Will empowering developers to challenge exclusionary zoning increase suburban housing choice?

The municipal zoning process in the United States has come under increasing attack as a tool to create and maintain suburban socioeconomic homogeneity by mandating sprawl‐producing single‐family detached houses at the expense of less costly townhouses, apartments, and mobile homes. Beginning in the 1970s, the Supreme Courts of the neighboring states of Pennsylvania and New Jersey addressed municipal exclusionary zoning in different ways: Pennsylvania empowered residential developers to compel municipalities practicing exclusionary zoning to authorize market‐rate development of all types of housing, while developer empowerment in New Jersey was conditioned upon inclusion of low‐ and moderate‐income units. Using aerial survey and housing census data over a 20‐year period, this article finds that outcomes by housing type over a 20‐year period in Pennsylvania municipalities around Philadelphia were more diverse than those in adjacent New Jersey municipalities. © 2004 by the Association for Public Policy Analysis and Management.     

“… And a suitable living environment”: The failure of housing programs to deliver on neighborhood quality

Abstract

This article evaluates the relative performance of housing programs in terms of neighborhood quality. We profile neighborhood characteristics surrounding assisted housing units and assess the direction of assisted housing policy in light of this information. The analysis relies on a housing census database we developed that identifies the type and census tract location of assisted housing units—that is, public housing, developments assisted under the Department of Housing and Urban Development, the Section 515 Rural Rental Housing Direct Loan Program, the low‐income housing tax credit, certificates and vouchers, and state rental assistance programs.

We conclude that project‐based assistance programs do little to improve the quality of recipients’ neighborhoods relative to those of welfare households and, in the case of public housing, appear to make things significantly worse. The certificate and voucher programs, however, appear to reduce the probability that families will live in the most economically and socially distressed areas.     

Comment on Lawrence J. Vale's “beyond the problem projects paradigm: Defining and revitalizing ‘severely distressed’ public housing”

For several decades, manufactured housing has been a crucial source of affordable housing, particularly for rural areas. However, electricity consumption per unit area and per capita are substantially higher for manufactured housing units relative to site built, single-family detached units. This article uses data from the federal Residential Energy Consumption Survey (RECS) to examine patterns of electricity consumption in manufactured housing units over time and to draw comparisons with single-family detached housing units. Regression analysis is used to model annual electricity consumption for manufactured housing units in 1990 and 2005. Temporal trends in key predictors are discussed and contrasted with those for single-family detached units. Findings suggest that the most important predictors of electricity consumption are comparable across the housing types considered and that while manufactured housing units may be gaining in energy efficiency over time, consumption per unit area and per capita are increasing faster than in single-family detached units.     

Comment on Jack Goodman's “houses,apartments, and the incidence of property taxes”

Abstract

Goodman finds from his analysis of the 2001 Residential Finance Survey that multifamily housing bears a higher effective property tax rate (EPTR) than single‐family owner‐occupied housing and argues that much of the differential is associated with the lower average property value of apartments. We offer comments on how this important research can be enhanced and analyze the EPTR by using a different database, the Public Use Microdata Sample (PUMS) of the decennial census.

Like Goodman, we find from the PUMS that the EPTR of multifamily housing is high relative to that of single‐family detached housing and that lower‐value multifamily housing has a higher EPTR relative to that of higher‐value multifamily units. We offer preliminary findings from the PUMS on the implications of the EPTR for development patterns (it may discourage smart growth), equity (the poor and minorities bear a higher tax burden), and housing (high EPTRs challenge affordability).     

Comment on Dennis P. Culhane et al.’s “Public shelter admission rates in Philadelphia and New York City: The implications of turnover for sheltered population counts”

Low-Income Housing Tax Credit (LIHTC) developments serve renter households with incomes between 30% and 60% of Area Median Family Income. Ideally, the program places units into neighborhoods where there is a shortage of units serving this cohort. LIHTC units are allocated to developers by state agencies through their Qualified Allocation Plans which should direct units to areas of need. Using a national database, this research examines where LIHTC developments were placed in service to determine whether these developments enter tracts experiencing shortages.

The LIHTC program is not directing units to those census tracts where there is a latent demand for units in this rent range. Rather, it is placing units into tracts that have surpluses. Equally, the program is not placing units in tracts with little or no affordable housing. This suggests that the program is not breaking down the income separation that exists in the nation's housing markets.     

No renters in my suburban backyard: Land use regulation and rental housing

Academics and policymakers have argued that the ability of low‐ and moderate‐income families to move into desirable suburban areas is constrained by the high cost of housing. Local zoning and other forms of land use regulation are believed to contribute to increased housing prices by reducing supply and increasing the size of new housing. Suburban restrictions on rental housing are particularly likely to reduce mobility for low‐income families. In this paper, I employ an instrumental variables approach to examine the effects of zoning on the quantity and price of rental housing in Massachusetts, using historical municipal characteristics to instrument for current regulations. Results suggest that communities with more restrictive zoning issue significantly fewer building permits for multifamily housing but provide only weak evidence of the effects of regulations on rents. The lack of effects on rents may reflect the low level of multifamily development, while analysis is complicated by development of subsidized housing under the state's affordable housing law. © 2009 by the Association for Public Policy Analysis and Management.     

Searching for Affordability and Opportunity: A Framework for the Housing Choice Voucher Program

Abstract

Affordability, a key factor in the housing search process, becomes critical when locating rental housing in opportunity-rich areas. The Housing Choice Voucher (HCV) program accommodates low-income households searching for housing and encourages recipients to reside in low-poverty areas. Affordable neighborhoods that are accessible to public transportation are often found in distressed areas, and not all HCV recipients succeed in locating qualified housing. To address these challenges, a housing search framework is developed to assist HCV households in the housing search process. This framework builds on the methodology of the U.S. Department of Housing and Urban Development (HUD) for the Location Affordability Index and Affirmatively Furthering Fair Housing assessment tool by creating multivariate indices that incorporate housing supply, accessibility to opportunity, and neighborhood conditions. The framework serves as a foundation for an online housing search application for public housing authorities to further fair housing goals, HCV recipients to locate qualified housing units, and local governments to assess affordability and opportunity.     

Comment on Kirk McClure's “Are low-income housing tax credit developments locating where there is a shortage of affordable units?”

Kirk McClure's article makes important contributions to our understanding of the way in which state allocating agencies are using the Low-Income Housing Tax Credit (LIHTC). However, one of the premises of his analysis – that allocating agencies should encourage the location housing developments in census tracts with a “surplus” of low-income renters – is mistaken. Census tracts are too small to be considered closed-system housing markets. Additionally, the LIHTC program does not exist in isolation, but instead as part of a combined national rental housing policy that includes both supply-side programs (LIHTC) and demand-side programs (housing vouchers). A final flaw in the notion that LIHTC units should be built in census tracts with a surplus of renter households in the 30% to 60% of AMI range compared with the units affordable to them is that increasing the amount of affordable housing in those tracts could have the effect of further concentrating households by income and race.     

Preserving Neighborhood Opportunity: Where Federal Housing Subsidies Expire

Abstract

Rent burdens are increasing in U.S. metropolitan areas while subsidies on privately owned, publicly subsidized rental units are expiring. As a result, some of the few remaining affordable units in opportunity neighborhoods are at risk of being converted to market rate. Policy makers face a decision about whether to devote their efforts and scarce resources toward developing new affordable housing, recapitalizing existing subsidized housing, and/or preserving properties with expiring subsidies. There are several reasons to preserve these subsidies, one being that properties may be located in neighborhoods with greater opportunity. In this article, we use several sources of data at the census tract level to learn how subsidy expirations affect neighborhood opportunity for low-income households. Our analysis presents several key findings. First, we find that units that left the project-based Section 8 program were – on average – in lower opportunity neighborhoods, but these neighborhoods were improving. In addition, properties due to expiry from the Section 8 program between 2011 and 2020 are in higher opportunity neighborhoods than any other subsidy program. On the contrary, new Low-Income Housing Tax Credit (LIHTC) units were developed in tracts similar to those where LIHTC units are currently active, which tend to be lower opportunity neighborhoods.     

The changing demography of multifamily rental housing

Abstract

The residents of multifamily rental housing are different from both homeowners and single‐family home renters, and these differences have implications for the housing market and for public policy. This article describes apartment residents today, discusses recent changes in their number and characteristics, projects their future growth and composition, and highlights business and policy implications of future changes.

For purposes of business and public policy, a segmentation of apartment residents into three submarkets is useful: the “affordable” market serving low‐ and moderate‐income households, some of which receive government housing assistance; the “lifestyle apartment market” serving higher‐income adult households; and the substantial “middle market.” The number of apartment renters is likely to grow moderately over time. The combination of multifamily structure type and rental tenure form offers unique opportunities not only for provision of affordable housing but also for revitalization of downtown areas and balanced “smart” growth in suburban areas.     

Development of a simulation model of the Detroit housing market

A first generation model simulating the Detroit housing market has been developed for the City of Detroit. The model has the capability both to assist the City in planning for future housing and renewal needs as well as to aid in research to improve understanding of the functional relationships in the housing market. The key inputs to the model are census tract data describing specific attributes of the households, dwelling units and neighborhoods in the City. The model can provide forecasts of future levels of demand for housing with the specified structural and locational attributes. By operating the model under varying assumptions concerning public actions, it is possible to simulate the effects of the public policies being considered. The model is based on what is known, but it is designed to permit the development of a second generation model in response to advances in the state of the art of urban simulation modeling.     

Housing Programs Fail to Deliver on Neighborhood Quality,Reexamined

This article revisits the relative performance of housing programs in terms of delivering on neighborhood quality. Newman and Schnare examined this issue in 1997, and this article updates their work more than a decade later. Both efforts examine the neighborhood characteristics surrounding assisted rental housing and assess the direction of assisted-housing policy. The analysis is performed by exploring census data at the tract level for the tenant-based Housing Choice Voucher program plus a set of project-based programs, including public housing, the Low-Income Housing Tax Credit program, and other HUD multifamily programs. We conclude that Newman and Schnare remain correct that rental housing assistance does little to improve the quality of the recipients' neighborhoods relative to those of welfare households and can make things worse. However, things have improved. The Housing Choice Voucher and Low-Income Housing Tax Credit programs have grown in importance over the intervening years and have improved their performance by moving more households into low-poverty, less distressed areas. Importantly, these active programs for assisted housing are beginning to find ways to overcome the barriers preventing entry into the suburbs, although more needs to be done.     

Taking the High Ground: FEMA Trailer Siting after Hurricane Katrina

Using data on more than 300 census blocks from across New Orleans, Louisiana, this article investigates two steps in the placement of temporary housing after Hurricane Katrina. First, the authors seek to understand the factors that determined whether census blocks were selected for Federal Emergency Management Agency (FEMA) trailers. Then, in light of the widespread resistance to the trailers, they focus on variables that influenced whether trailers were successfully placed on those sites. Despite past research arguing that race, collective action potential, and political factors are the primary determinants of facility placement and the success or failure of the attempt, these data show that technocratic criteria dominated. Interestingly, although census blocks in less vulnerable areas were more likely to be selected as locations for FEMA trailer parks than ones in more vulnerable areas, it was precisely the former areas where siting success was less likely. Flood‐resistant areas that decision makers chose for housing were less willing to accept such projects than more flood‐prone ones.     

Struggling to stay out of high-poverty neighborhoods: housing choice and locations in moving to opportunity's first decade

Improving locational outcomes emerged as a major policy hope for the nation's largest low-income housing program over the past two decades, but a host of supply and demand-side barriers confront rental voucher users, leading to heated debate over the importance of choice versus constraint. In this context, we examine the Moving to Opportunity experiment's first decade, using a mixed-method approach.

MTO families faced major barriers in tightening markets, yet diverse housing trajectories emerged, reflecting variation in: (a) willingness to trade location – in particular, safety and avoidance of “ghetto” behavior – to get larger, better housing units after initial relocation; (b) the distribution of neighborhood types in different metro areas; and (c) circumstances that produced many involuntary moves. Access to social networks or services “left behind” in poorer neighborhoods seldom drove moving decisions. Numerous moves were brokered by rental agents who provided shortcuts to willing landlords but thereby steered participants to particular neighborhoods.     

How Affordable Is HUD Affordable Housing?

This article assesses the affordability of U.S. Department of Housing and Urban Development (HUD) rental assistance properties from the perspective of transportation costs. HUD housing is, by definition, affordable from the standpoint of housing costs due to limits on the amounts renters are required to pay. However, there are no such limitations on transportation costs, and common sense suggests that renters in remote locations may be forced to pay more than 15% of income, a nominal affordability standard, for transportation costs. Using household travel models estimated with data from 15 diverse regions around the United States, we estimated and summed automobile capital costs, automobile operating costs, and transit fare costs for households at 8,857 HUD rental assistance properties. The mean percentage of income expended on transportation is 15% for households at the high end of the eligible income scale. However, in highly sprawling metropolitan areas, and in suburban areas of more compact metropolitan areas, much higher percentages of households exceed the 15% ceiling. This suggests that locational characteristics of properties should be considered for renewal when HUD contracts expire for these properties, based on location and hence on transportation affordability.     

Some possible directions for research on multifamily housing

Abstract

The combination of a growing demand for information and a literature that has not emphasized multifamily housing has produced an information gap in multifamily housing research. This article seeks to shed light on the areas in which the information gap is widest and to put forth a research agenda for the study of multifamily housing. The article starts from a definition of multifamily housing that includes all rental housing in structures with five or more units, and it goes on to develop a more precise definition. Next the various components of the market for multifamily housing are discussed. These include the demand and supply of multifamily housing and its sources of financing. The discussion examines each of these components with an eye toward identifying questions and issues in need of further study. Data needed for further research are the subject of the sixth section. The final section highlights questions of particular interest to public policy makers.

Because of the lack of information about multifamily properties, the list of possible research questions is long. A better understanding is needed of how multifamily housing markets operate—for example, what factors influence the supply of multifamily housing and how it is financed. There is also a need to examine specific public policy issues, including the impact of tax policy on residential rents, ways of detecting financial distress in federally insured multifamily properties, and the performance of nonprofit organizations in delivering and maintaining affordable multifamily housing. Recently released data from the 1991 Survey of Residential Finance, the U.S. Department of Housing and Urban Development's planned 1995 Landlord Survey, and the newly founded Multifamily Housing Institute could play key roles in studying these questions.     

Rental vacancy rates: A policy primer

Abstract

This article examines how policy makers use rental vacancy rates as indicators of housing market condition. The common practice of assuming that any rental market is in equilibrium when its rental vacancy rate is approximately 5 percent is criticized. Based on theoretical and empirical literature, the case is made that the rental vacancy rate that prevails when the supply and demand for rental units are in balance varies among areas and types of units and is not always 5 percent. The Department of Housing and Urban Development is faulted for not recognizing these variations and, therefore, misusing rental vacancy rates in its formula allocations for the Section 8 and HOME programs.

Observed vacancy rates offer meaningful insight into rental market conditions only when they are compared with empirically derived estimates of equilibrium vacancy rates. The methods for estimating these rates, however, are still being refined, and the data needed to derive such estimates are available only for a limited set of metropolitan areas. Other measures are available that policy makers could use to judge the adequacy of low‐income housing supply in local markets, but they are also somewhat problematic.     

Is Urban Sprawl Good for Minorities?

This article investigates the effect of urban sprawl, as measured by employment decentralization, on minority housing consumption gaps since the housing bust. Previous research contends that sprawl contributes to reducing the Black–White housing consumption gap by increasing the supply of land in housing markets and thereby increasing affordability. Antisprawl policies may therefore exacerbate the Black–White housing disparity. This research makes two contributions to the literature. First, the article examines how changes in sprawl may have varying influences on the Black–White housing gap, a previously unexamined facet of this relationship. In the vast majority of metropolitan areas in this sample, sprawl is predicted to exacerbate the Black–White housing gap until sprawl reaches a threshold. Only in a limited number of high-sprawl metropolitan areas does sprawl contribute to reducing the Black–White housing gap. Second, the article examines differences in housing gaps for three distinct minority groups—Blacks, Asians, and Hispanics—using recent data from the 2009 American Housing Survey. For Blacks, sprawl continues to have varying effects on housing consumption. For Asians, urban sprawl yields significant gains in housing consumption relative to Whites. However, no significant results occur for Hispanics. This article demonstrates that the independent effect of urban sprawl on U.S. minority housing consumption is a highly uneven process in the post–Great Recession economy. As such, arguments that antisprawl policies reduce minority gains in housing should be treated with considerable skepticism.     

Revitalizing inner‐city neighborhoods: New York city's Ten‐Year Plan

Abstract

This article examines the impact of New York City's Ten‐Year Plan on the sale prices of homes in surrounding neighborhoods. Beginning in the mid‐1980s, New York City invested $5.1 billion in constructing or rehabilitating over 180,000 units of housing in many of the city's most distressed neighborhoods. One of the main purposes was to spur neighborhood revitalization.

In this article, we describe the origins of the Ten‐Year Plan, as well as the various programs the city used to implement it, and estimate whether housing built or rehabilitated under the Ten‐Year Plan affected the prices of nearby homes. The prices of homes within 500 feet of Ten‐Year Plan units rose relative to those located beyond 500 feet, but still within the same census tract. These findings are consistent with the proposition that well‐planned project‐based housing programs can generate positive spillover effects and contribute to efforts to revitalize inner‐city neighborhoods.     

Segmentation of Homebuyers by Location Choice Preferences

Edmonton, Alberta, has been experiencing rapid population growth and its associated housing pressures for the past decade. Municipalities like Edmonton are attempting to promote compact, transit-oriented, and infill housing development with policy while accommodating large increases in a population that may demand traditional suburban housing options. This article examined homebuyers’ opinions and preferences regarding their home location choice and found three distinct segments of homebuyers. These segments were established using a Q methodology to group homebuyers by their shared opinions as opposed to traditional sociodemographic or socioeconomic variables. These groups illustrate different perspectives regarding the everyday transportation choices, home attributes, and neighborhood predilections that comprise a home location choice. The identification of these groups of homebuyers provides insights for municipalities attempting to attract and retain citizens in redeveloped housing areas and assists to dissuade greenfield sprawling development.