Tag Archives: race

Race, Poverty and Housing Policy

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Signing of the Housing and Urban Development Act

Signing of the Housing and Urban Development Act of 1965

Ingrid Gould Ellen and Jessica Yager of NYU’s Furman Center contributed a chapter on Race, Poverty, and Federal Rental Housing Policy to the HUD at 50 volume I have been blogging about. It opens,

For the last 50 years, HUD has been tasked with the complex, at times contradictory, goals of creating and preserving high-quality affordable rental housing, spurring community development, facilitating access to opportunity, combating racial discrimination, and furthering integration through federal housing and urban development policy. This chapter shows that, over HUD’s first 5 decades, statutes and rules related to rental housing (for example, rules governing which tenants get priority to live in assisted housing and where assisted housing should be developed) have vacillated, reflecting shifting views about the relative benefits of these sometimes-competing objectives and the best approach to addressing racial and economic disparities. Also, HUD’s mixed success in fair housing enforcement—another core part of its mission—likely reflects a range of challenges including the limits of the legal tools available to the agency, resource limitations, and the difficulty of balancing the agency’s multiple roles in the housing market. This exploration of HUD’s history in these areas uncovers five key tensions that run through HUD’s work.

The first tension emerges from the fact that housing markets are local in nature. HUD has to balance this variation, and the need for local jurisdictions to tailor programs and policies to address their particular market conditions, with the need to establish and enforce consistent rules with respect to fair housing and the use of federal subsidy dollars.

The second tension is between serving the neediest households and achieving economic integration. In the case of place-based housing, if local housing authorities choose to serve the very poorest households in their developments, then those developments risk becoming islands of concentrated poverty. Further, by serving only the poorest households, HUD likely narrows political support for its programs.

The third tension is between serving as many households as possible and supporting housing in high-opportunity neighborhoods. Unfortunately, in many metropolitan areas, land—and consequently housing construction—is significantly more expensive in the higher-income neighborhoods that typically offer safer streets, more extensive job networks and opportunities, and higher-performing schools. As a result, a given level of resources can typically house fewer families in higher-income areas than in lower-income ones.

The fourth tension is between revitalizing communities and facilitating access to high-opportunity neighborhoods. Research shows that, in some circumstances, investments in subsidized housing can help revitalize distressed communities and attract private investment. Yet, in other circumstances, such investments do not trigger broader revitalization and instead may simply constrain families and children in subsidized housing to live in areas that offer limited opportunities.

The final apparent tension is between facilitating integration and combating racial discrimination. Despite the Fair Housing Act’s (FHA’s) integration goal, legal decisions, which are discussed further in this chapter, have determined that the act’s prohibition on discrimination limits the use of some race-conscious approaches to maintaining integrated neighborhoods.

To be sure, these tensions are not always insurmountable. But addressing all of them at once requires a careful balancing act. The bulk of this chapter reviews how HUD programs and policies have struck this balance in the area of rental housing during the agency’s first 50 years. The chapter ends with a look to the challenges HUD is likely to face in its next 50 years. (103-104, citation omitted)

The chapter does a great job of outlining the tensions inherent in HUD’s broad mandate. It made me wonder, though, whether HUD would benefit from narrowing its mission for the next 50 years. If it focused on assisting more low-income households with their housing expenses (for example, by dramatically expanding the Section 8 housing voucher program and scaling back other programs), it might do that one thing well rather than doing many things less well.

HUD at 50

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United States Dept of Housing and Urban Development by Tim1965

The Office of Policy Development and Research at the Department of Housing and Urban Development has issued HUD at 50: Creating Pathways to Opportunity. It is a massive tome, with a lot of interest in it for the housing geeks among us. In the Preface, Deputy Assistant Secretary for Policy Development Lynn Ross writes,

This volume looks back on HUD’s history and looks forward to ways the agency might evolve. If you are familiar with the mission and the work of PD&R, you will not be surprised to learn that this book includes thorough analyses of not only how programs succeeded, but also how they sometimes fell short and what was done in response. I hope you will take the time to engage with the analysis and ideas contained throughout this volume. We’ve organized this book so you can read the thematic chapters in any order—although you can certainly read it cover to cover.

Given that HUD at 50 is more than 250 pages long, only the most dedicated among us will do so. Nonetheless, it is worth skimming the table of contents to see if any of the entries are worth reading in full:

  • Introduction by Julián Castro
  • Chapter 1 The Founding and Evolution of HUD: 50 Years, 1965–2015 by Jill Khadduri
  • Chapter 2 Race, Poverty, and Federal Rental Housing Policy by Ingrid Gould Ellen and Jessica Yager
  • Chapter 3 Urban Development and Place by Raphael W. Bostic
  • Chapter 4 Housing Finance in Retrospect by Susan Wachter and Arthur Acolin
  • Chapter 5 Poverty and Vulnerable Populations by Margery Austin Turner, Mary K. Cunningham, and Susan J. Popkin
  • Chapter 6 Housing Policy and Demographic Change by Erika Poethig, Pamela Blumenthal, and Rolf Pendall
  • Conclusion Places as Platforms for Opportunity: Where We Are and Where We Should Go by Katherine M. O’Regan

I will take a closer look at some of these chapters in the coming days, but feel free to dip in before I do!

Wednesday’s Academic Roundup

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Gentrification and Displacement

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Joe Wolf

Miriam Zuk et al. have posted a Federal Reserve Bank of San Francisco Working Paper, Gentrification, Displacement and The Role of Public Investment: A Literature Review. The paper opens,

The United States’ metropolitan areas’ ever-changing economies, demographics, and morphologies have fostered opportunity for some and hardship for others. These differential experiences “land” in place, and specifically in neighborhoods. Generally, three dynamic processes can be identified as important determinants of neighborhood change: movement of people, public policies and investments, and flows of private capital. These influences are by no means mutually exclusive – in fact they are very much mutually dependent – and they each are mediated by conceptions of race, class, place, and scale. How scholars approach the study of neighborhood change and the relative emphasis that they place on these three influences shapes the questions asked and attendant interventions proposed.

These catalysts result in a range of transformations – physical, demographic, political, economic – along upward, downward, or flat trajectories. In urban studies and policy, scholars have devoted volumes to analyzing neighborhood decline and subsequent revitalization at the hands of government, market, and individual interventions. One particular category of neighborhood change is gentrification, definitions and impacts of which have been debated for at least fifty years. Central to these debates is confronting and documenting the differential impacts on incumbent and new residents, and questions of who bears the burden and who reaps the benefits of changes. Few studies have addressed the role of public investment, and more specifically transit investment, in gentrification. Moreover, little has been written about how transit investment may spur neighborhood disinvestment and decline. Yet, at a time when so many U.S. regions are considering how best to accommodate future growth via public investment, developing a better understanding of its relationship with neighborhood change is critical to crafting more effective public policy.

This literature review will document the vast bodies of scholarship that have sought to examine these issues. First, we contextualize the concept and study of neighborhood change. Second, we delve into the literature on neighborhood decline and ascent (gentrification). The third section examines the role of public investment, specifically transit investment, on neighborhood change. Next, we examine the range of studies that have tried to define and measure one of gentrification’s most pronounced negative impacts: displacement. After describing the evolution of urban simulation models and their ability to incorporate racial and income transition, we conclude with an examination of gentrification and displacement assessment tools. (2, footnote omitted)

Because gentrification is such a contested topic both within and without the academy, this literature review is very useful. Notwithstanding the fact that the results of many of the studies mentioned are mixed, the authors were able to identify certain findings that emerge from the literature. These include,

  • Neighborhoods change slowly, but over time are becoming more segregated by income, due in part to macro-level increases in income inequality.
  • Racial segregation harms life chances and persists due to patterns of in-migration, “tipping points,” and other processes; however, racial integration is increasing, particularly in growing cities.
  • Despite severe data and analytic challenges in measuring the extent of displacement, most studies agree that gentrification at a minimum leads to exclusionary displacement and may push out some renters as well. (44-45)

As hot cities like New York and San Francisco struggle with their changing housing markets, policy makers should make decisions based on the best available research on gentrification and displacement. This literature review provides a guide.

The Prime Crisis

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Ben Franklin, Founder of the University of Pennsylvania

Fernando Ferreira and Joseph Gyourko, both at Penn’s Wharton School, have posted A New Look at the U.S. Foreclosure Crisis: Panel Data Evidence of Prime and Subprime Borrowers from 1997 to 2012 to SSRN. Unfortunately it is behind a National Bureau of Economic Research paywall. The paper makes the case for “a reinterpretation of the U.S. foreclosure crisis as more of a prime, rather than a subprime, borrower issue.” (1) The authors conclude,

The housing bust and its consequences are among the defining economic events of the past quarter century. Constructing and analyzing new and very large micro data spanning the cycle and all sectors of the mortgage market leads us to reinterpret the ensuing foreclosure crisis as something much more than a subprime sector issue. Many more homes were lost by prime mortgage borrowers, and their loss rates not only increased relatively early in the crisis, but stayed high through 2012. This new characterization of the crisis motivates a very different empirical strategy from previous research on this topic. Rather than focus solely on the subprime sector and subprime traits, we turn to the traditional home mortgage default literature that explains outcomes in terms of common factors such as negative equity and borrower illiquidity.

The key empirical finding is that negative equity conditions can explain virtually all of the difference in foreclosure and short sale outcomes of Prime borrowers compared to all Cash owners. This is true on average, over time (including the spike in their foreclosure rate beginning in 2009), and across metropolitan areas. Given the predominance of this group in terms of foreclosures and short sales, this is tantamount to explaining the crisis itself. We can explain much, but not all, of the variation in Subprime borrower outcomes in terms of negative equity or borrower illiquidity conditions, so something potentially ‘special’ about the subprime sector still is unaccounted for. That said, it also could be that a less noisy measure of borrower illiquidity would be able to account for this residual variation. That remains for future research.

None of the other ‘usual suspects’ raised by previous research or public commentators change this conclusion. Housing quality traits, household demographics (race or gender), buyer income, and speculator status do not have a material influence on outcomes across borrower types. Certain loan-related attributes such as initial LTV, whether a refinancing occurred or a second mortgage was taken on, and loan cohort origination quarter do have some independent influence, but they are much weaker than that of current LTV. (27)

I will have to leave it to other empiricists to evaluate whether this sure-to-be-controversial study is methodologically sound, but I sure did find their policy conclusion to be interesting:

We are not able to provide a definitive recommendation one way or another, but we can rule out one noteworthy reason offered for not aiding homeowners—namely, that the crisis was mostly about irresponsible subprime sector actors (both lenders and borrowers) who were undeserving of transfers. Of course, this is not to say that there was no such behavior. The evidence from other research and serious journalists is that there was. However, it is clear from the passage of time (and the accumulation and analysis of new data that provides) that the problem was much more widespread and systemic.  (28)

Hopefully, this is a lesson that we can take with us into the next (inevitable) housing crisis so we lay the foundation for policy solutions based on facts and not rely on moral judgments about borrowers that are built on shaky ground.

Wednesday’s Academic Roundup

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Segregation in the 21st Century

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NYU’s Furman Center has posted a research brief, Race and Neighborhoods in the 21st Century. The brief is is based on a longer paper, Race and Neighborhoods in the 21st Century: What Does Segregation Mean Today? (One of the co-authors of the longer paper, Katherine M. O’Regan, is currently Assistant Secretary for Policy Development and Research at HUD.) The brief opens,

In a recent study, NYU Furman Center researchers set out to describe current patterns of residential racial segregation in the United States and analyze their implications for racial and ethnic disparities in neighborhood environments. We show that 21st Century housing segregation patterns are not that different from those of the last century. Although segregation levels between blacks and whites have declined nationwide over the past several decades, they still remain quite high. Meanwhile, Hispanic and Asian segregation levels have remained relatively unchanged. Further, our findings show that the neighborhood environments of blacks and Hispanics remain very different from those of whites and these gaps are amplified in more segregated metropolitan areas. Black and Hispanic households continue to live among more disadvantaged neighbors, to have access to lower performing schools, and to be exposed to more violent crime. (1)

And the brief concludes,

Black and Hispanics continued to live among more disadvantaged neighbors even after controlling for racial differences in poverty, to have access to lower performing schools, and to be exposed to higher levels of violent crime. Further, these differences are amplified in more segregated metropolitan areas. Segregation in the 21st century, in other words, continues to result not only in separate but also in decidedly unequal communities. (5)

This conclusion makes clear that segregation is not merely the result of poverty. It is important to understand how segregation persists even though the legal support of segregation has been dismantled. Richard Brooks and Carol Rose’s work in this area is a good start for those who are interested.