The Fair Housing Act at 50

by David Luberoff
Deputy Director

Fair housing can and should be a centerpiece of efforts to expand economic opportunity, asserted Dr. Raphael Bostic, President and CEO of the Federal Reserve Bank of Atlanta, who gave the 18th Annual John T. Dunlop Lecture at the Harvard Graduate School of Design on Tuesday, April 10 (watch video).  His talk, on the past, present, and future of the Fair Housing Act, was given one day before the 50th anniversary of President Lyndon B. Johnson signing the measure.

Bostic, who also served as Assistant Secretary for Policy Development and Research at the U.S. Department of Housing and Urban Development (HUD) from 2009 until 2012, explained that decades of research show the strong positive impacts that neighborhoods can have on children's education and future earnings. Given this, he noted, it is in everyone's interest to support efforts to expand opportunities for all families. "Fair housing is a key to economic mobility," he explained. "It is an economic development issue as well as a community and personal development issue."

Bostic went on to discuss the two main strategies for achieving the law's ambitious (and, in many cases, unfilled) goals. One approach has been enforcement of the fair housing act’s prohibition on discriminatory treatment in the housing market– including actions brought by HUD against communities, and sometimes brought against HUD by activists and non-profit groups. The other strategy derives from the act’s mandate that federal grantees also have an obligation to affirmatively further fair housing, taking steps to promote integration and not just combat discrimination. During his HUD tenure, Bostic was instrumental in developing a new approach to structuring how HUD-funded communities should go about identifying and implementing such affirmative steps.

While the former approach can achieve some success, it can ultimately produce only limited results, he observed. However, if carefully designed, the latter strategy has significant potential, asserted Bostic, as plans designed by the communities themselves with input from local stakeholders have a greater chance of being actively embraced. Given the current administration's efforts to slow and roll back some of those efforts, in the short run, enforcement efforts are likely to be the primary way in which supporters of fair housing will achieve their goals, he said. However, in the long run, people and communities will come to adopt more proactive approaches if only because an increasing number of them understand that America's long-standing history of upward economic mobility is at risk and that fair housing can be part of a solution to making sure that the next generation (and the ones that follow) continue to have access to the American Dream.

Have Incomes Kept Up with Rising Rents?

by Whitney
Airgood-Obrycki

While renters’ median housing costs rose, in real terms, by 11 percent between 2001 and 2016, their incomes fell by two percent, according to our latest America’s Rental Housing report. Moreover, these changes were unevenly distributed across renter households, primarily affecting those who are least able to afford it. Housing costs (rents plus utilities) consumed an increasing portion of household income for renters who made less than the median income for all households. In contrast, incomes increased more than housing costs for higher-income renter households (Figure 1).

Notes: Income quartiles include both owners and renters. Median housing costs and household incomes are in constant 2016 dollars, adjusted for inflation using the CPI-U for All Items. Housing costs include cash rent and utilities. Indexed values are cumulative percent change.

Source: JCHS tabulations of US Census Bureau, American Community Surveys.

Illustratively, the median monthly income for renters in the bottom income quartile fell by $50, dropping from $1,270 in 2001 to $1,220 in 2016 (a 4 percent decline). However, their median monthly housing costs increased by $70, rising from $690 to $760 (a 10 percent increase). This means that after paying for housing, renters in the bottom income quartile had less than $500 left to cover all other expenses (Figure 2), such as food, health care, insurance, transportation, and savings they could use for emergencies, retirement, education, repairs, or other needs.

Notes: Income quartiles include both renters and owners. Housing costs include cash rent and utilities.

Source: JCHS tabulations of 2016 American Community Survey.

While residual incomes for the lowest-quartile group are slightly higher than they were in recent years, they are still 18 percent less than in 2001, when these households had $600 in residual income (in inflation adjusted dollars). Moreover, 48 percent of households in the lowest-income quartile consist of more than one person, and 27 percent have at least one child present.

The situation is particularly bleak for renters in the lowest income quartile who spend more than 30 percent of income on housing. These cost-burdened renters had a residual income of only $360 per month in 2016, down 18 percent since 2001. In contrast, households in the same quartile that weren’t cost burdened had a residual income of $1,180 in 2016, down 6 percent since 2001. Part of this difference is due to the higher rates of cost burden among the very lowest-income renters within the quartile. Even so, cost burden reduces residual income.

As noted above, the story is quite different for higher-income renters. Monthly housing costs for renters in the top income quartile rose by $320, increasing from $1,360 to $1,680 (a 24 percent rise). However, their monthly incomes rose by $890, increasing from $10,440 to $11,330 (a 9 percent rise). As a result, these renters saw their residual incomes increase from $9,030 in 2001 to $9,660 per month in real terms.

What Would it Take for Housing Subsidies to Overcome Affordability Barriers to Inclusion in All Neighborhoods?

by Katie Gourley, Graduate Research Assistant

The design of housing voucher programs, site selection for new subsidized units, and federal, state, and local housing programs can all encourage—or hamper—efforts to create more inclusive residential communities. Three new papers released today by the Joint Center for Housing Studies examine many of the issues and historic legacies that policymakers need to address as they strive to meet this goal. The papers, which were presented at A Shared Future: Fostering Communities of Inclusion in an Era of Inequality, a symposium hosted by Joint Center last year, are:

Margery Austin Turner,
Urban Institute

What Would it Take for Housing Subsidies to Overcome Affordability Barriers to Inclusion in All Neighborhoods? by Margery Austin Turner, the panel moderator, begins by noting that, while there are many benefits associated with moving to higher-opportunity neighborhoods, the voucher and tax credit programs that are currently the largest source of federal subsidies for affordable housing often fail to offer those opportunities to low-income families. Part of the problem, she argues, is that too often, policies aimed at expanding access to opportunity-rich neighborhoods (i.e. fair housing policies) are pursued separately from housing subsidy policies, rather than as part of a strategic portfolio of investments. Such a portfolio approach would use different investment and interventions to four different types of neighborhoods. In severely distressed neighborhoods, subsidized housing probably should not be further concentrated, while in stable, low-income neighborhoods, subsidized housing investments should focus on renovation and preservation of the affordable housing stock. In emergent neighborhoods, preservation and expansion of affordable housing options should be the top priority, while in opportunity-rich neighborhoods, housing subsidies should be deployed (along with other policy tools) to expand affordable housing options.

Stephen Norman &
Sarah Oppenheimer,
KCHA

Expanding the Toolbox: Promising Approaches for Increasing Geographic Choice by Stephen Norman and Sarah Oppenheimer reviews the King County Housing Authority's (KCHA) ambitious efforts to use federal housing subsidies to provide families with broader neighborhood choice. Informed by growing national evidence on the effects of neighborhood quality on life outcomes, they note, KCHA has used both tenant-based mobility approaches and site-based affordability approaches to expand low-income families' access to a wider set of neighborhoods in the county, which includes Seattle and many surrounding communities. KCHA's tenant-based mobility strategies have included offering to pay higher rents in higher-opportunities areas and providing extensive counseling to voucher holders. The site-based strategies have focused on acquiring and preserving housing and using federal vouchers to support new development in higher-opportunity areas. As a result, about 31 percent of KCHA's federally-subsidized households with children currently reside in low-poverty areas.

Christopher Herbert,
JCHS

Expanding Access to Homeownership as a Means of Fostering Residential Integration and Inclusion by Christopher Herbert, Managing Director of the Joint Center for Housing Studies, notes that efforts to foster more inclusive communities have to confront issues related to housing affordability not only in more expensive, higher-opportunity neighborhoods, but in gentrifying ones as well. While many discussions about these issues focus on subsidized rental housing, Herbert argues that efforts to make homeownership more affordable should also be part of the portfolio of approaches used to foster more racially-, ethnically-, and economically-integrated communities. Potential appealing policies, he contends, fall into four broad categories: changes in federal income tax policy related to the mortgage interest deduction and savings; increased support for housing counseling; maintaining or modifying "duty to serve" obligations that affect mortgage lending; and better targeting and potentially expanding funding for downpayment assistance. He notes that, while these are not the only areas where action is needed to expand residential choice, they are critical (and sometimes overlooked) elements that should be included in a broader effort to foster more inclusive communities.

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Additional papers from the A Shared Future symposium are available on the JCHS website. The papers will also be collected into an edited volume to be published later this year.

Family Instability... It's Not Just Mom and Dad

by Kristin Perkins
Postdoctoral Fellow

Children experience many changes in their households while they are growing up. But while we often think about divorcing and remarrying parents as common changes in household composition that affect many children, in new research, I show that changes involving extended family members and nonrelatives are far more common than changes involving a parent. This finding is significant because prior research suggests that it is likely that instability involving nonparental household members affects children's outcomes. It is therefore relevant to assess the extent to which children are exposed to these transitions and how exposure varies by race and family structure.

To gauge the extent of household changes, I used the nationally representative Survey of Income and Program Participation (SIPP) to track a sample of more than 72,000 children and their households over approximately two years. The SIPP interviews households every four months and documents the set of household members at each interview. This allowed me to identify the relationship between each child and each other household member and to determine who exited or entered the households between interviews.

Overall, by the end of two years (after six interviews), about one percent of children experienced a change in household composition involving their mother and five percent experience a change involving their father. In contrast, more than 10 percent experienced a change involving a grandparent, aunt, uncle, cousin, or other extended family member. In addition, more than four percent of children experienced a change involving a nonrelative. This means that if we think only about divorcing and remarrying parents, we miss changes that affect 14 percent of children over a period of about two years.

These rates vary significantly by type of household, by race, and by ethnicity. For example, 18 percent of children living with a single parent and 29 percent of children living with no parents had an extended family member enter or exit their households compared to only seven percent of children who live with two parents. Similarly, over 10 percent of children living with a single parent or no parent experienced a change involving a nonrelative compared to two percent of children living with two parents (Figure 1).

Moreover, 17 percent of black children and 18 percent of Hispanic children experienced a change in household composition involving extended family members compared to only six percent of white children. There is not as much difference by race and ethnicity, however, for changes involving nonrelatives. Rather, the rate clustered around five percent for all three groups (Figure 2).

Taken together, these findings mean that considering only instability involving parents may not uncover differences by family structure, race, and ethnicity that a broader conceptualization of household instability would reveal. This is important because many studies find that divorce has negative effects on children's well-being. My research showing the much more widespread exposure to changes in household composition highlights the need for future research that assesses whether these other changes in household composition are detrimental—or beneficial—for children. For example: do the distraction and stress from instability involving relatives and nonfamily members mean children perform less well in school or have more behavior problems? Or do some types of changes reflect closer relationships with extended kin that are beneficial for children? Such questions, which were beyond the scope of my analysis, clearly merit further attention.

These descriptive findings and future work on the consequences of household instability for children could also have implications for housing policy. If high housing cost burdens and a lack of affordable options contribute to changes in household composition and if those changes are detrimental to children, then expanding the supply of affordable housing and targeting it to specific households and/or specific high-cost or low-income geographies could greatly help those children. Moreover, such policies could have meaningful spillover effects because providing housing assistance to families not only might benefit children in the family that receives the assistance, but could also help children in the households their families otherwise would have joined when they doubled up with extended family members or nonrelatives.

How Do Funding and Review Processes Shape the Design of Affordable Housing?

by David Luberoff
Deputy Director

How do the notoriously complicated funding and approval processes for affordable housing shape the design of those projects? In particular, are these elements so complex that they make it difficult, if not impossible, to incorporate high-quality design into the planning and execution of affordable housing?

In a new paper, jointly published by the Joint Center and Enterprise Community Partners, Inc., and being presented at a Research Seminar tomorrow (Friday, March 23), Donald Taylor-Patterson, a second year Master of Urban Planning student at the Harvard Graduate School of Design and former Joint Center student research assistant, and I examine these questions as they pertain to Massachusetts in general, and to greater Boston in particular.

One Beach apartments, Revere, MA. Photo by Flagship Photos.

To do so, we drew on three sources of information. First, we carefully reviewed the state's Qualified Allocation Plan, which are the guidelines the state uses to allocate its annual allotment of federal Low-Income Housing Tax Credits (LIHTC), a key funding source for affordable housing. Second, Taylor-Patterson interviewed 18 leading experts in the field and we reviewed the insights that came from those discussions. Finally, Taylor-Patterson spoke with participants at Enterprise's 2017 Affordable Housing Design Leadership Institute (AHDLI), an annual event that brings together non-profit developers and design professionals to discuss how to improve the design of proposed affordable housing projects. (The research, it bears mention, did not attempt to define "design excellence," which can be subjective. Instead, the research focused on whether and how key actors and processes assessed the design quality of affordable housing developments.)

Four key findings emerged from this research. First, the LIHTC process in Massachusetts generally encourages design excellence for "invisible" project elements, particularly those that can be measured such as energy efficiency or accessibility. Second, the harder-to-measure "visible" or "aesthetic" design elements are often the product of the informal and formal ways that community groups and local governments review proposed affordable housing developments.

Third, while funding and approval processes sometimes crowd out efforts to improve design, key actors can bring design back into the picture, particularly if they can create (or take advantage of) well-timed processes that bring together developers, designers, and others for design-focused discussions that take funding and other constraints into account. Finally, although there is widespread agreement on some aspect of design excellence, the fact that each project's physical, political, and financial context is unique makes it almost impossible to use as regulatory process to specify what design excellence entails.

Taken together, these findings underscore how the complex interplay of funding, design, regulatory processes, and local politics creates both challenges and opportunities to ensure that affordable housing projects are designed and built in ways most likely to benefit both residents and neighborhoods. They also suggest that realizing design excellence for affordable housing projects is difficult but achievable. This is particularly true if the work plan for project development encourages and incentivizes processes that allow project designs to be challenged and pushed to a higher standard.