Affordable housing in black neighbourhoods leads to integration
DESPITE the lawsuits, media spotlight, and conventional wisdom, affordable housing developments built in poor, heavily black communities can lead to greater racial and income integration, according to new research by Stanford economists.
Such housing, funded by federal tax credits, also raises property values and lowers crime in surrounding neighbourhoods as higher-income white residents move in, the researchers found.
“When a corporate developer comes in and builds nicer, new housing, it makes the neighbourhood more desirable as a potential place to live,” said Rebecca Diamond, a professor at Stanford’s Graduate School of Business who authored the study with her colleague Tim McQuade.
The surprising findings, to be published in the Journal of Political Economy, are being widely circulated this week among academics following a New York Times story asserting that federal tax credits for affordable housing promotes racial segregation despite the programme’s intent.
While it’s true that such housing is disproportionately located in minority communities, the federal programme actually results in more racially desegregated neighbourhoods over time, said the researchers who analysed a decade’s worth of relevant data around more than 7,000 developments built with federal tax credits in 15 states.
Building affordable housing in low-income, high- minority neighbourhoods lowers the share of black residents in the surrounding community by about three percentage points, Diamond and McQuade found. It also improves racial integration in wealthier, high- minority communities.
“That’s a pretty big effect just by developing one building,” Diamond said. Most of the impact occurs within half a mile of the housing development. The most intense effect is felt within less than a quarter mile, she said. In neighborhoods where median incomes fell below US$ 26,000 a year, the researchers saw home values appreciate 6.5 per cent within a tenth of a mile of the housing development. But the benefits disappear when the affordable housing complexes are built in wealthier, white neighbourhoods, the researchers found.
In such neighborhoods with median incomes above US$ 54,000, property values dropped 2.5 per cent within a tenth of a mile of the housing development, or about two city blocks. The affordable apartments also decrease diversity, but does not impact crime rates.
“People have a preference of who their neighbours are, and perhaps higher income people just don’t want to live with lower-income residents,” Diamond said.
Congress is trying to address the issue of wealthier neighbourhoods rejecting the construction of affordable housing with bipartisan legislation that would prohibit states from considering local opposition as a factor in funding developments.
The bill , sponsored by Senator Maria Cantwell, and Senate Finance Committee Chairman Orrin Hatch, would no longer require state agencies to notify local officials when siting a proposed housing development. The goal is to prevent ‘ Not In My Backyard’ opposition from interfering with housing credit allocation.
That could encourage more affordable housing in higherincome, whiter communities, says Daniel Hemel, who teaches tax law at the University of Chicago and who wrote a blog post this week highlighting the role affordable housing tax credits play in integrating neighbourhoods.
Previous long- term research has shown that giving families living in public-housing projects vouchers to move into wealthier neighbourhoods improves children’s future earnings. But the effect on individual families does not outweigh the community benefits of locating affordable housing developments in low-income neighbourhoods, Diamond said.
“The neighbourhood spillover effect for low-income communities are quite large – larger than the benefits of moving the lucky few into a high-income neighbourhoods,” Diamond said.
“A building is investing in a neighbourhood whereas a voucher is just a subsidy to one household.” Policy makers need to consider the benefits of doing both, economists say.
“We should not have affordable housing all going into low poverty neighbourhoods or high poverty neighbourhoods. It can’t be all or nothing,” said Katherine O’Regan, a public policy and planning professor at New York University’s Wagner Graduate School of Public Service who served as the assistant secretary for policy development and research at the US Department of Housing and Urban Development under President Barack Obama.