Housing Problems and Policy Solutions for Communities of Color: Housing Need and Opportunity Based H

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Housing Problems and Policy Solutions for
Communities of Color Housing Need and
Opportunity Based Housing

• Jason Reece, AICP
• Research Associate
• Kirwan Institute for the Study of Race
  Ethnicity
• April 21st 2005

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Todays Presentation

• A look at national housing affordability trends?
• What are two significant housing problems facing
  communities of color?
• Housing affordability crisis
• Concentration of subsidized housing
• Policy solutions to these problems?
• Inclusionary zoning and opportunity based housing
• How do you implement an opportunity based model
  of housing?
• Kirwans projects related to implementing
  opportunity based housing policies

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More on the Kirwan Institute

• Research institute focused on research and policy
  advocacy to eliminate disparities (in social and
  economic well-being) for racial and ethnic
  populations
• Focused on a variety of topics
• Structural Racism, Affirmative Action, Diversity
  Initiatives, Educational Policy, Regionalism and
  Regional Equity, Housing and others
• Housing is a significant component of our work

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Why Focus on Housing?

• Why focus on housing to eliminate racial
  disparities?
• Addressing the housing problems facing minority
  communities is perceived as a strategic
  intervention to address disparity
• A strategic intervention is a small targeted
  intervention that can be critical to addressing a
  wide range of problems (or disparities)

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Housing Need and Affordability

• Is there a housing affordability crisis?
• A wide variety of advocates, policy experts,
  academics, lenders and home builders have raised
  concern about rising housing costs
• A few years back the American Heart Association
  ran a successful series of public service
  announcements to raise awareness of the perils of
  high blood pressure. The spots labeled the
  disease "the silent killer." Today, the nation
  faces a public policy challenge that reminds me
  of high blood pressure acute, growing, and
  deadly yet for most Americans, unknown. The
  issue is affordable housing.
• Paul Farmer, AICP
• Executive Director, American Planning
  Association

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National Housing Need and Affordability Trends

• Various indicators are used to assess affordable
  housing need
• Analyzing changes in housing cost
• Utilizing a housing wage to determine
  affordability
• How much do you need to earn to afford housing?
• Analyzing how much of the housing market is
  affordable to specific groups (e.g. low income
  families)
• Determining cost burdened households
• People paying more than 30 of their income for
  housing
• All of these indicators indicate growing
  affordability problems

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Changes in Housing Cost

• In the past 5 years the median cost of a new
  single family home has increased by 36, from
  161K in 1999 to 219K in 2004
• In the past two years the median cost for an
  existing owner occupied housing unit increased by
  17, from 158K in 2002 to 184K in 2004

Source National Home Builders Association
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National Trends Affordable Housing Need

• Mismatch between demand and supply
• 8.5 million extreme low income households existed
  in 1999, only 6.7 million units affordable to
  this income group existed in 1999
• In 1999, 9 million households qualified for
  housing assistance but did not receive it due to
  insufficient funding
• Housing cost is rising faster than inflation
• The national housing wage of 15.37 per hour
  (the wage needed to afford a 2 bedroom unit at
  less than 30 of gross income) has increased by
  37 in the last five years
• The housing wage is currently almost 3 times
  the national minimum wage

Source Millennial Housing Commission and
American Planning Association
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Cost Burdened Households

• The proportion of cost burdened households is
  increasing, most notably for renters

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What are some of the factors influencing the
affordability problem?

• Loss of existing affordable units
• Pressure from gentrification, reduction in
  subsidized housing support and demolition of
  subsidized housing units
• Income and wages are not growing as fast as
  housing costs
• Wages are not keeping up with housing costs, not
  just in hot housing markets but across the
  nation
• Housing market is not producing enough affordable
  units to meet demand
• Housing production is a profit oriented
  enterprise
• Market provides a narrow range of housing options
• Impact of land use regulations

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Land Use Policies Affordable Housing

• Local government land use restrictions in
  suburban areas can enable communities to exclude
  affordable housing
• These restrictions drive up the cost of housing
  and block access to lower income African American
  and Hispanic households
• This is often referred to as exclusionary
  zoning
• density restrictions (lots too large)
• building size (large square footage requirements)
• site restrictions (requiring driveways, large
  setbacks)
• use restrictions (not allowing enough
  multi-family zoned land)

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Land Use Policies Affordable Housing(Columbus,
OH Example)
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Land Use Policies Affordable Housing(Columbus,
OH Example)

• Exclusionary zoning exists in Central Ohio
• The 2001-2003 Fair Housing Plan for the region
  identified impediments to affordable housing
  production in 2000
• While Columbus allowed single family homes to
  exist on lots of 5,000 square feet, the
  surrounding suburban communities required 8,000
  to 11,000 square feet
• Square footage requirements for structures in
  suburban communities were approximately twice as
  large as the 740 square feet required in Columbus

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Housing Affordability and Communities of Color

• For the African American and Latino community,
  housing problems are more severe than national
  trends indicate
• Why?
• Multiple factors
• Discrimination in the rental market
• Racial steering
• Discriminatory lending practices (see handout)
• Subsidized housing policies
• Wealth and income disparity

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The Impact of Income Disparity

• Disparity in income and the limited number of
  lower cost housing opportunities creates a
  constrained housing market for African American
  and Latino households

Limited Affordable Homeownership Opportunities
Concentrated Rental Housing
Example Pittsburgh Although the Pittsburgh
region is one of the most affordable housing
markets in the nation, the median income African
American household has very limited options in
locating affordable housing in the Pittsburgh
region.
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Subsidized Housing Policies and Communities of
Color

• Subsidized housing is government assisted housing
• There many government assisted housing programs
• Rental Housing Assistance in 2004
• The federal government subsidizes 4.8 million
  rental units
• 1.3 million government owned rental units
• 1.9 million privately owned rental units
• 1.6 million section 8 vouchers for rental units
• Homeowner assistance provided to another 591,000
  housing units
• Impact on Housing Market
• Assisted housing accounts for 12.9 of the U.S.
  rental market
• Assisted housing accounts for 4.5 of the entire
  U.S. housing market
• Nearly 2/3s of all subsidized housing is
  occupied by people of color

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Subsidized Housing Policies and Communities of
Color

• Insufficient funding exists for subsidized
  housing
• Example Direct Subsidized Housing Assistance vs.
  Mortgage Deduction Subsidy
• In 2003, 23 billion for low income housing
  assistance, 113 billion or mortgage deduction
  subsidy

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Subsidized Housing Policies and Communities of
Color

• Historical and contemporary subsidized housing
  policies locate subsidized housing opportunities
  in segregated, opportunity poor communities
• The impact of concentrated subsidized housing
• Research suggests that this concentration further
  depresses the life outcomes for low income
  subsidized housing residents (who are primarily
  minority)
• At a neighborhood level, the over concentration
  of subsidized housing destabilizes these
  predominately minority inner city neighborhoods

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Concentrated Subsidized Housingand the
Disconnection from Opportunity

• The continued concentration of assisted housing
  units and the disconnection with opportunity
• In 2000, three quarters of the nations
  traditional assisted housing units were located
  in central cities, while only 37 of the nations
  metropolitan population lived in central cities
• The average metropolitan neighborhood with
  subsidized housing
• Had a poverty rate that was three times higher
  than the average neighborhood
• Had a median household income that was 40 lower
  than the average neighborhood
• Had home values that were 20 lower than the
  average neighborhood

Source Siting Affordable Housing Location and
Neighborhood Trends of Low Income Housing Tax
Credit Developments in the 1990s Brookings
Institute (2004)
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Multiple Housing Challenges for Communities of
Color Summary
Housing Challenges
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These Same Trends Are Found in the Columbus, OH
Housing Market

• Columbus is now the 4th least affordable housing
  market in the Midwest
• Behind Chicago (1st), Minneapolis (2nd) and
  Milwaukee (3rd)
• Housing affordability is not just a coastal
  problem
• Analysis of housing affordability finds the same
  national trends are impacting the Columbus market
• Growing affordability problem
• Severe disparity in affordability for African
  Americans and Latinos
• Concentration of subsidized housing in
  opportunity poor communities

Source Wells Fargo, Housing Affordability Index
for 2004
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Households with Housing Problems in Franklin
County in 2000
Housing problems defined as paying too much for
housing (more than 30 of income), being
overcrowded (more than one person per room) or
lacking adequate plumbing or kitchen facilities
Figure 3 Housing problems (percentage of
households experiencing) by tenure. Source U.S.
Department of Housing and Urban Development.
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Racial Disparity in Housing Problems in Franklin
County

• In Franklin County

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Housing Cost Burden

• Cost burden (paying more than 30 of income for
  housing) is the most common housing problem
  (impacting about 90 of households with housing
  problems or 29 of all households in 2000)
• Cost burden inflicts low income households and
  minority households more
• 58 of extremely low income households (earning
  less than 15K) paid more than 50 of their
  income for housing in 2000
• Almost half of African American rental households
  paid more than 30 of their income for housing in
  2000 and 1/5th paid more than 50 of their income
  for housing

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Are Housing Costs Rising?

• Housing costs are rising rapidly
• Between 1993 and 2004, the median family income
  in Columbus Ohio rose by 50, the median sales
  price for a home rose by 80 during this time
• The Housing Wage (the income needed to afford a
  two-bedroom rental unit) is increasing faster
  than income in the Columbus region
• Household income for renters has increased 8
  between 1999 and 2003, while the housing wage had
  increased 16 during this time
• Based on the 25,600 housing wage for central
  Ohio
• None of 120,000 households in Franklin County
  earning less than 25K per year could afford the
  fair market rent for a two-bedroom unit

Sources Wells Fargo Housing Affordability Index
and National Low Income Housing Coalition
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Are Housing Costs Rising?

• The proportion of cost burdened households are
  rising
• The proportion of households burdened by
  housing cost (paying more than 30 of income for
  housing) has increased in Franklin County
• Rental households facing a housing cost burden
  increased from 36 to 43 between 2000 and 2003
• One out of ten renter households were severely
  cost burdened in 2003 (paying more than 50 of
  their income for rent)
• Almost 30 of homeowners were burdened by housing
  cost in 2003

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The Relationship Between Income and Cost Burden?
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The Relationship Between Income and Cost Burden?
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Housing Supply and Demand The Housing Market
Serves a Narrow Segment of Demand
Housing Affordable to those earning 80 of Median
Household Income
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Housing Supply and Demand The Housing Market
Serves a Narrow Segment of Demand

• Our analysis of the regional housing supply and
  the demand for units by various income groups has
  found a significant mismatch
• In 2002, we estimate approximately 48,000 to
  55,000 extremely low income households were not
  served by the housing market
• Just not enough affordable units
• An additional 90,000 other low income households
  were not served by the market

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Is Housing Supply Meeting Need?

• The housing shortage is compounded by the lack of
  affordable home owner opportunities for low
  income households
• Less than 9 of the regions owner occupied units
  are affordable to households earning less than
  25K per year
• New single family homes in Franklin County are
  unaffordable
• Between 2000 and 2002 almost 90 of new single
  family homes were not affordable to low income
  households
• These homes were unaffordable to 200,000 low
  income households and ¾s of all African American
  and Hispanic households in Franklin County

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Subsidized Housing is Located in Opportunity Poor
Communities

• The connection between subsidized housing and
  opportunity in Franklin County
• Our study also analyzed the neighborhood
  conditions surrounding the stock of subsidized
  housing in Franklin County
• Subsidized housing units are found in areas of
  high poverty, low incomes, high vacancy, low home
  values, high unemployment, low labor force
  participation and lower quality schools

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Poverty and Job Growth in Relation to Subsidized
Housing
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Area of Opportunity? Subsidized Housing in Areas
of High Poverty

• The poverty rate for 2000 in neighborhoods with
  LIHTC sites and public housing authority (CMHA)
  property sites were more than double poverty
  rates of the county and region in 2000 (2000
  Census of Population and Housing)

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Area of Opportunity? Subsidized Housing and
Job/Population Growth

• Projected population growth and employment growth
  for 2000 to 2030 for traffic analysis zones
  surrounding LIHTC sites and public housing
  authority (CMHA) parcels, compared to county and
  metropolitan average

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Solutions for the Housing Problems Facing
Communities of Color

• Inclusionary Zoning

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Inclusionary Zoning

• Inclusionary Zoning Laws (Montgomery County, MD)
• Inclusionary zoning is a policy that assures a
  variety of homes and apartments are built to suit
  people of all income levels
• In Montgomery County, Maryland these policies
  have produced over 11,000 affordable units
• Inclusionary zoning has now spread throughout the
  nation (California, Wisconsin, Illinois)
• Inclusionary zoning can work to better connect
  housing to opportunity (jobs, schools)

Affordable Housing Built in Montgomery County,
Maryland
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Solutions for the Housing Problems Facing
Communities of Color

• Opportunity Based Housing

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Linking Housing to Opportunity

• Need to move beyond thinking of affordable
  housing/subsidized housing in terms of fair
  share or suburban/urban dichotomy
• Need to think in terms of opportunity
• Opportunity structures are the resources and
  services that contribute to stability and
  advancement

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Housing and Opportunity Where you live is more
important than what you live in.

• Housing is Critical in Determining Access to
  Opportunity

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Principles of an Opportunity Based Housing Model

• Affordable housing must be deliberately and
  intelligently connected to high performing
  schools, sustaining employment, necessary
  transportation infrastructure, childcare, and
  institutions that facilitate civic and political
  activity.
• When analyzing and prioritizing subsidized
  housing investments the following questions must
  be addressed
• Is the housing located near sustainable
  employment opportunities? Is it near safe,
  affordable public transportation and childcare
  options?
• Does the housing support school residence and
  school attendance? Is the housing located near
  schools that produce positive student outcomes?
• Does housing support the health of occupants? Is
  it safe and is it located in a safe neighborhood,
  free of health hazards, away from crime and near
  recreational space?
• This requires an assessment of the distribution
  of opportunities throughout the region.

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From the Federal Millennial Housing Commission
Report

• neighborhood quality plays an important role
  in positive outcomes for families. Stable housing
  in an unstable neighborhood does not necessarily
  allow for positive employment and child education
  outcomes. Federal demonstration programs enabling
  the poor to move from distressed city
  neighborhoods to lower-poverty communities
  underscore the potent impact of neighborhood
  quality on family stability.
• From Meeting our nations housing challenges.
  Report of the Bipartisan Millenial Housing
  Commission, Appointed by the Congress of the
  United States. Page 11 (2002)

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Recent Work by Kirwan to Support Opportunity
Based Housing Initiatives

• Federal Fair Housing Lawsuit in Baltimore
  (Thompson et. al. vs. HUD)
• The Kirwan Institute is involved in a pending
  lawsuit on behalf of the ACLU of Maryland
• The ACLU sued the U.S. Department of Housing and
  Urban Development for violating the Fair Housing
  Act by not offering sufficient subsidized housing
  outside the city of Baltimore

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Background on Subsidized Housing and Baltimore

• The Baltimore region has some of the most
  concentrated subsidized housing in the nation.
• Roughly 3 out 4 of the regions subsidized
  housing opportunities are located in the City of
  Baltimore
• In comparison the City of Baltimore only contains
  29 of the regions housing units and 27 of the
  regions population

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Background on Subsidized Housing and Baltimore

• Most subsidized housing in the Baltimore region
  is located in highly impoverished neighborhoods
  with high crime rates, limited employment and
  distressed schools
• These communities are also highly segregated
• Approximately 85 of subsidized housing units are
  found in high poverty neighborhoods
• One out of three housing units are in extreme
  high poverty neighborhoods

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Thompson et. al. vs. HUD

• The lawsuit began in 1996, with the U.S. District
  Judge ruling against HUD in January of 2005 for
  not offering enough housing opportunities outside
  of the inner city
• "Baltimore City should not be viewed ... as a
  container for all of the poor of a contiguous
  region
• U.S. District Judge Marvin J. Garbis
• One of the housing policies supported in the
  Judges ruling is the opportunity based housing
  model

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Kirwans Role

• The institute is exploring how an opportunity
  based housing model can be applied in the
  Baltimore region
• The first step in this analysis is determining
  the distribution of opportunity throughout the
  region
• This can become a framework for looking at
  subsidized housing investments and programs

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Opportunity Index for the Baltimore Region
(Working DRAFT)

• We have worked to create an opportunity index for
  the Baltimore region
• The index is made up of more than a dozen
  variables related to opportunity

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Other Opportunity Based Housing work by KI

• Mapping Communities of Opportunity in the
  Chicago region for regional fair housing advocacy
  organization in the nation
• Leadership Council for Metropolitan Open
  Communities
• (See Handout)
• Advising the Wisconsin Housing and Economic
  Development Authority in ways to modify
  subsidized housing site selection criteria to
  support the principles of opportunity based
  housing

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Concluding Thoughts

• Multiple indicators suggest that housing
  affordability is a growing problem
• For African American and Latino households the
  extent of the affordability problem and other
  housing challenges are severe
• Policy solutions exist to some of these
  challenges
• Need for public/political will to implement
• Gradual progress is occurring

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Concluding Thoughts

• Why should we care about the housing disparities
  impacting minority communities (beyond concerns
  for social justice)?
• The Miners Canary these disparities signal
  institutional problems that will soon threaten
  everyone
• An unbalanced housing market will eventually have
  negative impacts on the entire region
• Example Economic competitiveness

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Concluding Thoughts

• Addressing the housing problems for minority
  communities as a strategic intervention
• Why does KI focus so much attention to the
  housing challenges facing people of color
• Addressing the housing dilemma has the potential
  to reduce disparities for racial and ethnic
  groups in multiple areas
• Examples
• Homeownership and the wealth
• Opportunity Based Housing and socioeconomic health

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For More Information Visit us On-Line at
http//www.kirwaninstitute.org/
Questions E-mail at Reece.35_at_osu.edu