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.     

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.     

Beyond NIMBY and poverty deconcentration: reframing the outcomes of affordable rental housing development

Policies and research around affordable rental housing remain stuck between the “rock” of not-in-my-backyard (NIMBY) fears and the “hard place” of deconcentrating poverty goals, leading to fragmented outcome measurement in contemporary project-based affordable rental housing programs. This article compares the motivations and results of existing research focused on NIMBY concerns around place to that of programs that promote the deconcentration of poor people. We suggest reframing the argument for project-based affordable rental housing by bolstering outcome measurement on neighborhoods and developments and expanding it to include tenants. Building upon current evaluation practices of mobility studies and the Low Income Housing Tax Credit program, we present a comprehensive framework for evaluating outcomes of project-based rental housing developments within their local context at three relevant scales: project, household, and community. We present an array of indicators and examine data collection needs and limitations, acknowledging the political and financial obstacles to comprehensive evaluation but arguing for the need to justify expenditures and prove results to the public. We recommend that government agencies stretch beyond NIMBY arguments and deconcentration of poverty goals to be proactive in targeting, measuring, publicizing, and redressing an expanded set of outcomes through better comprehensive planning for affordable housing. Through more rigorous and comprehensive evaluation of outcomes at all scales, it may be shown that affordable housing development yields a broad range of benefits for the people housed, projects financed, and the communities where it is built.     

How Do People-Based Housing Policies Affect People (and Place)?

Assisted housing programs in the United States aim to provide decent, safe, and affordable housing for low-income households. Increasingly, policymakers have also considered how assisted housing can provide access to lower poverty, income-diverse, and higher opportunity neighborhoods. The U.S. Department of Housing and Urban Development currently balances two strategies. First, place-based programs—immoveable subsidies linked to particular units—can both revitalize distressed neighborhoods and provide access to higher opportunity neighborhoods. Second, people-based assistance—housing vouchers for use on the private rental market—can facilitate moves out of high-poverty, low-opportunity neighborhoods. During this policy moment with fair housing priorities receiving national attention, understanding the efficacy of each approach is critically important. This article synthesizes past research on housing vouchers to identify the impact of people-based assistance on four outcomes: residents’ neighborhood attainment, education, economic outcomes, and health. I also review the scant literature examining how vouchers affect place rather than people. I conclude by identifying aspects of special voucher programs that promote positive outcomes that could potentially be scaled up.     

Addressing the Affordable Housing Crisis for Vulnerable Renters: Insights From Broward County on an Affordable Housing Acquisition Tool

South Florida is experiencing an affordable rental crisis that is especially burdensome on those most vulnerable in society, low-income households. Rapid urbanization has resulted in inequitable land-use patterns that are a barrier to housing for the poor. As a solution to the crisis, local housing agencies seek to expand their affordable housing stock for vulnerable renters in opportunity-rich neighborhoods, but there is no standard framework for identifying properties for acquisition. Broward County serves as a case study to develop a housing acquisition tool. Using a combination of spatial statistics and principal components analysis, neighborhoods in which housing agencies may consider acquiring property are identified through the creation of an affordability surface in ArcGIS. Affordability is overlain by an opportunity surface derived from neighborhood quality and accessibility rankings. The results identify neighborhoods in Broward County that are both affordable and opportunity-rich, to better serve the county's most vulnerable renters.     

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.     

Gentrification and Fair Housing: Does Gentrification Further Integration?

ABSTRACT

On the 50th anniversary of the Fair Housing Act, long-time residents of cities across the country feel increasingly anxious that they will be priced out of their homes and communities, as growing numbers of higher-income, college-educated households opt for downtown neighborhoods. These fears are particularly acute among black and Latino residents. Yet when looking through the lens of fair housing, gentrification also offers a potential opportunity, as the moves that higher-income, white households make into predominantly minority, lower-income neighborhoods are moves that help to integrate those neighborhoods, at least in the near term. We explore the long-term trajectory of predominantly minority, low-income neighborhoods that gentrified over the 1980s and 1990s. On average, these neighborhoods experienced little racial change while they gentrified, but a significant minority became racially integrated during the decade of gentrification, and over the longer term, many of these neighborhoods remained racially stable. That said, some gentrifying neighborhoods that were predominantly minority in 1980 appeared to be on the path to becoming predominantly white. Policies, such as investments in place-based, subsidized housing, are needed in many gentrifying neighborhoods to ensure racial and economic diversity over the longer term.     

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.     

Rooms for Improvement: A Qualitative Metasynthesis of the Housing Choice Voucher Program

This article synthesizes housing subsidy voucher research to explain why, when in theory vouchers enable users to move out of poor neighborhoods, in practice they often do not. This qualitative meta-analysis presents an examination of the assumptions of the program and their relationship to empirical findings.

Two themes emerged from this synthesis: market barriers and product problems. Data from a variety of studies and contexts portray recipients struggling to use vouchers in the private rental market due to market barriers, including lack of public transportation and the presence of discrimination. Product problems constrained freedom of choice about where to move and when to make a housing transition. These constraints manifest as compromised housing quality and low voucher utilization. This synthetic view cannot account for all outcomes or exceptional cases, but results suggest where participant experiences are generalizable and attributable to features of the housing market and structure of the program itself.     

Beyond People Versus Place: A Place-Conscious Framework for Investing in Housing and Neighborhoods

This article argues for a next generation of place-conscious strategies that recognize the importance of neighborhoods in the lives of families, but look beyond narrowly defined neighborhood boundaries to address market-wide opportunities and barriers, capitalize on demographic and market trends underway at the regional scale, and envision alternative models of how neighborhoods can function for their residents. It offers five principles for ongoing experimentation and knowledge building: (a) develop citywide strategies that promote both inclusion and redevelopment; (b) anticipate and plan for residential mobility and neighborhood change; (c) connect residents of poor neighborhoods to city and regional opportunities; (d) capitalize on the coming rental housing boom; and (e) use data for continuous learning and accountability. Advancing this agenda will require enhanced capacity for collaboration and governance at the local levels.     

A different lens: administrative perspectives on portability in Illinois' Housing Choice Voucher Program

Over the last decade, the Housing Choice Voucher Program has grown to become the USA's primary strategy for providing safe, decent, and affordable housing. Annually serving more than 2 million low-income households, the program is designed to help low-income households afford private market rental housing. The program also allows for the “portability” of vouchers nationally between housing authority jurisdictions. Both features aim to mitigate the effects of concentrated poverty. Research on the Moving to Opportunity Program and the Gautreaux consent decree have produced data confirming that residential mobility can at times lead to positive opportunities for assisted households. This past research has been conducted on specific programs occurring outside of the general Housing Choice Voucher Program framework and has focused on household-level outcomes, paying little attention to the ways in which program administration may affect outcomes for voucher households. This article aims to understand voucher portability from the perspective of housing authority executive directors and program administrators, in order to better understand how program administration impacts the types of household outcomes observed in prior research. The results reveal that housing authority administrative practices and inter-housing authority relationships play a significant role in shaping the types of outcomes realized by porting voucher households. These findings suggest several changes to program administrative design and policy that may improve support for voucher households as they make portability moves.     

“Ragged urchins play on marquetry floors”: The discourse of filtering is reconstructed, 1920s–1950s

The idea of filtering has played a key role in our understanding of housing markets and in framing federal policy. The origins of the idea, however, and of the term itself, are poorly understood. Drawing loosely on the approach of discourse analysis, this article clarifies both issues, arguing that language shapes how we think about housing policy, and indeed policy itself. The concept of filtering emerged in Great Britain in the late nineteenth century where, by 1900, it informed arguments in favor of municipal (public) housing. It became influential in the United States in the 1920s but in 1938 was still referred to in different ways, notably as “hand-me-down housing.” Here, it was understood more narrowly, as an alternative to public housing. After 1939, the Federal Housing Administration, though not its leading consultant Homer Hoyt, popularized the term “filtering.” The neutral connotations of this metaphorical term suited the agency's goal of developing an apparently objective discourse of housing markets and market analysis. The term was normalized by the early 1960s.     

New York city and subsidized housing: Impacts and lessons of the city's $5 billion capital budget housing plan

Abstract

New York City has devoted far more resources to the development and rehabilitation of affordable housing than any other U.S. city, investing more than $4 billion from 1986 to 1997. This article surveys the impact, status, and implications of New York's housing programs. It looks at correlations between publicly funded housing starts and changes in the housing stock, welfare rolls, and crime and at the economic impact of the city's housing investments within low‐income neighborhoods.

New York's housing programs have transformed neighborhoods, replacing large swaths of abandoned shells and vacant land with new housing and preserving thousands of buildings at risk of abandonment. While these housing investments correlate most strongly with reductions in vacant units and vacant lots, they also show significant correlations with reductions in welfare rolls and violent crime, but uneven economic impacts as well. New York's housing programs are important nationally less for the specifics of particular programs than for the institutional collaborations on which they are founded.     

A practical analysis of shared‐appreciation mortgages

Abstract

When the development of large‐scale public housing projects was discontinued in the 1970s in both Canada and the United States, the policy response was very different. This article reviews the nature of the dissimilar low‐income housing policy paths, documenting the role of federal housing policy in the evolution of a significant nonprofit “third sector” in Canada's housing system; the decision of the U.S. federal government to rely on the private sector for subsidized rental supply; and, with very little help from the federal government, the ‘bottom‐up” attempt to develop a nonprofit housing sector in communities throughout the United States. In Canada, a permanent stock of good‐quality, nonprofit social housing was created along with a growing and increasingly competent community‐based housing development sector.

The Canadian experience demonstrates that it takes time to build the capacity of the nonprofit sector. The U.S. experience demonstrates that there is a great deal of community‐based talent ready and willing to provide nonprofit housing if reliable and adequate funding is available. Canada has made outstanding progress relative to the United States in the area of affordable housing supply, creating yet another small but significant difference in the quality of life for lower income households. The general Canadian approach to consistent national support of nonprofit and cooperative housing can be applied in the United States. Canada's relative success is not based on unique structural or systemic differences—that is, it is a matter of political choice and political will. The United States should look to Canada's 20‐year experience to determine whether some of the mechanisms used to support Canada's nonprofit sector might be transferable to the United States.     

The What,Where, and When of Place-Based Housing Policy’s Neighborhood Effects

Ever-scarce affordable housing production resources, in addition to their primary function of providing housing for those in need, are increasingly enlisted for the dual goals of strengthening distressed communities and increasing access to higher opportunity neighborhoods. Information on spillovers can inform investment decisions over time and across communities. We leverage recent, high-quality research on neighborhood effects of Low-Income Housing Tax Credit (LIHTC) production, synthesizing evidence according to neighborhood context. We also summarize the evidence on project features moderating impacts of publicly subsidized, place-based rental housing, in general. We conclude that context matters. Producing LIHTC housing in distressed neighborhoods positively impacts the surrounding neighborhood—in terms of modest property value gains and increased safety. By contrast, higher opportunity neighborhoods experience small property value reductions, and no impacts on crime. Big questions remain, however, about impact heterogeneity—via tenant mix, property design, and ongoing property management, as examples—with the scarcity of systematic data representing one of the field’s largest constraints.     

Low‐Income Housing Development,Poverty Concentration,and Neighborhood Inequality

Considerable debate exists about the merits of place‐based programs that steer new development, and particularly affordable housing development, into low‐income neighborhoods. Exploiting quasi‐experimental variation in incentives to construct and rehabilitate rental housing across neighborhoods generated by Low‐Income Housing Tax Credit (LIHTC) program rules, we explore the impacts of subsidized development on local housing construction, poverty concentration, and neighborhood inequality. While a large fraction of rental housing development spurred by the program is offset by a reduction in the number of new unsubsidized units, housing investment under the LIHTC has measurable effects on the distribution of income within and across communities. However, there is little evidence the program contributes meaningfully to poverty concentration or residential segregation.     

Whose shortage of affordable housing?

Abstract

Shortfalls of low‐rent units are repeatedly cited as the rationale for programs to expand the supply of affordable housing. But the poverty‐level rents studied fall well below those of major supply programs. To reassess whether HOME and the low‐income housing tax credit (LIHTC) address actual shortfalls, this article compares numbers of units with renters by measuring both affordability and incomes with the median‐income‐based metric used for all federal rental programs.

During the 1980s, there were growing surpluses of units affordable to renters with incomes between 50 and 80 percent of their area's median income, a “low‐income” range that includes most HOME and LIHTC rents. By contrast, shortages were severe and growing only at rents affordable to households with incomes below 30 percent of area median. Examination of these shortfalls and the problems they create implies that programs to expand supply are not widely needed.     

“The Color of Money” revisited: Racial lending patterns in Atlanta's neighborhoods

Abstract

In 1988, the Atlanta Journal‐Constitution published “The Color of Money,” an influential series examining mortgage redlining in Atlanta. The articles documented wide lending disparities between white and black neighborhoods of similar income levels. Given sweeping changes in housing finance since 1988, we seek to determine whether Atlanta's racial geographic disparities in mortgage lending have changed.

Analysis of 1992 to 1996 Home Mortgage Disclosure Act data reveals slight improvement. Atlanta's depository lenders made 4.2 times as many conventional home purchase loans per owner‐occupied unit to middle‐income white neighborhoods as they did to middle‐income black neighborhoods; a decade earlier, this ratio was 5.2. Nondepositories post lower ratios, particularly for Federal Housing Administration‐insured loans, but this market segment raises concerns because of potential abuses. By the indicator of most enduring theoretical and policy interest—conventional home purchase lending by depositories—the patterns that aroused concern a decade ago are still evident today.     

The viability of the thrift industry

Abstract

This paper argues that many widely referenced studies on the cost effectiveness of alternative assistance programs were conducted at a time when rental housing markets were depressed. Recent increases in rent appear to have reduced the apparent cost advantage that demand‐side subsidies hold over supply‐side interventions. In addition, the nonsubsidized poor increasingly must compete for a dwindling supply of low‐cost privately owned housing. Housing vouchers or similar demand subsidies may be appropriate in some contexts, but economic theory and recent empirical analysis suggest that such subsidies are “not the best at all times and under all situations.” Rather, the “best policy” depends on program targeting and the nature and extent of program‐induced price increases and externality effects. Since funding limitations currently block the creation of an entitlement housing assistance program, housing policy must balance the often competing goals of expanding the ability of participating low‐income households to pay for decent housing while at the same time working to limit the adverse effects that rent increases and the loss of low‐cost nonsubsidized stock have on households falling outside of the housing assistance safety net.     

Does mobility matter? The neighborhood conditions of housing voucher holders by race and ethnicity

Abstract

Mobility is one mechanism used to address the federal goals of deconcen‐trating poverty and minorities. The Housing Choice Voucher Program relies on participants to make residential location decisions consistent with these goals. Our research investigates the level and impact of mobility on the neighborhood quality of voucher holders, their neighborhood conditions by race and ethnicity, and perceived obstacles to mobility within the jurisdiction of a Southern California housing authority.

About one‐third of the sample moved during the study, and moving resulted in improved neighborhoods for only one subset of movers. Minorities live in more impoverished, overcrowded neighborhoods than nonminorities, even when controlling for mobility status, contract rent, and other factors. Further, most voucher holders see the lack of rental units as a major obstacle to mobility. These findings suggest that current policy is not uniformly achieving deconcentration and that real and perceived barriers to mobility exist, especially for minorities.