Spatial Injustice and the Informal Housing Market in the United States: How Predatory Practices Impact upon Geographies

Abstract

A large share of the African American population in the U.S. lives in poor areas characterized by high unemployment, low housing quality, and unhealthy living conditions, thus making low socioeconomic status a critical risk factor. Consequently, the higher Covid-19 death toll paid by Black Americans has been linked to the Redlining policies introduced by the Home Owners Loan Corporation in the 1930s. These policies are believed to have contributed to the development of segregated neighborhoods and ghettoization. Nowadays, we implicitly support a new form of Redlining, which comes in the different shape of the formal/informal market divide in housing. In fact, two pathways to homeownership have always existed in this legal framework. On the one hand, there is a well-established legal regime that provides families with a secure and marketable title to their homes. On the other hand, an informal regime is applied where the most vulnerable citizens (such as Blacks, Latinos, immigrants, and the poor) buy ‘on contract’. This is similar to an installment land contract whereby the seller can easily repossess the house since they are entitled to evict the would-be owner even when a single monthly payment is missed. Indeed, such contracts grew in number particularly in the aftermath of the 2007 subprime mortgage crisis, when the lack of equal access to credit for homeownership led many people to buy houses ‘on contract’. The article aims to show how these predatory lending practices, by fostering ghettoization, favored inequalities and jeopardized the spatial allocation of justice in the U.S.