Study on integration, housing questions conventional wisdom

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 lowe rs crime in surrounding neighborhoods as higher-income white residents move in, the researchers found.

“When a corporate developer comes in and builds nicer, new housing, it makes the neighborhood more desirable as a potential place to live,” said Rebecca Diamond, a professor at Stanford who authored the study with colleague Tim McQuade.

The surprising findings, to be published in the Journal of Political Economy, are being circulated among academics following a New York Times story asserting that federal tax credits for affordable housing promotes racial segregation despite the program’s intent.

While it’s true that such housing is disproportionately located in minority communities, the federal program actually results in more racially desegregated neighborhoods over time, said the researchers who analyzed 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, highminority neighborhoods lowers the share of black residents in the surrounding community by about 3 percentage points, Diamond and McQuade found. It also improves racial integration in wealthier, highminority 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. In neighborhoods where median incomes fell below $26,000 a year, the researchers saw home values appreciate 6.5 percent within a tenth of a mile of the housing development.

But the benefits disappear when the affordable housing complexes are built in wealthier, white neighborhoods, the researchers found.

In such neighborhoods with median incomes above $54,000, property values dropped 2.5 percent within a tenth of a mile of the housing development, or about two city blocks. The affordable apartments also decrease diversity but does not affect crime rates.

“People have a preference of who their neighbors 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 neighborhoods rejecting the construction of affordable housing with bipartisan legislation that would prohibit states from considering local opposition in funding developments.

Previous long-term research has shown that giving families living in publichousing projects vouchers to move into wealthier neighborhoods 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 neighborhoods, Diamond said.

Policymakers need to consider the benefits of doing both, economists say.