The blog of the Urban Institute
December 8, 2020

Housing Policy Responses to Past Crises Haven’t Advanced Racial Equity or Economic Mobility. This Crisis Can Be Different.

The COVID-19 pandemic has exacerbated housing challenges long predating the pandemic, suggesting we can expect another housing crisis for homeowners, renters, and rental property owners.

Recent data and past crises indicate that people of color are most at risk for housing instability during economic downturns. Pandemic-related job and income losses Black and Latinx adults at increased risk of housing instability, including falling behind on rent and mortgage payments (PDF) at more than twice the rate of white homeowners.

Owners of rental units in small buildings, a large source of affordable housing without subsidies, are also particularly vulnerable: nearly one of every three feel more pressure to sell their properties now primarily because of reduced rental income. And Black and Hispanic owners are likely to be hit harder. A loss of these units would reduce the stock of affordable rental housing, further limiting housing options for struggling renters.

Housing policy responses to past crises—including Hurricane Katrina and the Great Recession— have fallen short of advancing racial equity and economic mobility. Launching a more equitable housing recovery and preventing a return to the current, inequitable status quo requires digging up the racist roots of housing policy while promoting choice and community belonging.

Digging up racist roots to ensure more equitable outcomes for people of color

Many present-day housing outcomes reflect historically racist intentions and practices. Though they have evolved or been outright outlawed, these policies’ racist beginnings still inform who owns homes, where these homes are, and who possesses wealth in the US today.

No evidence makes these trends more apparent than the widening racial homeownership gap and related lack of intergenerational wealth-building opportunities for Black Americans. Today, the Black homeownership rate is more than 30 percentage points lower than the white homeownership rate, a larger gap than when racial discrimination against homebuyers was legal. Even after controlling for structural characteristics, such as year built, square footage, and the number of bedrooms, as well as for neighborhood amenities, homes in Black neighborhoods are frequently undervalued. Because homes are typically Americans’ largest asset, if public policy successfully eliminated racial disparities in homeownership rates, the wealth gap between Black and white households would shrink 31 percent.

To undo these legacies and ensure racism is uprooted, simply tracking who happens to participate in crisis response programs, as past crisis response programs have done, is not enough. Instead, racial equity must be an explicit starting goal of crisis housing policy responses. On-the-ground program implementation must then be guided by the voices of people of color—those most affected by this and past crises. Finally, programs should track and measure outcomes to gauge whether they helped reduce racial disparities and the likelihood that a person’s race predicted their outcomes. Building these approaches and processes into crisis response now can pave the way to more just housing policies and equitable outcomes.

Championing choices and belonging in community to empower economically vulnerable residents

Past housing policy responses to disasters have provided relief to people affected financially but have often dictated the terms of assistance and left some people, particularly renters and communities of color, to suffer. For example, after Hurricane Katrina hit the Gulf Coast in 2005, disaster victims had limited choice in the type of housing assistance they received and were “expected to accept the first offer of housing assistance” or risk forfeiting the benefits. Many resources available for long-term housing recovery post-Katrina were targeted toward homeowners, rather than vulnerable renters. A time-limited, declining rental subsidy with case management helped support renters’ power and autonomy, but when benefits expired, many renters were still experiencing economic hardship (PDF).

Giving traumatized people in crisis more agency over their lives, including the ability to choose their homes and communities, is critical to equitable recovery. One way to do this is to provide households with holistic, individualized services and financial counseling, like the National Foreclosure Mitigation Counseling Program did during and following the Great Recession. Another way to ensure local housing recovery planning efforts are inclusive is to involve people harmed by past policies in decisionmaking, similar to the Unified New Orleans Plan (PDF) developed after Hurricane Katrina.

Targeting solutions to people most affected by crises and engaging them to help in craft recovery policies can better equip homeowners, renters, and small-property owners to make decisions in their best interest and ultimately improve their economic outcomes.

Four ways to advance beyond the status quo

Despite early pandemic response programs, policymakers and practitioners can do more to advance beyond the status quo and uproot and replace racist policies with equitable ones that promote choice and value communities. Our recent report offers four practical policy principles for a more equitable housing response to COVID-19 and beyond: 

  • Keep all renters and homeowners housed while targeting those with the greatest need and maximizing their choices. Losing a home during a pandemic puts people at greater risk of exposure to the coronavirus. Policies should stabilize those who are most at risk of COVID-19-related housing displacement, prevent housing loss, and preserve wealth.
  • Maintain an affordable supply of housing and financing. Without intervention, low-cost housing units could be lost, and tightening credit markets can push homeownership out of reach. Focusing on stabilizing owners of small rental properties and homeowners keeps homes available and preserves intergenerational wealth.   
  • Stabilize communities by increasing power, autonomy, and the sense of belonging. Disasters disrupt and destabilize communities, not just households. Ensuring those who want to remain housed in place are able to preserves social capital and community ties.
  • Center people in policy response. Providing clear, simple choices and individualized assistance in the face of trauma keeps options open, rather than closing doors.

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