Jenny Schuetz - Fixer-Upper: How to Repair Americas Broken Housing Systems

FIXER-UPPER

How to Repair Americas Broken Housing Systems

JENNY SCHUETZ

BROOKINGS INSTITUTION PRESS

Washington, D.C.

Copyright 2022 by Jenny Schuetz

THE BROOKINGS INSTITUTION

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The Brookings Institution is a private nonprofit organization devoted to research, education, and publication on important issues of domestic and foreign policy. Its principal purpose is to bring the highest quality independent research and analysis to bear on current and emerging policy problems. Interpretations or conclusions in Brookings publications should be understood to be solely those of the authors.

Library of Congress Control Number: 2021951983

ISBN 9780815739289 (paperback)

ISBN 9780815739296 (ebook)

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Typeset in Kepler Std

Composition by Elliott Beard

My dissertation adviser, Tony Gmez-Ibez, told me that writing a book is qualitatively different from writing journal articles: it forces you to engage with larger-scale ideas over a longer narrative arc. He was right (as usual). Some of the ideas in this book I have been mulling over in my head for many years, but putting them down on paper in semicoherent form has pushed me to think more deeply, more critically, and more concretelyeven about topics I thought I already understood. Researching and writing the book have been terrific learning exercises for me; I hope that readers will also come across ideas that push them outside their comfort zones.

Many friends and colleagues have helped nudge the book into existence. Chris Redfearn deserves special thanks (or blame) for casually asking me at the AREUEA conference in San Diego: So when are you going to write a book? Cross-country flights provide quiet thinking space that is conducive to writing chapter outlines, as it turns out. My students in Georgetowns urban planning program have been an excellent sounding board for much of this material, tucked into lecture notes, and have helped me learn how to present complicated economic concepts with as little jargon as possible. Lyndsey Blessing kindly shared her expert knowledge on how book publishing works. I am enormously grateful for colleagues who took time away from their own work to offer thoughtful suggestions, corrections, and healthy skepticism on early chapter drafts: Adie Tomer, Anna Tranfaglia, Emily Badger, Jackie Begley, Jeff Larrimore, Pam Blumenthal, Patrick Chuang, and Tracy Gordon. Thanks also to two anonymous reviewers who provided insightful, constructive, and (uncharacteristically for economists) encouraging comments. All remaining errors and omissionsand certainly all the policy recommendationsare entirely my own.

My colleagues at Brookings have supported me throughout the project, especially Alan Berube, Amy Liu, Andre Perry, David Lanham, and Richard Reeves, as well as Bill Finan and the team at the Brookings Institution Press. Cecile Murray coauthored several of the blog posts and briefs that evolved into chapters. Sarah Crump provided excellent support with fact-checking, graphics, and general research assistance.

Writing the book would not have been possible without the love and support of my family. My parents, Verna and Arnold Schuetz, cheered me on and kept me updated on the local housing debates in Blacksburg, Virginia. My deepest, most heartfelt thanks go to my husband, Joe Sill, for his (nearly) endless patience, encouragement, and practical and moral support. On our daily walks, Joe and our dog Trooper have heard more grumbling about unreasonable zoning and inefficient land use than they ever anticipated. Every day I write the book, every day you tell me that I can.

Between 2007 and 2009, millions of American homeowners lost their homes in an unprecedented wave of foreclosures that precipitated the United Statesand the worldinto the Great Recession. The aftermath of the foreclosure crisis was devastating, not just for borrowers who defaulted, but for neighbors whose homes lost value, and for entire communities.

During the years after the foreclosure crisis, housing fell off the national policy stage. Most middle- and upper-income U.S. households enjoy excellent housing outcomes, compared to historical and global standards. They live in homes that are in good physical condition with ample space. Amenities like air-conditioning and spare bedrooms are taken for granted. Out-of-pocket housing costs dont unduly strain the monthly budgets of middle-class homeowners, and the equity in their homes provides a financial cushion for rainy days. Housing systems work well for these familiesas they were designed to.

And yet, the nations growing dividesby geography, income, race, and ageare reflected in and exacerbated by inequalities in housing markets. Even before the COVID-19 pandemic, more than 10 million renter households spent over half their income on rent. Low-income Americans struggle to afford decent-quality housing in safe neighborhoods. Black and Latino families still face high barriers to becoming homeowners, due to persistent discrimination. Every year, millions of homes are destroyed and families displaced as a result of wildfires, flooding, intense storms, and other climate-related disasters. Where people live is increasingly correlated with important life outcomes, from school performance to employment to life expectancy. A family earning the national median income (about $68,000 in 2020) can afford to buy a good-condition, three-bedroom home in the suburbs of Dallas or Cleveland for monthly payments that would barely cover rent on a studio apartment in the San Francisco Bay Area. Millennials lag previous generations in buying homes, and have substantially less housing wealth than their parents or grandparents at their age.

These discrepancies in housing well-being by place and population characteristics help explain why housing has drawn little attention in national policy debates. Politically, it is hard to convince a majority of voters to support large-scale policy changes when millions of middle-class Americans are financially invested in the current system.

This book explores the key structural problems within U.S. housing systems that contribute to widely disparate outcomes. Many of the persistent problems are rooted in outdated laws and regulations, including decades of institutional discrimination against Black people. Policies that govern seemingly different parts of our economyfrom local school funding to federal transportation policyinteract to reinforce bad housing outcomes. Throughout the book, I identify gaps between how economists believe markets ought to work and how our housing systems work in practice. For each structural problem, I propose a set of policy changes that would improve housing outcomes for individuals and communities.

Stable, decent-quality housing is critical to individual and community well-being. Many of us who have the good fortune to live in comfortable, stable homes take for granted how much that impacts our daily lives. A home does more than offer physical protection from the elements and space to store our belongings. At its best, a home provides a peaceful, private place to return to after work or school, to host family and friends for holidays and other celebrations. Homes are located in neighborhoods, offering connections to a community of nearby people. Owning ones home can help build a nest egg, providing financial security for the future.