Crime is a key factor in the affordability equation

From Nothing Costs Like Crime by Rafael A. Mangual.  The subheading is Wrongdoing isn’t cheap—and until it’s brought under control, affordability is just a word.

Often missing from the affordability debate is an appreciation of how public safety and order shape economic well-being. Policymakers seldom draw the connection, yet affordability and safety are tightly intertwined. When leaders fail on public safety, their constituents’ economic prospects decline with it.

Controlling crime and disorder is often treated as a good unto itself, and rightly so. Crime affects a host of other areas: real-estate values, economic mobility, private investment, and, of course, the direct social costs of victimization. Failure to control it undermines the bottom lines of those living in the neighborhoods most affected. This point matters even more because many misguided criminal-justice reforms are justified in part on fiscal grounds. Incarceration is expensive, reformers say, so we should do less of it for taxpayers’ sake. But loosening the social controls exerted by police departments and prisons carries its own price: rising crime imposes massive economic costs.

Mangual delves into the tricky accounting for victim costs, direct and indirect.  He discusses the indirect cost of crime on education attainment and achievement.  

He has an interesting insight in terms of wealth accumulation.  He makes three points, for most Americans, wealth accumulation is via home ownership, home valuations are very sensitive to the  incidence of violent crime, and violent crime is enormously concentrated in poor urban neighborhoods.

Crime can also have concrete effects on the asset that often accounts for most of the average American family’s wealth: their home. The homeownership rate in the U.S. was just under 66 percent in 2022. According to Pew Research, “Half of U.S. homeowners derived more than 45 percent of their wealth from home equity alone.” That share is even higher for black and Hispanic homeowners, for whom home values constitute between 63 percent and 66 percent of total wealth. I note this disparity because black and Hispanic Americans disproportionately bear the brunt of the nation’s violent-crime problem. In testimony before the U.S. Commission on Civil Rights in 2023, I laid out the relevant facts on that disparity.

Consider an illustrative excerpt: “In New York City, . . . a minimum of 95 percent of all shooting victims and 85 percent of all homicide victims have been black or Hispanic every year going back to 2008, despite those groups making up just 52 percent of the city’s population. . . . Relative to their share of the population, these groups are also consistently statistically overrepresented among victims of rape, robbery, and felonious assault.” Meanwhile, “in Chicago, where 57.9 percent of the population is black or Hispanic, those groups constituted 95 percent of homicide victims in 2019, 96 percent in 2020, 96 percent in 2021, and 95 percent in 2022. . . . Relative to their share of the city’s population, those groups are also consistently statistically overrepresented among victims of robbery, aggravated assault, criminal sexual assault, aggravated battery, and violent crime, generally.”

This should matter more to progressive policymakers, who largely attribute the racial wealth gap to disparities in homeownership. The National Community Reinvestment Coalition, for example, notes: “For most families, their home is the primary way they store and build wealth. The Black–White homeownership gap is therefore the primary driver of the Black–White racial wealth divide. . . . In fact, between 2013 and 2022, more than 90 percent of the wealth gains for Black Americans came from homeownership.” One would expect, then, that self-styled progressives would calibrate their public-safety policies to protect the home values of the very people whose interests they claim to represent.

His main argument is that if politicians wish to improve affordability, one of the more important policy levers are those related to crime control.  Crime, both violent and non-violent, are very large contributors to low affordability.