The current housing and mortgage crisis in the United States seems to be evidence that the deregulation of the housing market has created a system with the potential to devastate poor, working, and middle class people.  Homeownership has always been the central goal of housing policymakers in this country, and deregulation of the market was intended to further promote this goal. 

Deregulation has taken a number of forms.  For one, the abolition of rent control/stabilization in many urban areas has rendered downtown living unaffordable for everyone but the most economically well- off.  In Boston, for example, the abolition of rent control in 1994 has enabled property owners to maximize profits by catering to the massive student and professional populations while the poor and working class families who traditionally lived here were forced to move away from the center city to find housing that they could afford.  In 2000, HUD announced that 6.2 million households were spending more than fifty percent of their monthly incomes on housing, a fact that is troubling at best, considering that housing is officially “unaffordable” when it amounts to more than thirty percent of a person’s total income.   

Another impact of deregulation has been the growth of mortgage lending companies and the emergence of predatory lending groups.  Predatory lenders are organizations that target people who don’t have the financial security necessary for taking out a home loan and may not have the resources to make monthly mortgage payments.  As is evident with the recent burst of the mortgage bubble in the U.S., predatory lending creates a system where people take out more money than they can afford to pay back, mortgages go into default, and homes are foreclosed upon in record numbers.  A recent Boston Globe article focused on housing foreclosures in Lawrence, MA, speaks to this trend.  In just two years, one lower-middle class neighborhood in North Lawrence has experienced over 600 home foreclosures, with the numbers expected to continue rising in the future (http://www.boston.com/realestate/news/articles/2007/10/07/as_foreclosures_widen_a_neighborhood_erodes/).

A third effect of deregulation has been an overall decrease in the quality and quantity of affordable housing, both in terms of new developments and the maintenance/ upkeep of older units.   Prohibitively expensive upfront costs disproportionately impact low-income dwellers, who often cannot front the money for costly repairs and/or live in homes owned by slumlords who care little for the quality of life of their tenants.  In terms of quantity, contemporary policy measures (such as housing vouchers, expiring lease agreements, and Hope VI rehabilitations) have resulted in significant net losses of affordable units over the.  The conversion of previously subsidized units into market-rate rentals and condominiums is compounding the problem, producing gentrification—or as free market supporters claim, “revitalization”—at the expense of displacing the poor from cities.

Progressive housing critics have long argued that leaving the problem of affordable housing up to the private market will only reinforce and exasperate the problem of poverty and income inequality.  But neo-liberal economics has never claimed to do otherwise. By its very nature, Capitalism requires economic inequality; this inequality runs much deeper partisan political battles  The politics of supply and demand were never designed to benefit the consumer, and within a deregulated, for-profit oriented housing market this same principle holds true. 

For this reason, the for-profit approach to affordable housing will “always tend to produce segregation, ugliness, and deterioration in large parts of the market and an unconscionable gap between housing conditions for the rich and the poor” (Marcuse and Keating, 2006: 156).  In so far that market ‘solutions’ continue to characterize our dominant political and social paradigms, we must constantly self-reflect on our roles as the planners and policymakers of tomorrow.  Are willing to accept a status quo that exasperates social inequalities, or should it be our goal to come together to redefine the dominant social paradigm? 

Courtney Knapp

UEP Class of 2008 

Gavin, Robert.  7 October 2007.  As Foreclosures Widen, A Neighborhood Erodes.  Boston Globe.  Accessed online 12 October 2007.

     http://www.boston.com/realestate/news/articles/2007/10/07/as_foreclosures_widen_a_neighborhood_erodes/

Marcuse, Peter and W. Dennis Keating.  2006.  The Permanent Housing Crisis: The

Failures of Conservatism and the Limitations of Liberalism.  Pp 139-161 in Rachel Bratt (Ed) A Right to Housing.  Philadelphia: Temple University Press.