Navigating the Unchartered Waters of U.S. Housing Policy: Current Challenges and Solutions

In many ways, U.S. housing policy is entering unchartered waters: the current housing market must adjust to particularly high rent burdens and affordability challenges that affect nearly every American. With that in mind, Professor John Landis and I, with support of Penn IUR, Housing Policy Debate, and the Fels Policy Institute at Penn, convened a symposium on September 15^th that brought together some of the most forward-thinking scholars from across the country to discuss the future of housing policy in the United States.

In “Ten for Ten: 10 New Realities Policymakers Should Keep in Mind as They Think About the Next 10 Years of Federal Housing Policy,” a framing paper for the event, Professor Landis and I highlight the challenges, and opportunities facing U.S. housing policy.  For example, we find that nearly half of the 44 million households renting in 2015 were rent burdened, meaning they spend over 30 percent of their income in rent. This is particularly true for the lowest income households –with 89 percent of households with incomes below $20,000 being rent burdened. In 2015, federal tax expenditures that went toward supporting affordable rental housing were approximately 21 percent of what was spent on homeownership, which represents a roughly 3 percentage-point decrease from 2000, despite the fact that there are three times more rent-burdened low-income households than there are subsidized rental units in the country. At the same time, re-investment in cities is leading to increased gentrification in counties as large as Los Angeles County, California, and as small as Pulaski County, Arkansas.

Further, since 2010, the national rate of new home construction has fallen behind job and household growth rate, leading to higher demand for fewer units. Housing markets in the Northeast and West Coast in particular have witnessed rapid price appreciation, raising concerns about the attainability of homeownership for most renters in these markets. One response to affordability concerns is to increase the supply of housing. However, we show that overly-stringent land use regulations make it difficult to increase the supply of housing units in many places, which is driving up both rents and property values.  

While these challenges exist, the symposium highlighted a large body of empirical evidence that demonstrates what does work.

• Increasing the supply of rental housing at prices affordable to a range of incomes is vital to addressing the current rental affordability challenge. For example, a team of researchers at NYU dissected the current debate about whether increasing the supply of rental housing will help alleviate the lack of affordable housing across the country. Their research suggests that a supply-side response is essential, but that housing demand is so high that these new units need to come in at every level of rental market, not just at the top.[1]
• The 2015 federal fair housing rules resulted in more robust fair housing goals at the local level.  For example, a team of researchers at MIT conducted the first analysis of the Assessments of Fair Housing filed pursuant to the U.S. Department of Housing and Urban Development’s 2015 Affirmatively Furthering Fair Housing Rule, and find that municipalities propose significantly more robust fair housing goals than submissions by the same ones before the rulemaking.[2] 
• Calculating Section 8 voucher rents at a zip code level can improve access to higher opportunity neighborhoods, but is not a solution on its own.  For example, of team of researchers at Penn, the Federal Reserve Bank of Atlanta, and the University of Washington, found that a HUD demonstration program that allows voucher rents to be calculated at a zip-code level resulted in households in Dallas accessing higher opportunity neighborhoods. At the same time, it found the impact to be much more nuanced in other locations due to local market factors and the way the program was implemented.[3]
• Closing interracial gaps in education can increase the young- adult homeownership rate.  For example, a team of researchers at USC simulated how changes in the demographic characteristics of young adults would affect future changes in the homeownership rate and found that closing this gap would increase the young homeownership rate by 1.5 percentage points over the next two decades.[4]
• Partnerships between city and state agencies are essential to the preservation of affordable housing.  For example, a team of researchers from VCU, UVA, and UT Austin, analyze three case studies- Austin, Chicago, Washington D.C.- and find that while the challenges around affordability, and methods of addressing them, are different across all three sites, the responses share the common element of cross agency collaborations that employ detailed local knowledge and partnerships.[5]

At the Symposium, housing experts offered their views on these findings, their policy suggestions, and their perspectives on the changing environment for housing policy. Columbia University Professor Lance Freeman reflected on the need to balance investment in neighborhoods with concerns about potential displacement; UC Berkeley Professor Carol Galante and Urban Institute’s Margery Turner emphasized the need to think creatively about development challenges and opportunities and make the case for bold  approaches to housing policy, respectively. Finally, Ford Foundation Vice President Xavier De Souza Briggs voiced his position on the need to develop coalitions that provide a base for meaningful housing policy and change.

The conference proceedings will be featured in a forthcoming special issue of Housing Policy Debate.

Vincent Reina is a Penn IUR Faculty Fellow and Assistant Professor in the Department of City and Regional Planning at the University of Pennsylvania.Navigating the Unchartered Waters of U.S Housing Policy: A Consideration of Current Challenges and Solutions

[1] The NYU team includes: Vicki Been, Boxer Family Professor at NYU Law, who recently returned to NYU from serving as Commissioner of New York City’s Department of Housing Preservation Development; Ingrid Ellen, the Paulette Goddard Professor of Urban Policy and Planning at NYU Wagner, who previously served as a Policy Advisor to HUD; and Katherine O’Regan, Professor of Public Policy and Planning at NYU Wagner, who recently returned to NYU from serving as the Assistant Secretary for Policy Development and Research at the U.S. Department of Housing and Urban Development (HUD).

[2] The MIT team includes Justin Steil, Assistant Professor of City Planning, and Nicholas Kelly, a doctoral candidate.

[3] This team includes: Vincent Reina, Assistant Professor of City Planning at Penn and Penn IUR Fellow; Raphael Bostic, President of the Federal Reserve Bank of Atlanta and Penn IUR Fellow; and Arthur Acolin, Assistant Professor of Real Estate at the University of Washington and Penn IUR Scholar.

[4] The USC team includes: Professors Gary Painter, Dowell Myers, and Julie Zissimopoulos;  Hyojung Lee, Post-doctoral research fellow at the Joint Center for Housing Studies at Harvard University; and Johanna Thunell, a doctoral candidate at USC

[5] The team of researchers includes: Kathryn Howell, Assistant Professor at Virginia Commonwealth University; Elizabeth Mueller, Associate Professor of Community and Regional Planning at the University of Texas at Austin; and Barbara Brown Wilson, Assistant Professor of Urban and Environmental Planning at the University of Virginia;