Evaluating California’s Housing Element Law,Housing Equity,and Housing Production (1990–2007)

Since 1969, California’s Housing Element Law has required that municipalities address housing equity and housing production. In California, housing equity means that a municipality has planned for the future production of low-income housing that is priced from 0 to 120% of the U.S. Department of Housing and Urban Development’s median family income, and market-rate housing that is priced higher than 121%. For a purposive sample of municipalities (Sacramento and Los Angeles regions, 1990 to 2007, n = 53), this research found that as compliance with the law increased, the sample experienced deficient low-income housing production but surplus market-rate housing production. Mixed-effects models indicated that compliant municipalities were associated not only with increased low-income housing production but also with decreased annual housing production in comparison to noncompliant municipalities. While these associations contrast with Lewis, they suggest that municipal compliance may support California’s goal of providing housing equity but may also constrain California’s overall housing production.     

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.     

Can State Review of Local Planning Increase Housing Production?

Abstract

To increase housing production and make the distribution of affordable housing more equitable, several states subject local land use planning to review by state agencies or courts. Focusing an empirical analysis on California, this article considers the potential efficacy of these reviews in contributing to the overall supply of housing. Past studies of other intergovernmental mandates suggest that their institutional design helps determine their success.

A comparison of four states indicates that approaches differ considerably in how they determine local housing needs, evaluate local efforts prospectively or retrospectively, and penalize noncompliance. California's housing element law, which mandates prospective local planning for quantifiable housing goals, gives state staff the power to review local plans for compliance with statutory requirements. However, multivariate analysis indicates that the compliance status of California municipalities in 1994 did not predict the number of single‐family or multifamily housing permits issued from 1994 to 2000.     

Are Discrimination and Social Capital Related to Housing Instability?

Existing studies examining social capital and housing instability have overlooked structural factors such as discrimination, providing an incomplete explanation of the relationship between social capital and housing instability. This study addresses this limitation by exploring how discrimination and social capital are related to housing instability. This study is a secondary analysis of data collected during the Atlanta Neighborhood Pilot study. The sample consists of mostly African American adults who resided in the Atlanta metropolitan area in 2013 (n = 691). After controlling for sociodemographic characteristics, residential mobility, and public assistance, stepwise logistic regression identified social capital and discrimination as significant predictors of housing instability. Lower social capital and higher everyday discrimination scores were associated with increased odds for housing instability. Individuals 35 or older, those with annual incomes between $25,000 and $50,000, and those who reported receiving public assistance during their lifetime also had increased odds for housing instability. Findings identify characteristics of individuals vulnerable to housing instability and suggest that social capital development as a housing intervention warrants further exploration. These findings can be utilized by policymakers and practitioners to better target funding and to create efficient systems better equipped to deploy early homelessness prevention interventions.     

Does the Likely Demographics of Affordable Housing Justify NIMBYism?

ABSTRACT

NIMBYism (not in my backyard) decreases the amount of affordable housing construction. A possible motivator for this is an existing homeowner’s fear that proximity to affordable housing depresses property value. Using a hedonic regression analysis of the sales prices of homes in Sacramento County, California, this study finds that increases in the demographic characteristics in a census tract that are likely to increase if more affordable housing is built there lower the sales price of a home. This finding holds even after controlling for the percentages of racial/ethnic groups more likely to face discrimination. Policymakers should recognize this economic element of NIMBYism as they consider instruments to increase the amount of affordable housing built. We conclude with a suggestion for a knowingly controversial policy mechanism based upon cap and trade with the hope it will spur further debate on this issue.     

The Changing Relationship Between Housing and Inequality, 1980–2010

Inequality in both income and wealth has grown rapidly in the United States since the 1970s. Over the same period, homeownership rates increased in step with expansionist government policies and the development of subprime and other exotic loan products, and housing affordability challenges emerged as the most prevalent housing problem for owners and renters alike. The subprime lending and foreclosure crises of the 2000s stretched households financially, threatening the traditional economic benefits of homeownership, bringing into stark relief the ways in which housing and inequality mutually influence one another, and implicating homeownership, housing affordability, and subprime lending in the widening gap between the rich and the poor. This article examines the changing roles of homeownership, housing affordability, and subprime lending in contemporary U.S. inequality by, first, describing trends in county inequality and housing characteristics and, second, modeling inequality as a function of the previous decade's housing characteristics over the period of 1980–2010. We build upon past models of county inequality by more explicitly considering causal order, place characteristics, and state and regional fixed effects. The results confirm that homeownership, affordability, and subprime lending not only reflect existing inequalities but also perpetuate those inequalities over time. Homeownership promotes equality, affordability problems undermine it, and subprime lending has the potential to ameliorate inequality in certain contexts, but these effects shift significantly over time, particularly as a result of widespread foreclosures and economic recession. Our analysis establishes the importance of housing in explaining contemporary inequality, highlights how place characteristics and causal ordering may improve county inequality models, and provides a foundation for future studies examining inequality in light of the Great Recession and the foreclosure crisis.     

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.     

Does Homeownership Protect Individuals From Economic Hardship During Housing Busts?

ABSTRACT

Does homeownership protect individuals from experiencing economic hardships even during housing busts? Does the relationship differ by race and ethnicity? Using the Survey of Income and Program Participation 2008 panel in the United States and controlling for income and various family characteristics, we find that the likelihood of experiencing any hardship is 5.6 percentage points lower for homeowners than for renters without rent subsidies, a reduction of about 25%. Owning a home for more than 10 years provides more protection than owning a home for less than 4 years. Homeownership’s role in shielding people from economic hardship is significant not only for non-Hispanic whites, but also for non-Hispanic blacks and Hispanics. The negative relationship of homeownership to economic hardship offers additional evidence that it is beneficial to own your home, even during housing busts and even for households of color.     

Do State Affordable Housing Appeals Systems Backfire? A Natural Experiment

Several U.S. states have supplemented traditional judicial review of local land-use regulation with a state affordable housing appeals system (SAHAS). Empirical evidence indicates that a SAHAS can increase the proportion of housing that is affordable to low- and moderate-income households. But some scholars have suggested that an effective SAHAS will ultimately backfire, by producing incentives to prohibit market-rate development, thereby rendering a state’s housing stock less affordable overall. We test this “backfire” hypothesis with a longitudinal comparison of single-family housing development from 1980 through 2007 in municipalities located in adjacent areas of Connecticut (which adopted a SAHAS in 1989) and New York State (which did not have a SAHAS during the study period). Contrary to the predictions of the backfire hypothesis, our fixed effects regression indicates that Connecticut's SAHAS was associated with increased single-family development relative to the New York State jurisdictions in our sample. This result suggests that a SAHAS can increase below-market rate and mixed-income development without impeding market-rate development.     

Housing vouchers versus housing production: Assessing long‐term costs

Abstract

Possibly the single largest debate in the field of affordable rental housing concerns the use of tenant‐based assistance versus project‐based assistance. The accepted wisdom is that project‐based assistance costs anywhere from 50 to 100 percent more than tenant‐based assistance. This premium for project‐based housing is based on a comparison of subsidy costs at the start of a project's life rather than on a comparison of the discounted present value of the costs over the long term.

The subsidy costs of samples of Section 8 new construction projects have been compared to those of Section 8 certificates over a long period of time. The results indicate that the cost premium associated with project‐based assistance may be lower than conventionally believed, around 40 percent, and may get even lower if the cost comparison could extend to longer time periods and could control for the quality of the housing units.     

The Effects of a Housing Mobility Experiment on Participants’ Residential Environments

We used the Moving to Opportunity (MTO) housing experiment to inform how Housing Choice Vouchers and housing mobility policies can assist families living in high-poverty areas to make opportunity moves to higher quality neighborhoods, across a wide range of neighborhood attributes. We compared the neighborhood attainment of the three randomly assigned MTO treatment groups (low-poverty voucher, Section 8 voucher, control group) at 1997 and 2002 locations (4–7 years after baseline), using survey reports, and by linking residential histories to numerous different administrative and population-based data sets. Compared with controls, families in low-poverty and Section 8 groups experienced substantial improvements in neighborhood conditions across diverse measures, including economic conditions, social systems (e.g., collective efficacy), physical features of the environment (e.g., tree cover) and health outcomes. The low-poverty voucher group, moreover, achieved better neighborhood attainment compared with Section 8. Treatment effects were largest for New York, New York, and Los Angeles, California. We discuss the implications of our findings for expanding affordable housing policy.     

The Evolution of Low‐Income Housing Policy, 1949 to 1999

Abstract

The evolution of low‐income housing policy during the past 50 years can be divided roughly into two segments: the first running from 1949 to the 1973 Nixon moratorium on subsidized production programs and the second from 1973 to the present, marked by a diminished federal leadership role and an increased state and local role. After tracing the rise of the federal leadership role represented in the Housing Acts of 1949 and 1968, this article focuses on the development of three important policy instruments that mark the devolution of housing policy: housing vouchers, housing block grants, and the Low‐Income Housing Tax Credit.

The three‐pronged strategy of vouchers, block grants, and tax credits has achieved reasonably good results and attracted an unusual degree of political consensus. A steady expansion of all three offers the most promising path to the “realization as soon as feasible” of the national housing goal.     

Why Do Housing Mobility Programs Fail in Moving Households to Better Neighborhoods?

This article conceptualizes the relationship between housing instability, residential mobility, and neighborhood quality. We summarize the existing literature about residential mobility and housing instability and examine their potential interactions along three dimensions: (a) the reasons for a move, including a variety of push and pull factors; (b) mobility outcomes in terms of whether moves result in residing in a better or worse neighborhood than that of the prior residence; and, especially important for low-income households, (c) the degree to which the current move and past experiences of moving have been discretionary or forced. Housing instability is a cumulative concept, with involuntary moves at its center. This synthetic model of housing instability's impact on mobility outcomes suggests that the more instability a household has experienced, the less likely mobility moves are to occur, or, if they do occur, to be long lasting. Policy implementation may underestimate the interaction between cumulative housing instability and residential mobility in housing mobility policies. Thus, these interactions have implications for mobility policies, pointing toward a path for future research that inform policies to move low-income households toward both greater housing stability and better neighborhood outcomes.     

Family Unification Program: Housing Services for Homeless Child Welfare–Involved Families

The Family Unification Program—a U.S. Department of Housing and Urban Development initiative to facilitate interagency collaboration between the child welfare and public housing service systems—aims to stabilize families at risk for parent–child separation by addressing housing needs. Findings from a randomized controlled trial suggest that families referred to the program experienced lower risk for homelessness and out-of-home placement compared with child welfare services as usual. The findings suggest that housing services offer an effective alternative to foster care.     

Gateway to Opportunity? Disparities in Neighborhood Conditions Among Low-Income Housing Tax Credit Residents

A key goal of housing assistance programs is to help lower income households reach neighborhoods of opportunity. Studies have described the degree to which Low-Income Housing Tax Credit (LIHTC) developments are located in high-opportunity neighborhoods, but our focus is on how neighborhood outcomes vary across different subsets of LIHTC residents. We also examine whether LIHTC households are better able to reach certain types of neighborhood opportunities. Specifically, we use new data on LIHTC tenants in 12 states along with eight measures of neighborhood opportunity. We find that compared with other rental units, LIHTC units are located in neighborhoods with higher poverty rates, weaker labor markets, more polluted environments, and lower performing schools, but better transit access. We also find that compared with other LIHTC tenants, poor and minority tenants live in neighborhoods that are significantly more disadvantaged.     

The Low‐Income Housing Tax Credit An Analysis of the First Ten Years

Abstract

The Low‐Income Housing Tax Credit (LIHTC) has been the de facto federal rental housing production program since its creation in the Tax Reform Act of 1986. In this article, using a detailed database on 2,554 LIHTC projects, we analyze the costs of building these projects, where they are built, their financial viability, whom they serve, who finances them, and the size of the subsidies provided to them.

The LIHTC is a flexible program that has built different types of housing in various markets. While LIHTC projects serve low‐ and moderate‐income households, their rents are beyond the reach of many poor households without additional subsidy. Revenues just cover costs for many LIHTC projects. Over time, considerably more of each tax‐credit dollar has ended up in the projects, and returns to equity investors have dropped significantly, perhaps reflecting an increased understanding of project risks. We estimate that LIHTC projects developed by nonprofits are 20.3 percent more expensive than those developed by for‐profits.     

Comment on “Does the Likely Demographics of Affordable Housing Justify NIMBYism?”

Abstract

Automated underwriting (AU) systems have become the tool of choice in mortgage lending decisions. While these systems provide significant benefits to mortgage originators and investors, questions have been raised about their impact on underserved populations. The questions focus on the relative accuracy of AU compared with manual underwriting and whether AU has increased the flow of mortgage credit to underserved consumers.

Using information from Freddie Mac's Loan Prospector AU service, we provide statistics useful in examining these issues. The data strongly support our view that AU provides substantial benefits to consumers, particularly those at the margin of the underwriting decision. We find evidence that AU systems more accurately predict default than manual underwriters do. We also find evidence that this increased accuracy results in higher borrower approval rates, especially for underserved applicants.     

Where will I sleep tomorrow? Housing,homelessness, and the returning prisoner

Abstract

This year, over 630,000 prisoners will be released from state and federal prisons across the country—more than four times as many as were released in 1980. In this article, we examine the scope of the prisoner reentry issue—what is known about the intersection of housing, homelessness, and reentry and about the barriers returning prisoners face in securing safe and affordable housing.

Although the housing challenges are formidable, progress is being made on numerous fronts. We seek to frame the dynamics of the reentry housing discussion by highlighting the promising strategies that are emerging. These strategies, taken to scale, could help create a very different national policy on prisoner reentry. Ultimately, effective reentry strategies have the potential not only to reduce re‐arrest and increase public safety, but also to reduce homelessness.