The Rich Get Richer and the Poor Get Poorer
Has the housing crisis equally affected the rich and the poor? Has the effect of the crisis been to improve or worsen the relative equality of these two groups? In this section, we will explore how the crisis has affected the distribution of housing prices. A big caveat is that we are looking at the Bay Area, so homes will be more expensive than in many other places in the country, but we still expect to see some relative inequalities. (NB. In the following, we will frequently use the word "houses" to refer to all categories of residential real estate: houses, townhouses, apartments, etc.)
As a first step, we calculate price deciles for each month. The deciles are the nine prices for which 10%, 20%, 30%, 40%, 50%, 60%, 70%, 80%, and 90% of houses cost less. This is a succinct summary of the distribution of the prices for each month: instead of just looking at the average price, as we did earlier, we have nine numbers that summarize the complete distribution of the prices. (We don't display the curves for the minimum or maximum price, because they would be too choppy.)
Figure 18-3 shows how these deciles have changed over time. The top line is the ninth decile, the price that 90% of houses are less than, and the bottom line is the first decile, the price that only 10% of houses are cheaper than. The line in the middle is the median, the price that divides the houses into halves, half cheaper and half more expensive. The lines are colored ...