.</p>
<h2>A future housing strategy</h2>
<p>In 2017, Canada announced a <a href="https://www.cmhc-schl.gc.ca/en/nhs">National Housing Strategy</a>. Since then, $55 billion spread over 10 years has been promised to pursue it. In the face of the COVID-19 outbreak, the federal government implemented new stimulus policies, including a new <a href="https://www.cmhc-schl.gc.ca/en/finance-and-investing/insured-mortgage-purchase-program">Insured Mortgage Purchase Program</a> that allows the federal government to buy up mortgages. </p>
<p>The stimulus money aims to ensure that the banks, lenders and construction companies remain profitable during the COVID-19 recession in the hopes that finance and real estate can continue to drive economic growth in the country. But this promotes additional risky lending to buyers of owner-occupied housing with the potential to further imbalance housing markets in Canadian cities, increasing debt levels and making rental housing even less affordable.</p>
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<figcaption><span class="caption">Affordability was a key issue in the federal election for many Canadians who rent their home.</span></figcaption>
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<p>A better policy would be to immediately build social housing and affordable rental units. Governments should also continue pandemic-induced policies like limiting loopholes for <a href="https://www.cmhc-schl.gc.ca/en/rental-housing/covid-19-eviction-bans-and-suspensions-to-support-renters">eviction from commercial and private rental housing</a>. Otherwise, we will face a wave of “<a href="https://www.cbc.ca/news/canada/renovictions-housing-shortage-1.5400594">renovictions</a>” and rents will continue to be out of reach as entrepreneurs buy up properties in the economic recovery period of the outbreak.</p>
<p>Canada is ripe for implementing bold policies that build affordable housing to meet the diverse needs of its population. </p>
<p>Stimulus spending can have long-term impacts if it protects workers, allows tenants the right to remain in their units and invests in new public transit lines that make cities more sustainable. To fix inequality, we should also consider adopting a <a href="https://www.cbc.ca/news/opinion/opinion-universal-basic-income-1.5501938">universal basic income</a> and other redistributive policies. </p>
<p>We have a real chance at building socially just cities. Let’s not waste it.</p><img src="https://counter.theconversation.com/content/134735/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Howard Ramos receives funding from the Social Sciences and Humanities Research Council. </span></em></p><p class="fine-print"><em><span>Alan Walks receives funding from the Social Sciences and Humanities Research Council of Canada (SSHRC). He is affiliated with the University of Toronto, the Canadian Association of Geographers, the Associate Collegiate Schools of Planning, and the Urban Affairs Association.</span></em></p><p class="fine-print"><em><span>Jill L Grant receives funding from the Social Sciences and Humanities Research Council of Canada.</span></em></p>It’s time to reset Canada’s housing policies to make cities more affordable and more socially just places to live.Howard Ramos, Professor of Sociology, Dalhousie UniversityAlan Walks, Professor, Geography, University of TorontoJill L Grant, Professor Emeritus, School of Planning, Dalhousie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1158302019-05-20T11:10:35Z2019-05-20T11:10:35ZHow millennials are affecting the price of your home<figure><img src="https://images.theconversation.com/files/272846/original/file-20190506-103045-pp5uj3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Millennials are less likely to own a home than previous generations were at the same age.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/sold-home-sale-real-estate-sign-168053771?src=MyyBDZW8tOfFl2Au5es9xg-1-2">Andy Dean Photography/shutterstock.com</a></span></figcaption></figure><p>It used to be that everyone wanted to buy a home, seeking pleasure and security, as well as the potential for future wealth. </p>
<p>But younger Americans are buying homes far less often than their elders’ generations did, and that puts a large sector of the U.S. economy at risk.</p>
<p><a href="https://www.urban.org/sites/default/files/publication/96221/homeownership_and_the_american_dream_0.pdf">Millennial home ownership levels</a> are dramatically lower than the those of previous generations at a similar age. In 1985, 45.5% of 25- to 34-year-olds owned homes in the U.S. By 2015, this had fallen about 25%.</p>
<p>Since the housing industry currently accounts for <a href="https://www.nahb.org/en/research/housing-economics/housings-economic-impact/housings-contribution-to-gross-domestic-product-gdp.aspx">15% to 18% of the nation’s gross domestic product</a>, any change in established behavior could have substantial consequences on the larger economy. </p>
<p><a href="https://scholar.google.com/citations?user=rBUYZnsAAAAJ&hl=en">Researchers like me</a> who are interested in the future of the U.S. economy are faced with some difficult questions about how millennials’ behavior is changing the housing market. </p>
<p>My recent research suggests that both increases and decreases in home prices can be directly tied to where millennials choose to live. If a long-term behavioral change is afoot, and this generation continues not to buy homes, it will very directly impact GDP. </p>
<h2>Homeownership</h2>
<p>Research has shown that younger generations <a href="https://www.stlouisfed.org/publications/regional-economist/second-quarter-2018/accounting-age-financial-health-millennials">lag behind</a> previous generations in terms of milestones like homeownership and marriage.</p>
<p>One of the assets that set previous generations apart is home equity. In 2001, Gen-Xers held an average of US$130,000 in assets, compared to millennials in 2016 that held almost 31% less. </p>
<p>However, assets attributed to home equity are subject to the whims of the housing market. Just ask anyone <a href="https://www.washingtonpost.com/business/economy/a-guide-to-the-financial-crisis--10-years-later/2018/09/10/114b76ba-af10-11e8-a20b-5f4f84429666_story.html">still underwater</a> on a home purchased before the financial crisis. </p>
<p>And home equity isn’t just vulnerable to large-scale economic upheavals. In fact, it’s constantly fluctuating. </p>
<h2>Age and cost</h2>
<p>I analyzed data from the U.S. Census Bureau and American Community Survey from about 800 of the most populous counties in the U.S., or about 85% of the population, in a study that has not yet been published. The data show a rather disconcerting trend.</p>
<p>If no one ever moved from one county to another, almost all counties would gradually grow older in terms of average age. </p>
<p>However, the migration of primarily younger individuals has caused an escalation in this aging shift. Some areas are aging much more quickly than expected. In those areas, home prices have been vulnerable to long-term declines. </p>
<p>In other words, the trend of rising or falling home values follows patterns of migration in the U.S. </p>
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<p>From 2010 to 2016, counties with aging populations were about 50% more likely to have experienced a decline in home values than those counties that were becoming “younger.” Not surprisingly, counties that were becoming younger were often experiencing increases in both populations and in the prices of homes.</p>
<p>Two areas that provide an illustration of this are key to the oil and gas industry: the Midland-Odessa area of Texas and Ward County, North Dakota. Both areas have experienced not only a net decrease in the age of residents, but also a net increase in population. </p>
<p>This is far from a rural phenomenon. In Allegheny County, the Pennsylvania county that’s home to Pittsburgh, a similar increase in population has also decreased the average age of its residents.</p>
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<h2>The cost of a home</h2>
<p>Millennials’ migration to particular counties has fueled <a href="https://www.corelogic.com/downloadable-docs/marketpulse/the-marketpulse-vol-8-issue-4-april-2019-screen-041719.pdf">speculative real estate transactions</a>. </p>
<p>In 2018, such transactions are reaching levels just below the pre-crisis highs, accounting for almost 11% of all homes sold last year. The prices are inflated by buyers looking to “flip” houses. This forces younger buyers to compete with the professionals, pushing them out of the markets they are migrating to.</p>
<p>Younger buyers are further frustrated by the cost of what economists refer to as frictions. Frictions include <a href="https://www.realtrends.com/wp-content/uploads/2018/06/RT_0618News.pdf">commissions that average 5% to 6%</a> of the purchase price, myriad inspection and appraisal fees, as well as mortgage and title insurance. All of this runs counter to the transparency and ease of access many millennials have become used to in the modern world.</p>
<p>Since the younger generation is <a href="https://www.urban.org/sites/default/files/publication/96221/homeownership_and_the_american_dream_0.pdf">better educated</a>, one might expect significant wage increases to counter some of these frictions. But recent graduates between the ages of 22 and 27 <a href="https://www.newyorkfed.org/research/college-labor-market/college-labor-market_wages.html">earn about 2% less</a> than their predecessors did in 1990. </p>
<p>If <a href="https://www.multpl.com/case-shiller-home-price-index-inflation-adjusted">home prices</a> had also stayed relatively flat, this likely wouldn’t be an issue. However, from 2000 to the present, average home prices have increased by about 3.8% annually, though this varies dramatically from county to county.</p>
<p><iframe id="3A5rK" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/3A5rK/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>As urban areas continue to attract more new residents, many young people may need to reassess the true value that home ownership offers. Meanwhile, older generations are likely just becoming aware of the impact of millennial migration on the American dream. If you live in an area that is aging faster than the natural rate, the probability of your home value decreasing is very real.</p><img src="https://counter.theconversation.com/content/115830/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jimmie Lenz receives funding from Manhattan Institute.</span></em></p>As millennials flock to certain parts of the US, home prices in those areas are surging.Jimmie Lenz, Clinical Assistant Professor of Finance, University of South CarolinaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1144772019-04-08T10:19:57Z2019-04-08T10:19:57ZWhite British homeowners more likely to move out if Pakistanis buy houses nearby<figure><img src="https://images.theconversation.com/files/267142/original/file-20190402-177167-8ft1py.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/gee01/9974208744/sizes/l">_gee_/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Few of us make a bigger financial decision than buying a house. Where we live and choose to bring up our children is something that implies emotional commitment and investment. So house moves can be a powerful way to reveal what people really think and value – including about their neighbours.</p>
<p><a href="http://eprints.whiterose.ac.uk/130437/">Previous research</a> on the UK has tended not to find evidence of “white flight” – a term borrowed from mid-20th century North America, where the large migration of people of colour from the rural south to metropolitan areas resulted in white households leaving inner cities for the suburbs. </p>
<p>While there has so far been limited evidence of white flight in modern Britain, there have been some shortcomings with the previous studies that have looked into it. One of the problems is that the areas studied have been too large to detect what impact people’s immediate neighbours have on their decisions to move house.</p>
<p>In <a href="http://eprints.whiterose.ac.uk/139611/">recent research</a> that I published with my colleague Sue Easton, we wanted to take a closer look at what was happening when people with ethnic minority names moved next door or very close to homeowners with white British names. While you might be oblivious to who moves into a house a street or two away, you’re likely to be very conscious, and much more concerned about, who moves in next door. It’s at this level that our true conviviality or prejudices are revealed. </p>
<h2>What’s in a name?</h2>
<p>In our study, we used property registration data for the 40% most deprived census areas of Glasgow in Scotland. We created a longitudinal dataset – one that follows individual homeowners over time – constructed from the population of homebuyers recorded in all property transaction records from 2003 to 2014.</p>
<p>Crucially for our purposes, the property registration data we used recorded the names of both buyers and sellers in each house transaction. How people respond to particular sorts of names can reveal certain prejudices. <a href="http://www.tariqmodood.com/uploads/1/2/3/9/12392325/racism_muslims_and_the_national_imagination.pdf">One 2009 study</a> based on in-depth interviews with “white” and “non-white” participants in Glasgow, for example, found that white residents responded with racialised or prejudiced attitudes when faced with the hypothetical scenario that a person with a stereotypically Muslim name was thinking of moving into the house next door. Respondents associated such names with Islamic terrorism and with stereotypes of Asian neighbours being loud, inconsiderate, and living in overcrowded conditions.</p>
<p>Analysis of particular name groups has become a lot more feasible as a result of the <a href="https://www.ncbi.nlm.nih.gov/pubmed/21907365">growing literature</a> on combining forenames and surnames to impute ethnicity. And now sophisticated software is being designed to do this too, such as the <a href="http://www.onomap.org/">Onomap software</a> which can assign ethnicity to names in a large dataset based on <a href="https://www.springer.com/gp/book/9783642454127">linguistic and cultural analysis</a>. </p>
<p>We used Onomap in our study to categorise the names of the house buyers in the millions of transactions in our dataset. Doing this allowed us to monitor whether the likelihood of somebody moving house is associated with buyers with particular ethnic name groups purchasing houses in the immediate neighbourhood. </p>
<p>Our results suggest that, on average, the length of stay of homeowners with white British names is significantly reduced if house buyers with Pakistani or other Muslim names move within 50 metres. For example, for every household moving in with a “non-white other” name, primarily Muslim in origin, the average length of stay of existing homeowners with white British names halved. We also found evidence, however, that the effect diminished somewhat as the number of those moving in with Pakistani or Muslim names increased. </p>
<p>In our statistical analysis, we were careful to control for the housing market conditions in the neighbourhoods. We did this by including the monthly change in mean property price in the surrounding area. So the effect we found is unlikely to be explained by fluctuations in local demand. Nevertheless, we can’t say for sure that those homeowners with white British names who chose to move did so because of anti-Pakistani or anti-Muslim sentiment. Our study was observational, and we didn’t interview people about the choices they’d made. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/267151/original/file-20190402-177184-1y09elv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/267151/original/file-20190402-177184-1y09elv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/267151/original/file-20190402-177184-1y09elv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/267151/original/file-20190402-177184-1y09elv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/267151/original/file-20190402-177184-1y09elv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=507&fit=crop&dpr=1 754w, https://images.theconversation.com/files/267151/original/file-20190402-177184-1y09elv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=507&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/267151/original/file-20190402-177184-1y09elv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=507&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Who is moving in next door?</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/710705557?size=medium_jpg">Tana888/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Neighbourhood churn</h2>
<p>It’s also worth bearing in mind that the effect is very likely to be partly driven by “neighbourhood churn”. When people move into your neighbourhood, it usually means others are moving out. If you’ve built up strong friendships with your neighbours, when any of them move, you might feel less tied to the neighbourhood. So even when newcomers have white-British names, we found that the chances of existing homeowners with white-British names moving out increased. Still, this didn’t happen as much as when the people moving in had Pakistani or other “non-white” (primarily Muslim) names. </p>
<p>Another possible explanation is that some of the buyers with Pakistani and Muslim names are landlords, rather than owner occupiers. We know, for example, that the length of stay for homeowners is <a href="https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/rented-accommodation-private-sector-full.pdf">more than seven times that of renters</a>, meaning they have a higher turnover of residents. If homeowners are averse to living near rental properties because of this impact on neighbourhood churn, they may be more likely to move out when a neighbouring house is purchased by a landlord. Although we couldn’t guarantee that we’d remove all landlord purchases from our analysis, we did go to considerable lengths to exclude them. </p>
<p>One alternative explanation of “white flight” is that white owners are moving out in order to move up the housing market. But this doesn’t explain why we found white British homeowners were more likely to move when the people buying nearby have Pakistani or Muslim names rather than white-British names.</p>
<p>Another explanation is that those moving out are doing so not because of the name or ethnicity of the new house buyers, but because those moving in are from a lower social class. To address this, we controlled for the deprivation level in the neighbourhood and the property price at the time of purchase. The more expensive the house, the more affluent the buyer needs to be in order to purchase the property. So it’s unlikely that house buyers with Pakistani names were significantly poorer or wealthier than existing residents. </p>
<p>This left us with the uncomfortable possibility that some homeowners with white British names were more likely to relocate if homeowners with Pakistani and Muslim names moved in within 50 metres. </p>
<p>In comparison to the white flight of 1950s America, the effect is probably pretty small and much more localised. But it nevertheless suggests house moves in Glasgow may be partly driven by latent aversion to having neighbours with Pakistani or Muslim names.</p><img src="https://counter.theconversation.com/content/114477/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gwilym Pryce currently receives funding from the UK Economic and Social Research Council (ESRC). This research was funded by the ESRC Understanding Inequalities project (Grant Reference ES/P009301/1) and the ESRC AQMeN Research Centre (Grant Reference ES/K006460/1).
.</span></em></p>A new study in Glasgow suggests latent anti-Pakistani sentiment may affect the house-moving decisions of white British homeowners.Gwilym Pryce, Professor of Urban Economics and Social Statistics and Co-Director of the CDT in Data Analytics & Society, University of SheffieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1131582019-03-22T10:44:35Z2019-03-22T10:44:35ZSkip this chore: Cleaning your air conditioner condenser probably won’t make it work better<figure><img src="https://images.theconversation.com/files/265106/original/file-20190321-93063-z8kltl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Scratch this off your to-do list.</span> <span class="attribution"><span class="source">Florence Yuill</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>I asked my neighbor who hoses off his air conditioner condenser every spring why he does it. “Because my dad always told me I had to,” he said.</p>
<p>Conventional wisdom like what my neighbor’s dad imparted may always seem right. But through <a href="https://scholar.google.com/citations?user=SHB82wYAAAAJ&hl=en">my HVAC scholarship</a> – the study of heating, ventilation and air-conditioning systems – I’ve learned that this particular presumption is probably wrong.</p>
<h2>Dirty equipment</h2>
<p>The equipment I’m talking about washing is the outdoor part of central air-conditioning systems that move heat from homes into the outdoors. </p>
<p>Technically known as condenser coils, they are usually about the size of a large garbage can but they can be as small as a bucket or as big as a refrigerator. Some are protected by louvered grilles but most are exposed to the elements. Their metal fins help transfer heat to the air. They contain tubes that carry the hot refrigerant, which gives off heat as it condenses.</p>
<p>Stuff like windblown seeds, dust and grass clippings tends to collect on the coil surface. Most homeowners and HVAC companies envision that this untidy-looking stuff acts like an insulating blanket, slowing down the passage of heat from inside to outside. Any debris that accumulates would also interfere with airflow over the coil, further restricting the system’s ability to expel heat.</p>
<h2>The nitty-gritty</h2>
<p><a href="https://scholar.google.com/citations?hl=en&user=Y5kMZy8AAAAJhttps://scholar.google.com/citations?hl=en&user=Y5kMZy8AAAAJ">Mehdi Mehrabi</a>, an architectural engineering graduate student, and I set out to learn the extent to which <a href="https://www.ashrae.org/1705">dirty residential air conditioners</a> are less efficient than clean ones. <a href="https://doi.org/10.1080/23744731.2019.1605197">What we found</a> astonished us – and many of the other experts in this field. </p>
<p>Previous work on this question simulated outdoor dirt with synthetic materials in a laboratory setting, or used reduced airflow as a proxy for the effects of dirty coils. Although it’s necessary to carefully to control operating conditions, we took a novel approach: collecting condensers that had gotten dirty through ordinary residential use, and bringing them to the lab for study with a special <a href="https://www.techstreet.com/ashrae/standards/ch-18-c033-development-of-a-method-for-testing-air-side-fouling-effects-on-outdoor-heat-exchangers-rp-1705?product_id=2005124">test apparatus</a>.</p>
<p>This meant that they were coated in real-world dust and other crud in everyday amounts. We tested the dirty air conditioners, then washed them thoroughly with a garden hose and tested again. We also used a commercial coil cleaning fluid and tested them for a third time.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=302&fit=crop&dpr=1 600w, https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=302&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=302&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=379&fit=crop&dpr=1 754w, https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=379&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/265180/original/file-20190321-93048-m7w5sj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=379&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Close-up of 7 grams of dirt per square foot on an air conditioner condenser and that same condenser after it’s cleaned.</span>
<span class="attribution"><span class="source">Mehdi Mehrabi</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Surprisingly, we found that dirty air conditioner condensers often perform better than clean ones. The change in condenser coil heat transfer performance ranged from a 7 percent increase to a 7 percent decrease for the coils we tested. The average change was … none at all.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=302&fit=crop&dpr=1 600w, https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=302&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=302&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=379&fit=crop&dpr=1 754w, https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=379&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/265185/original/file-20190321-93039-gqy4ag.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=379&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Close-up of 17 grams of dirt per square foot on an air conditioner condenser and that same condenser after it’s cleaned.</span>
<span class="attribution"><span class="source">Mehdi Mehrabi</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>The coil that registered a 7 percent improvement after getting cleaned up looked quite dirty, with 7 grams of dirt per square foot of coil surface area. But the coil that performed 7 percent worse was even dirtier, with 17 grams of dirt per square foot. It was so filthy, in fact, that it was nearly impossible to see the metal fins before we gave it a wash. Most of the condenser coils we tested in the lab were cleaner than both of those.</p>
<p><iframe id="BLEzu" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/BLEzu/7/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>No insulating blanket</h2>
<p>To see how the equipment’s performance could improve by getting dirty, we did further testing. </p>
<p>That next round of study suggested that the accumulated dirt stirs up the air passing over the condenser coils. Technically called “turbulence,” these little gusts can transfer heat away from the coil better. For some coil designs, this can cause the equipment to perform better when it’s dirty than when it’s clean. This is true even when the dirt has reduced the airflow rate.</p>
<p>If your home has one of these things, you are probably wondering whether you should you wash your own condenser. Here’s what you should know.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=451&fit=crop&dpr=1 600w, https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=451&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=451&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=567&fit=crop&dpr=1 754w, https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=567&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/265108/original/file-20190321-93057-1pkfk1h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=567&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The author, doing a chore that his own research has found to be pointless.</span>
<span class="attribution"><span class="source">Florence Yuill</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Cleaning your air conditioner might make it run better. It might make it run worse. But it probably won’t make any difference. I now personally believe in skipping this task, unless the coil is so dirty that it’s hard to see the metal fins. Although, if it will make you feel better, go ahead and hose it down. To be honest, that’s what I plan to do from now on.</p>
<p>Letting go of deep-seated beliefs of any kind is hard, whether it’s that <a href="https://www.vox.com/science-and-health/2018/6/13/17452936/dieting-weight-loss-netflix-explained">dieting makes you lose weight</a> in the long run – something recent studies do not support – or if this particular home maintenance ritual is justified. As news of our findings spreads, I’m bracing for some unpleasant responses from people who might lose out if the condenser-cleaning business dries up and others who simply refuse to accept that there was no basis for the conventional wisdom on this question.</p><img src="https://counter.theconversation.com/content/113158/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Yuill received funding from the American Society of Heating, Refrigerating, and Air-conditioning Engineers to conduct this study, under Research Project 1705. He is affiliated with ASHRAE. </span></em></p>Unless it sparks joy, go ahead and scratch this task off your spring-cleaning checklist.David Yuill, Assistant Professor of Architectural Engineering, University of Nebraska-LincolnLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1134322019-03-19T13:46:59Z2019-03-19T13:46:59ZDoes most of your paycheck go to rent? That may be hurting your health<figure><img src="https://images.theconversation.com/files/264244/original/file-20190317-28483-dgg7kc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Families that spend more on housing may have less to spend on their health.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/man-counting-house-price-home-insurance-1032274147">Tero Vesalainen/shutterstock.com</a></span></figcaption></figure><p>New data on health across the U.S. shows that high housing costs are harming Americans’ health – and that some communities are affected more than others. </p>
<p><a href="http://www.countyhealthrankings.org">The 2019 County Health Rankings</a>, an annual collaborative report from the University of Wisconsin Population Health Institute and the Robert Wood Johnson Foundation, shows that 11 percent of U.S. households are severely burdened by housing costs. This means that more than 800,000 households spend at least half of their income on housing. </p>
<p>In communities with high housing costs, residents rate their health as lower, are less likely to be able to purchase enough quality and nutritious foods, and have higher rates of child poverty.</p>
<p><a href="https://scholar.google.com/citations?user=60T28NcAAAAJ&hl=en">As a health researcher</a>, this is a theme that I have seen in studies over and over again.</p>
<h2>The most burdened households</h2>
<p>While many communities face high housing costs, these burdens are not universally shared. Renters are more likely than homeowners to spend more than half of their paycheck on housing. The costs of homeownership have improved over the past few years, but housing costs for renters have not. </p>
<p>There are also racial differences. More than 1 in 10 white households spend more than half of their income on housing, with a median income of US$56,000. But among households headed by blacks, the median income is $33,000 – and about 1 in 4 black households experience these housing costs burdens. </p>
<p>Another key finding from the County Health Rankings report is that segregated communities with more households headed by black residents are twice as likely to face severe housing cost burdens than white households. </p>
<p>Why are black Americans more likely to spend so much of their incomes on housing? One reason is that black neighborhoods were targeted in a process called <a href="https://www.npr.org/sections/thetwo-way/2016/10/19/498536077/interactive-redlining-map-zooms-in-on-americas-history-of-discrimination">redlining</a>, especially between the 1930s and 1965. Banks and other lenders excluded black communities from favorable loans and charged higher interest rates on mortgages, leading to higher housing costs – even when homes were valued less than similar homes in white communities. </p>
<p>Redlining is not explicitly practiced in the same way today, but <a href="https://www.washingtonpost.com/news/wonk/wp/2018/03/28/redlining-was-banned-50-years-ago-its-still-hurting-minorities-today/">its damage</a> and discrimination remains – such as how banks targeted black homeowners with <a href="https://www.citylab.com/equity/2013/08/blacks-really-were-targeted-bogus-loans-during-housing-boom/6559/">subprime loans</a>. The consequences of this became clear in the 2008 recession, when black homeowners suffered <a href="https://www.theatlantic.com/business/archive/2015/06/black-recession-housing-race/396725/">worse outcomes</a> compared to white homeowners. These practices led to higher foreclosure rates and steeper declines in home values during and after the recession, limiting opportunities for black communities to build wealth through homeownership.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/264390/original/file-20190318-28499-kc1xyj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Black families are more likely to need to leave their own communities to access fresh and nutritious foods.</span>
<span class="attribution"><span class="source">Oksana Shufrych/shutterstock.com</span></span>
</figcaption>
</figure>
<h2>Effects on health</h2>
<p>There is a powerful relationship between <a href="https://dx.doi.org/10.2105/AJPH.92.5.758">housing and health</a>. </p>
<p>When people pay too much for housing, they must make tough choices between paying their rent or mortgage or paying for food, medicine and other resources that support their health. In 2015, households that are burdened by housing costs <a href="https://www.jchs.harvard.edu/sites/default/files/harvard_jchs_state_of_the_nations_housing_2017_chap6.pdf">spent 53 percent less</a> on health care, food and transportation combined, compared to households that do not spend more than half of their income on housing. </p>
<p>To afford housing, some families spend less on food, do not buy enough food, or buy less nutritious and cheaper food. These families may also live in homes with structural deficits and other inadequacies, where they are at higher risk for health conditions like lead paint poisoning and asthma. </p>
<p>Research shows that <a href="https://doi.org/10.1093/phr/116.5.404">segregated communities</a> are more likely to be exposed to more threats to their health. For example, a study published in March showed that black and Hispanic populations are exposed to 56 percent and 63 percent <a href="https://www.npr.org/sections/health-shots/2019/03/11/702348935/study-finds-racial-gap-between-who-causes-air-pollution-and-who-breathes-it">more air pollution</a> compared to white residents, even though white residents are more likely to contribute to pollution. </p>
<p>Segregated communities are also less likely to have resources in their communities that promote health and help prevent chronic diseases, like obesity and diabetes. Even if black families were not overly burdened by housing costs, they still are more likely to need to leave their own neighborhoods to access <a href="https://doi.org/10.1016/j.amepre.2008.09.025">fresh and nutritious foods</a>, <a href="https://doi.org/10.1177/1077558711420263">quality health care services</a> and places to exercise. And <a href="https://doi.org/10.1111/j.1475-6773.2003.00199.x">black residents</a> living in segregated neighborhoods are also more likely to die prematurely. </p>
<p>I recently co-authored a paper, led by <a href="https://scholar.google.com/citations?user=3S2DdDAAAAAJ&hl=en">University of Maryland professor Caryn Bell</a>,
that shows that counties with 9 percent or more black residents are more likely to have <a href="https://dx.doi.org/10.3390/ijerph16050861">resources that compromise health</a>, such as fast food restaurants, and less likely to have resources that promote health, such as grocery stores. <a href="https://doi.org/10.1016/j.amepre.2005.11.003">Research has shown</a> that this is important, due to the relationship between access to health-promoting resources, like grocery stores, and lower obesity rates. </p>
<h2>A growing problem</h2>
<p>As housing costs have risen, incomes have not kept pace. Additionally, affordable housing is not available to everyone who needs it. </p>
<p>The National Low Income Housing Coalition <a href="https://www.novoco.com/sites/default/files/atoms/files/2019_gap_shortage_of_affordable_homes_031419.pdf">reported in March</a> that only 37 affordable homes exist for every 100 extremely low-income renter households, meaning households with incomes at or below the poverty line or 30 percent of the area median income. That means that there is a shortage of homes with monthly costs that are 30 percent or less of the monthly household’s income. No state has enough homes for every extremely low-income renter household, which are the majority of households that are severely housing cost burdened. </p>
<p>Incomes are <a href="http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/">stagnating</a> while housing costs, especially renting, <a href="https://www.bloomberg.com/news/articles/2018-07-12/americans-burdened-by-increasing-housing-costs-slow-wage-gains">continue to rise</a>. As these two forces combine to limit opportunity, more U.S. residents are at risk of becoming burdened by their housing costs and damaging their health, especially low-income and black Americans.</p><img src="https://counter.theconversation.com/content/113432/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jessica Owens-Young does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Eleven percent of Americans spend more than half of their paycheck on housing. These households rate their health as lower and are less likely to have access to enough nutritious food.Jessica Owens-Young, Assistant Professor of Health Studies, American UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1002962018-07-27T10:43:51Z2018-07-27T10:43:51ZApartments rarely come with access to charging stations. But electric vehicles need them<figure><img src="https://images.theconversation.com/files/229478/original/file-20180726-106496-1tlnlkq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Most garages can double as EV charging stations.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/man-charging-electric-car-outlet-home-1092177395">Shutterstock.com/riopatuca</a></span></figcaption></figure><p>Americans have now purchased more than <a href="https://insideevs.com/monthly-plug-in-sales-scorecard/">800,000 electric vehicles</a>, counting both plug-in hybrids and all-electric models. That may sound like a lot of EVs, and it is a <a href="https://insideevs.com/monthly-plug-in-sales-scorecard/">big jump from the less than 5,000</a> that were on the road in 2010. But this is still <a href="https://www.fhwa.dot.gov/policyinformation/statistics/2010/mv1.cfm">less than 1 percent of all U.S. registered vehicles</a>, despite the recent availability of <a href="https://theconversation.com/range-anxiety-todays-electric-cars-can-cover-vast-majority-of-daily-u-s-driving-needs-63909">longer-range, more affordable</a> EV models like the <a href="https://www.motortrend.com/news/chevrolet-bolt-ev-2017-car-of-the-year/">Chevrolet Bolt</a>. </p>
<p>Policymakers nonetheless see EVs as having great potential to <a href="https://about.bnef.com/electric-vehicle-outlook/">reduce carbon dioxide emissions</a> and other forms of pollution, and are supporting tax credits and other policies to encourage people to buy EVs. California, for example, aims to have <a href="https://www.gov.ca.gov/2018/01/26/governor-brown-takes-action-to-increase-zero-emission-vehicles-fund-new-climate-investments/">5 million of them</a> on its roads by 2030.</p>
<p>But to meet ambitious goals like that, EVs will need to stop being a niche product and appeal to as many drivers as possible.</p>
<p>I am an <a href="https://scholar.google.com/citations?user=4YjEZY4AAAAJ&hl=en&oi=ao">energy economist</a> working on transportation policy, and I’ve looked at newly available data to try to understand why people purchase EVs. It turns out that renting a home may be one of the biggest barriers. </p>
<h2>A striking difference</h2>
<p>New <a href="https://nhts.ornl.gov/">federal data</a> show that homeowners are more than three times more likely than renters to own an EV. And since <a href="http://www.pewtrusts.org/en/research-and-analysis/reports/2018/04/american-families-face-a-growing-rent-burden#0-overview">43 million</a> U.S. households – 37 percent of all households – rent their homes, it is worth thinking hard about why this gap exists. </p>
<p><iframe id="Ir4Iw" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Ir4Iw/7/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>By analyzing the Transportation Department’s newly released 2017 <a href="https://nhts.ornl.gov/">National Household Travel Survey</a> data, I found striking differences in EV ownership between homeowners and renters. In California, homeowners are three times more likely to own an EV than renters.</p>
<p>The gap is even wider for the rest of the U.S., where homeowners are six times more likely to own an EV than renters.</p>
<h2>Income isn’t everything</h2>
<p>You might be thinking that this gap is caused by income. It is true that EV ownership is <a href="https://energyathaas.wordpress.com/2015/07/20/are-clean-energy-tax-credits-equitable/">higher for richer people</a>, which is only natural since <a href="https://www.energysage.com/electric-vehicles/costs-and-benefits-evs/evs-vs-fossil-fuel-vehicles/">EVs cost more to buy</a> than comparable gasoline-powered vehicles although <a href="https://www.energy.gov/articles/egallon-what-it-and-why-it-s-important">charging them is cheaper</a> than filling a tank. </p>
<p>But I learned that homeowners are more likely than renters to own EVs, even when they have similar income levels. For example, among households earning between US$75,000 and $100,000 per year, 1 in 130 homeowners owns an EV, compared to 1 in 370 renters.</p>
<p><iframe id="fR8XQ" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/fR8XQ/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Parking and charging</h2>
<p>The other big difference between homeowners and renters is having a place to park.</p>
<p>Most homeowners have a garage, a driveway or both. That makes charging extremely convenient for them because they can charge their vehicles at night. </p>
<p>It’s not so easy, however, for many renters. Renters are more likely to live in multi-unit buildings and parking spots may not be assigned, or there may not be any parking spots at all. The federal data doesn’t provide any information about parking availability, but this likely helps explain the disparity between homeowners and renter EV ownership rates. </p>
<p>There is also the related question of charging equipment.</p>
<p>For homeowners, it is relatively straightforward to invest in a <a href="https://www.greencarreports.com/news/1098401_electric-car-charging-the-basics-you-need-to-know">240-volt outlet</a>, electric panel upgrades and other improvements to speed up charging. These investments can cost $1,000 or more, but are a good investment for a homeowner planning to stay put.</p>
<p>Making this investment is trickier for renters, however. They may not want to invest their own money in a property they don’t own and their landlords may be unwilling to let them do it in any case due to liability and other concerns. </p>
<p>This quandary is what economists call a <a href="https://econpapers.repec.org/article/eeeenergy/v_3a5_3ay_3a1980_3ai_3a4_3ap_3a355-371.htm">landlord-tenant problem</a>. In theory, a landlord could make investments like this, and then charge higher rent to recoup the cost. In practice, however, this can get complicated.</p>
<p>Even if the current tenant has an EV – the next tenant may not. And if future tenants don’t have EVs then they won’t need – or appreciate – having charging equipment handy. Several studies, including work by <a href="https://ei.haas.berkeley.edu/research/papers/WP246.pdf">economist Erica Myers</a>, show that renters tend not to value the energy-related investments their landlords make.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/229486/original/file-20180726-106499-vgrme2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Electric car charging station in a Miami, Fla., garage.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/miami-florida-october-02-2017-electric-732461311">Shutterstock.com/Rudy Umans</a></span>
</figcaption>
</figure>
<h2>Public support for charging</h2>
<p>California policymakers are well aware of these challenges and that is a big reason why they are investing heavily in charging stations. The state is spending <a href="https://www.gov.ca.gov/2018/01/26/governor-brown-takes-action-to-increase-zero-emission-vehicles-fund-new-climate-investments/">$2.5 billion</a> to bring 250,000 charging stations statewide by 2025. Each of these stations will support several EVs, so this will make charging much easier for EV owners. </p>
<p>Much of this funding will cover the cost of building charging stations in communities with a lot of renters. The big utility Pacific Gas & Electric, for example, is making <a href="https://www.utilitydive.com/news/pge-taps-evbox-to-build-up-to-25k-charging-stations/523093/">multifamily residences</a> a high priority as it builds thousands of new charging stations across the state. As this charging infrastructure grows, the EV market is bound to expand as well. </p>
<p>I’m eager to see whether these investments will narrow the homeowner-renter gap.</p>
<p>While writing this article, I searched on the <a href="https://www.zillow.com/homes/for_rent/San-Francisco-CA_rb/?fromHomePage=true&shouldFireSellPageImplicitClaimGA=false&fromHomePageTab=rent">Zillow real estate website</a> for rental listings in San Francisco and could find only four apartments that mentioned EV charging as an amenity. </p>
<p>This isn’t many compared to the more than 1,000 of the apartments on the market, but I have no doubt that there will be many more landlords giving their tenants a place to plug in their cars as more renters buy EVs in the near future.</p><img src="https://counter.theconversation.com/content/100296/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lucas Davis does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As EVs make more inroads, giving tenants somewhere to plug in their cars could become a selling point.Lucas Davis, Professor at the Haas School of Business, University of California, BerkeleyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/900872018-01-16T11:16:54Z2018-01-16T11:16:54ZDeadly California mudslides show the need for maps and zoning that better reflect landslide risk<figure><img src="https://images.theconversation.com/files/201971/original/file-20180115-101489-15v2ncx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Search and rescue personnel scan a home in the aftermath of a mudslide, Jan. 13, 2018, in Montecito, California.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/California-Storms/2ae07779626d4c97a911c5d05ffc5d2c/6/0">AP Photo/Marcio Jose Sanchez</a></span></figcaption></figure><p>Scenic hill slopes can be inspiring – or deadly, as we are seeing after the disastrous debris flows that have <a href="http://www.latimes.com/local/california/la-me-montecito-mudslides-20180114-story.html">ravaged the community of Montecito, California</a> in the wake of heavy rains on Tuesday, Jan. 9, 2018. <a href="http://www.latimes.com/local/lanow/la-me-ln-new-montecito-mud-20180114-story.html">At least 20 people are dead</a>, and four remain missing. More than a hundred buildings have been destroyed or damaged by moving walls of mud and boulders that rumbled down creeks and canyons into houses and roads. </p>
<p>As mountains rise, erosion tears them down. And Southern California’s mountains are rising fast, squeezed up by the action of the region’s active faults. This produces steep slopes that erode quickly, though much of that erosion happens in infrequent events, such as big rainstorms right after big wildfires. </p>
<p>We know that risks vary across the terrain and that some places in landslide-prone zones are more dangerous than others. In some regions the riskiest areas are well downslope or downstream of slide-prone slopes, in the places where debris runs out and comes to rest. Unfortunately, few people are aware of these risks when developers build in and around landslide-prone mountains. </p>
<h2>A predictable disaster</h2>
<p>The U.S. Geological Survey <a href="https://www.nbcnews.com/news/investigations/how-politics-buries-science-landslide-mapping-n73256">estimates</a> that landslides kill 25 to 50 people a year in the United States – more than earthquakes or volcanoes. Yet landslides receive far less attention and research funding than other natural hazards. </p>
<p>Part of the problem is that when a large earthquake strikes, the whole region feels it. But landslides tend to impact localized areas, so they rarely attract widespread attention, except in devastating cases like Montecito. Furthermore, different kinds of landslides present very different hazards. Assessing landslide risks requires an understanding of how erosional processes shape Earth’s surface in different regions. </p>
<p>In a general sense, the threat to Montecito was clear. Scientists and planners have known for decades that the mountains of Southern California are shaped by a cycle of fire, rain and debris flows. Back in 1989, when I was a graduate student studying landslides, journalist John McPhee published his acclaimed book <a href="https://us.macmillan.com/thecontrolofnature/johnmcphee/9780374522599/">“The Control of Nature</a>.” In it, McPhee described scenes of devastation resulting from intense rainfall running off of wildfire-charred slopes to roar down canyons around Los Angeles. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/mknStAMia0Q?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Landslides occur in all 50 U.S. states, but risks are higher in some areas.</span></figcaption>
</figure>
<p>The Montecito disaster did not come as a complete surprise. Indeed, the U.S. Geological Survey <a href="https://landslides.usgs.gov/hazards/postfire_debrisflow/detail.php?objectid=178">warned</a> of high potential for disastrous landslides if intense rain fell on mountainsides around Santa Barbara that had been scorched by the <a href="http://www.fire.ca.gov/current_incidents/incidentdetails/Index/1922">Thomas wildfire</a> in December. When that perfect storm landed, it hit bare, baked soil that could not readily absorb water. So the rain ran off, picking up soil, boulders and debris as it surged down canyons and streams. These debris-charged torrents slowed only where steep channels gave way to gentler slopes. </p>
<p>Most of the damage occurred <a href="https://www.independent.com/news/2018/jan/14/house-house-damage-assessment-montecito-mudslides/">along the run-out pathways</a> of the debris flows – areas where material can flow after it starts sliding downhill. Yet landslide hazard maps generally don’t show predicted run-out zones. Instead, they typically show only the locations of the source areas where landslides are likely to start. </p>
<h2>Better information for residents</h2>
<p>There are reasons why people keep building homes in landslide-prone areas. Some decide it’s worth the risk. In Seattle, where I live, steep slide-prone slopes tend to offer the best, and most expensive, views. Conversely, in low-income regions such as Appalachia and many developing countries, the poor often are pushed up onto potentially unstable hillsides. Generally, however, I suspect that many Americans living in landslide country are simply unaware of potential hazards that the lay of the land presents to their homes, neighborhoods and businesses. </p>
<p>Sometimes politics or greed plays a role. After <a href="http://www4.ncsu.edu/%7Enwsfo/storage/cases/20040908/">Hurricane Frances</a> hammered North Carolina in 2004, the state legislature approved a program to map landslide hazards. But once the first maps were produced, the program was <a href="https://www.nbcnews.com/news/investigations/how-politics-buries-science-landslide-mapping-n73256">canceled</a> over concerns that the maps would affect land values and be used to regulate development. </p>
<p>Without this kind of information, residents are physically and financially exposed. “Earth movement,” such as landslides, <a href="http://www.homeinsurance.org/dont-assume-earth-movement-coverage-is-standard-in-your-home-insurance/">generally is not covered</a> by homeowner’s insurance policies. And by the time a landslide comes, developers are long gone, leaving homeowners holding the bag. </p>
<p>And, of course, different types of landslides pose different risks. In the slow-moving <a href="https://www.dnr.wa.gov/rattlesnake-hills-landslide">Rattlesnake Ridge landslide</a> in central Washington state, a 20-acre parcel of land is sliding downhill about a foot and half per week. Residents have been moved out of the at-risk zone, and engineers and geologists are monitoring the site in real time to evaluate and update hazard assessments. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/201975/original/file-20180115-101489-1a3yhfd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Upper part of the Oso, Washington landslide site, photographed April 8, 2014 (see small house just inside treeline at lower left for scale).</span>
<span class="attribution"><a class="source" href="https://upload.wikimedia.org/wikipedia/commons/8/84/2014_Washington_Landslide.jpg">USGS/Jonathan Godt</a></span>
</figcaption>
</figure>
<p>In contrast, the <a href="http://www.geerassociation.org/administrator/components/com_geer_reports/geerfiles/GEER_Oso_Landslide_Report_low-res.pdf">Oso landslide</a> north of Seattle on March 22, 2014 was so large and fast-moving that even a real-time warning would not have prevented tragedy. This disaster killed 43 people in a couple of minutes when an entire hillside collapsed. In response, Washington state has started <a href="https://www.dnr.wa.gov/lidar">posting detailed topographical maps online</a> for use in identifying areas at risk for generating landslides. But hazard maps still don’t identify potential downhill run-out zones. </p>
<p>It’s time to get serious about landslide zoning, in the way that the federal government maps <a href="https://www.fema.gov/national-flood-insurance-program-flood-hazard-mapping">areas at serious risk of flooding</a>. Landslide hazard maps delineating potential run-out zones should be part of local land use planning. These maps could help guide zoning decisions and better inform homeowners, banks and insurance companies of potential risks. Ultimately, the best way to reduce landslide risk is to avoid building things we value in places where run-out is likely. For when there’s no controlling nature, there’s only living with her.</p><img src="https://counter.theconversation.com/content/90087/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David R. Montgomery does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In response to mudslides that have killed at least 20 people in Southern California, a geologist calls for more resources to study and map landslide hazards so residents can understand the risks.David R. Montgomery, Professor of Earth and Space Sciences, University of WashingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/870662017-11-14T02:43:41Z2017-11-14T02:43:41ZMortgage interest deduction is a terrible way to help middle-class homeowners<figure><img src="https://images.theconversation.com/files/194439/original/file-20171113-27616-160kcch.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Middle-class homeowners need credits, not deductions.</span> <span class="attribution"><span class="source">Konstantin L/Shutterstock.com</span></span></figcaption></figure><p>Republican lawmakers’ plans to rewrite the tax code <a href="https://www.washingtonpost.com/realestate/gop-tax-proposal-contains-major-headaches-for-homeowners/2017/11/07/31a62c40-c328-11e7-afe9-4f60b5a6c4a0_story.html?utm_term=.3e745caf9a68">would make it harder</a> for most Americans to take advantage of the mortgage interest deduction, which <a href="https://www.housingwire.com/articles/41796-nar-breaks-down-cost-of-house-tax-plan-to-homeowners">has angered many</a> who claim <a href="https://www.huffingtonpost.com/entry/the-tax-bill-placing-a-dagger-in-the-american-dream_us_5a06edcae4b0ee8ec36941b9">it’ll push homeownership</a> out of reach for millions of middle-class Americans. </p>
<p>Actually, evidence shows the deduction already <a href="http://www.nber.org/papers/w9284.pdf">disproportionately benefits</a> the highest-income homeowners while doing <a href="https://www.mercatus.org/system/files/Fichtner-Reforming-Mortgage-.pdf">little to promote homeownership</a> for middle- and low-income taxpayers. </p>
<p>I’ve been researching, writing and teaching on the effects of tax policies and their economic effects for almost three decades. Based on this work and my understanding of progressive taxation, I recommend something bolder than merely tinkering with the existing mortgage interest deduction. </p>
<p>Republicans should repeal it entirely and replace it with something that may sound the same but is in fact very different and would be much more effective in promoting homeownership. </p>
<h2>Importance of homeownership</h2>
<p>It makes lot of sense for government tax policy to favor homeownership. <a href="http://www.nber.org/papers/w9284.pdf">Research shows</a> neighborhoods with more residents who own their own homes offer many <a href="https://www.sciencedirect.com/science/article/pii/S0094119096920100">societal benefits</a> and lead to <a href="https://www.mercatus.org/system/files/Fichtner-Reforming-Mortgage-.pdf">stronger and better-cared-for communities</a>. </p>
<p>For example, a <a href="http://www.nber.org/papers/w9284.pdf">2002 paper</a> by economists Edward Glaeser and Jesse Shapiro found that homeowners tend to work harder at making their communities more pleasant, take better care of their properties and get more involved politically. </p>
<p>And a <a href="http://econweb.ucsd.edu/%7Emiwhite/gw-jue-reprint.pdf">1997 study</a> by economists Richard Green and Michelle White showed that children of homeowners were 9 percent more likely to stay in school than the children of renters.</p>
<h2>How the mortgage interest deduction works</h2>
<p>So naturally, the federal tax system <a href="https://economix.blogs.nytimes.com/2013/08/06/the-sacrosanct-mortgage-interest-deduction/">offers a number of ways</a> to promote homeownership, including the mortgage interest deduction, perhaps the most prominent among them. Here’s how it works and who benefits. </p>
<p>First off, only taxpayers who itemize their deductions can take it, so long as they tally more than the standard deduction, currently US$12,600 for a married couple. If you’ve met that threshold, then your benefit from the interest deduction will depend on how much greater it is than the standard deduction and what your marginal tax rate is. A higher rate will lead to greater tax savings. </p>
<p>For example, let’s imagine three couples filing jointly in 2016. Couple A has a modest income of $50,000 and pays $7,300 a year in interest but has only $4,000 in other expenses that can be itemized. This couple would have chosen the standard deduction and received no benefit from the mortgage interest it paid. </p>
<p>Couple B has the same mortgage but earns a lot more with a taxable income of $80,000. As a result, the couple paid $7,300 in state and local taxes the previous year, which can be itemized on its federal tax return. That gives the couple $14,600 in itemized deductions or $2,000 more than the standard. At a marginal tax rate of 25 percent, that means the couple would get a tax benefit from the mortgage interest deduction of $500. </p>
<p>Lastly, consider Couple C, with the same mortgage but a taxable income of $200,000, which puts it in the 28 percent tax bracket. The higher earnings mean it paid $12,600 in state and local taxes the previous year, which gives the couple $19,900 in itemized deductions. Since that’s $7,300 more than the standard deduction, it would be able to take advantage of all the interest it paid, reducing its tax liability by $2,044 (28 percent x $7,300). </p>
<p>From the above, it is clear that the higher a homeowner’s itemized deductions and marginal tax rates, the higher the benefit from the mortgage interest deduction will be. </p>
<p><a href="https://govinfo.library.unt.edu/taxreformpanel/final-report/TaxPanel_5-7.pdf">Abundant evidence</a> shows that the tax benefits from this deduction, which <a href="https://www.cbo.gov/publication/43768">cost $70 billion</a> in 2013, are highly skewed to high-income homeowners. <a href="https://fivethirtyeight.com/features/the-tax-deductions-economists-hate/">Just under three-quarters</a> of that went to the wealthiest 20 percent of earners, while the poorest 20 percent got nothing. </p>
<h2>Further favoring the rich</h2>
<p>So how would the latest versions of the plans working their way through Congress change this? </p>
<p>Under current law, <a href="https://www.zillow.com/research/mortgage-interest-deduction-taxes-17195/">44 percent of homes</a> are valuable enough to make itemizing and taking the deduction worthwhile, according to Zillow, which operates several real estate listing portals including Trulia and StreetEasy. This would fall to 12 percent under the House plan and to 7 percent under the Senate proposal.</p>
<p>Both plans would double the standard deduction, thereby increasing the threshold before the interest deduction becomes useful, while eliminating the ability to deduct state and local income or sales taxes, thus making it harder to reach that much higher bar. </p>
<p>There are two key differences between the plans: The House bill would lower the cap on which mortgages are eligible from $1 million to $500,000, while the Senate plan would eliminate the deduction of state and local property taxes. </p>
<p>Under either plan, however, the mortgage interest deduction would become essentially worthless to middle-income taxpayers.</p>
<h2>A better way to promote homeownership</h2>
<p>Replacing the deduction with a tax credit would be a much better way to promote homeownership in the U.S., particularly among lower- and middle-income Americans. And <a href="https://govinfo.library.unt.edu/taxreformpanel">bipartisan commissions</a> formed by the <a href="http://momentoftruthproject.org/sites/default/files/TheMomentofTruth12_1_2010.pdf">last two presidents</a> have supported doing just that. </p>
<p>Generally, while a tax deduction reduces only your taxable income and its value is a function of your marginal tax bracket, a credit offers a dollar-for-dollar reduction in your tax liability. That doesn’t mean a homeowner who pays $7,300 a year in mortgage interest would get that much back but rather that she would get a fixed percentage of it back as a credit. </p>
<p>So unlike the mortgage interest deduction, whose value depends on whether a taxpayer itemizes her deductions and what her marginal tax rate is, a tax credit would reduce any homeowner’s liability, regardless of income level. </p>
<p>For example, let’s say the tax credit is set at 10 percent. Our three couples who received as little as nothing or as much as $2,044 from the deduction would instead all receive a $730 credit, which would reduce how much they owe in taxes by that amount. </p>
<p>Thus, a mortgage interest credit would offer all taxpayers with mortgage interest some tax relief. Millions of lower-income borrowers would benefit, most of whom do not currently use the mortgage interest deduction. The tax credit would make the tax code simpler (a <a href="https://www.forbes.com/sites/taxanalysts/2017/09/11/trump-wants-a-simple-tax-system-history-says-he-wont-get-it/#696c00187c1c">stated objective</a> of President Trump) and would end the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2038638">disproportionate benefit</a> enjoyed by higher-income taxpayers. </p>
<p>A credit would also be easier to tailor to reflect the <a href="https://www.nar.realtor/research-and-statistics/housing-statistics/metropolitan-median-area-prices-and-affordability">wide disparities in housing costs</a> across the U.S., for example, by using average housing prices to adjust the maximum credit in a given region or urban area. </p>
<p>President Trump <a href="http://www.cnn.com/2017/09/27/politics/donald-trump-tax-reform-indianapolis/index.html">argues</a> we have a “once-in-a-generation opportunity” to get tax reform done right. This may be a rare chance to get tax incentives for homeownership right as well.</p><img src="https://counter.theconversation.com/content/87066/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gil B. Manzon Jr. does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Rather than tinkering with the deduction, Republicans should get rid of it altogether and replace it with something that would actually help more Americans afford a home.Gil B. Manzon Jr., Associate Professor of Accounting, Boston CollegeLicensed as Creative Commons – attribution, no derivatives.