Tag Archives: Furman Center

Neighborhood Change and Public Housing

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H.L.I.T.

The Effects of Neighborhood Change on NYCHA Residents, a report released to little notice in May, has received a lot of attention after the NY Daily News wrote a disparaging article about it. I will leave it to others to decide if this report was worth its six figure price tag, but I do think that there are some interesting findings. The report was prepared by Abt Associates and NYU’s Furman Center, two leading housing research entities. The Findings at a Glance state that

In this study, Abt finds statistically significant differences in earnings for NYCHA residents living in different neighborhood types. Annual household earnings average $4,500 higher for public housing residents in persistently high‐income neighborhoods as compared to persistently low‐income neighborhoods. Earnings are $3,000 higher for those in increasing income neighborhoods. Moreover, these findings are not attributable to any selection bias of residents choosing to live in either persistently high or low income neighborhoods. (1)

This is a pretty big deal, given that the average family income for NYCHA residents is $23,311. If this increased income is attributable to neighborhood characteristics, we would want to take that into account when formulating housing policy.

There were some other interesting findings that were also not highlighted by the Daily News:

  • Developments surrounded by persistently high‐income neighborhoods have lower violent crime rates (5.7 violent crimes per 1,000 residents) than those surrounded by persistently low‐income neighborhoods (8.3 violent crimes per 1,000 residents).
  • Developments in persistently high‐income neighborhoods are zoned for public elementary schools with higher standardized test scores than developments in persistently low‐income neighborhoods; 72% of NYCHA households in low‐income neighborhoods are zoned for schools in the bottom quartile for math proficiency (cf. 41% for those in high‐income neighborhoods).
  • Among public elementary and middle school students living in NYCHA housing, those living in developments surrounded by persistently high—and increasing—income neighborhoods score higher on standardized math and reading tests. (Findings at a Glance, 2)

Before this report is dismissed as a boondoggle, we should try to understand its implications for developing a housing policy that promotes socioeconomic diversity. This is a city of extremes of wealth and poverty and there has been a very negative reaction to policies, such as poor doors, that seem to reinforce that state of affairs. But it may turn out that public housing is a useful tool for creating the more equitable city that so many New Yorkers strive for. Let’s not shoot the messengers before we hear what they have to say.

The Next Urban Renaissance

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"Stacked parking New York 2010" by Jérôme

The Manhattan Institute has released an electronic book, The Next Urban Renaissance: How Public-Policy Innovation and Evaluation Can Improve Life in America’s Cities. Ingrid Gould Ellen, the Faculty Director of NYU’s Furman Center for Real Estate and Urban Policy, has a chapter on Housing America’s Cities: Promising Policy Ideas for Affordable Housing. She suggests three reforms:

First, cities could incentivize construction and development—and thereby increase the supply of housing—by more heavily taxing land than property. Such a “split-rate” tax would encourage development of underutilized land by reducing the added tax burden that standard property taxes impose on improving buildings.

Second, cities could reduce (or even eliminate) minimum parking requirements that significantly increase the cost of housing.

Finally, cities could shift some of the public funds currently spent on homeless shelters to time-limited rental subsidies for those at risk of homelessness. None of these ideas is new, but each deserves serious reconsideration as housing affordability problems mount around the country, especially in high-demand, coastal cities. (1-2)

I think the split-rate tax is worth exploring, although it may not be political feasible at this time. The property tax system in NYC is incredibly screwed up, so any proposal that involves scrapping it and replacing it with one that is more equitable is a step in the right direction.

The elimination of minimum parking requirements is a no-brainer. This is not only because they increase the cost of new housing (by increasing construction costs and by reducing square footage that would be available to other building uses). It is also because we should be trying to disincentivize people from owning cars in NYC, not incentivizing them with subsidizing parking.

The last proposal — time-limited rental subsidies — is also worth exploring although it sounds a little too good to be true. Early research indicates that program beneficiaries are unlikely to end up in shelters. If these findings are confirmed by more rigorous studies, then time-limited rental subsidies would be a brilliant policy innovation.

While none of these proposals are going to solve NYC’s affordable housing crisis, they will all have a positive impact at the margins. They are worth further study.

Thursday’s Advocacy & Think Tank Round-Up

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  • The Furman Center has released discussion 16, A New Approach to Affirmatively Furthering Fair Housing  in its ‘The Dream Revisited’ Series, a “slow debate.”  Discussion 16 contains five essays on the subject of affirmatively furthering fair housing.  This Author recommends HUD’s New AFFH Rule: The Importance of the Ground Game, by Michael Allen, which argues the HUD lacks the resources to enforce its rule which requires grant recipients not just avoid housing discrimination but “affirmatively further fair housing.”  Allen believes that the only way to hold the public housing agencies and block grant recipients accountable is through grass roots and legal advocates implementing their own enforcement strategy, through litigation if necessary.
  • The National Association of Realtors’ Pending Home Sales Index is up for the 12th straight month, year over year, despite a slight decline from July to August. The index decreased 1.4 percent to 109.4 in August from 110.9 in July but is still 6.1 percent above August 2014 (103.1). Watch NAR chief economist Lawrence Yun discuss his view of the housing market.
  • The National Housing Conference has released Paycheck to Paycheck a database that compares wages for selected occupations to assess the affordability of housing for full-time employees in different areas of the United States.  A companion report, A Snapshot of Metropolitan Housing Affordability for Millennial Workers explores housing affordability for millennials in five occupations, including: administrative assistant, retail cashier, e-commerce customer service representative, food service manager, and cardiac technician.

Thursday’s Advocacy & Think Tank Round-up

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  • Corelogic’s Second Quarter U.S. Equity Report indicated that over three-quarters-of -a-million properties regained equity, while 4.4 million remain in negative equity over the same period. Aggregate negative equity fell $28 billion from $338 billion to $309 billion. According to Corelogic this reduction is caused both by foreclosure completions and home price appreciation.
  • According to a study by the National Association of Realtors (NAR) new home construction is trailing job growth in major metro areas. NAR sees this as the primary reason for the affordability crisis now gripping the nation in many of the same areas.
  • The National Fair Housing Alliance (NFHA) has filed a complaint with the U.S. Department of Housing and Urban Development (HUD) against certain real estate agencies and individual realtors who are alleged to have treated black and latino buyers in Jackson Mississippi in drastically different ways than they treated equally qualified white buyers. According to the NFHA complaint white buyers were shown a wider variety of homes while black and latino purchasers were largely steer into majority minority neighborhoods.
  • The NHFA, in a related vein, also released a study entitled Where You Live Matters – 2015 Fair Housing Trends Report which draws a stark parallel between the historic lack of investment in communities of color and the racial disparities in educational, social, and economic outcomes that have resulted.
  • NYU’s Furman Center has released a Brief entitled Black and Latino Segregation and Socioeconomic Outcomes which finds that the burgeoning Latino population in the U.S. is largely “inheriting the segregated urban structures experienced by African Americans.” This segregation seems to lead to reduced socioeconomic prospects when compared with whites, including lower earnings, more violent crime, less access to credit and lower homeownership rates.

Desvinculado y Desigual = Separate and Unequal

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"Plessy marker" by Skywriter - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons - https://commons.wikimedia.org/wiki/File:Plessy_marker.jpg#/media/File:Plessy_marker.jpg

Justin Steil, Jorge De la Roca and Ingrid Gould Ellen, researchers affiliated to the NYU Furman Center, have published Desvinculado y Desigual [Separate and Unequal]: Is Segregation Harmful to Latinos? The authors find that their research on this topic “suggests that segregation may have as negative effects for Latinos as it does for African Americans and that persistent Latino-white segregation is of serious concern as the nation’s metropolitan areas continue to become more diverse.” (74)

More specifically, their research finds that

segregation continues to be associated with significant reductions in educational attainment and labor market success for African Americans, and that the associations between segregation and outcomes for Latinos are at least as large as those for African Americans. For native-born African American and Latino young adults between the ages of 20 and 30, increases in metropolitan-area segregation are associated with significant reductions in the likelihood of high school and college graduation, with lower earnings and employment rates, and with an increase in single motherhood.

These findings are somewhat unanticipated given the long history of intense black-white segregation and the systematic disinvestment in black neighborhoods through much of the last century, when compared to the historically more moderate levels of Latino-white segregation. These findings raise the question of which mechanisms may be at play to generate these differences.

One crucial mechanism seems to be the levels of neighborhood human capital to which whites, Latinos, and African Americans are exposed; they are consistent with the negative associations for both blacks and Latinos and with the differences in the magnitude of the association between them. The white-Latino gap in neighborhood exposure to human capital increases dramatically as levels of segregation increase.

The significance of neighborhood levels of human capital is consistent with existing research on the effects of segregation for African Americans and for immigrants. (73, citations omitted)

This is an understudied and important topic, so it is great that the authors have begun to explore it. They identify a number of research questions that others can take up. Let’s hope some do.

The Challenge of Rising Rents

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NYU’s Furman Center has issued a research brief, The Challenge of Rising Rents: Exploring Whether a New Tax Benefit Could Help Keep Unsubsidized Rental Units Affordable. The brief considers whether the creation of “a new property tax subsidy program aimed at maintaining affordability in buildings that currently provide affordable rents could be attractive to owners.” (1)

The brief concludes that

The bulk of New York City’s housing stock that is affordable to low-income households is in buildings that currently receive no government subsidy to maintain low rents. In a city where the real estate market is booming and the supply of housing is constrained, the upward pressure on these rents is likely to continue. However, our analysis here suggests that there are some markets in the city where an owner of an unsubsidized building would agree to restrict future rent increases in exchange for a tax benefit.

If owners think their building is in a neighborhood likely to experience rapid rent increases, they are not likely to participate in a program like the one we have outlined. But, owners who are less optimistic about rent growth in their neighborhood may be willing to sign up in exchange for the certainty of a 30-year tax break. Owners might be more likely to participate in this program than our modeling suggests if it were bundled with another benefit or if the regulatory requirements were less onerous. (11)

This is obviously a good exercise to undertake, but I wonder if most landlords believe that their buildings are like Lake Wobegon children — above average, one and all. So, if the success of this proposal rests on reaching pessimistic landlords, it may be relying on a very small pool of landlords indeed.

Thursday’s Advocacy & Think Tank Round-Up

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  • Corelogic’s Home Price Index for May 2015, reports that home prices are up 6.3% compared to May of 2014 and with Mortgage rates at around 4% – leading to increased demand – areas with high demand and low supply, such as San Francisco are seeing double digit appreciation.  Home prices peaked in April 2006 and are still 8.4% below peak.
  • Over 1,000 members of Affordable Rental Housing A.C.T.I.O.N. signed a letter to Congress urging both houses to protect, strengthen and expand the Housing Credit and preserve Housing Bonds as it considers tax reform and tax extenders legislation. Specifically, the letter urges Congress to act quickly to approve a minimum 9 percent Housing Credit rate for new construction and substantial rehabilitation, as well as a minimum 4 percent rate for the acquisition of affordable housing.
  • Furman Center’s Data Search Tool – is an online application that provides direct access to New York City data compiled by the NYU Furman Center. Visitors to the site can select from a range of variables to create customized maps, downloadable tables, and track trends over time. Variables include, among many others: Housing costs, mortgage lending, tax delinquencies, housing quality.