Category Archives: Housing

What HUD’s Been Up To

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by Michael Lewyn

There has been some controversy about the federal government’s new “Affirmatively Furthering Fair Housing” (AFFH) rule. Supporters hope, and opponents fear, that the rule will integrate lily-white suburbs and eliminate exclusionary zoning. However, there is reason to believe that the rule’s impacts will be fairly minor.

The Department of Housing and Urban Development (HUD) which enacted the rule, did so in order to implement sec. 808(d) of the Fair Housing Act, which requires federal agencies “to administer their programs…relating to housing and urban development…in a manner affirmatively to further” the policies of the Act—in other words, to affirmatively further fair housing.

In the past, HUD has sought to implement this statute by requiring grant recipients (such as local governments and public housing agencies) to draft an analysis of impediments (AI) to fair housing. An AI typically described impediments to racial integration, such as exclusionary zoning and racial disparities in mortgage lending. HUD decided that the AIs were not tremendously successful, because they did not contain enough data and were not adequately linked to other planning documents. (80 Fed. Reg. 42348).

The new rule requires grantees to create a new document called the “Assessment of Fair Housing” (AFH) every five years. The AFH will address a community’s barriers to integrated housing, such as “integration and segregation; racially or ethnically concentrated areas of poverty; disparities in access to opportunity, and disproportionate housing needs based on race, color [and other factors]” (80 Fed. Reg. 42355). The AFH will summarize any current litigation, analyze relevant data, and identify major factors limiting housing opportunity. The grant recipient must also set goals for overcoming the effects of these factors.To receive funding from HUD, a grantee must certify that it will affirmatively further fair housing, which means that it must promise to take meaningful actions to further these goals.  (80 Fed. Reg. 42316).  In other words, the grant recipient has to create paperwork stating: “This is why our city/county/area is more segregated than we would like, and this is what we would like to do about it.” Continue reading →

Walkability No Guarantee of Healthy Housing Market

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This graph shows how the midsized cities (excluding Arlington) with Top 10 walkability rankings score in WalletHub’s latest ranking of cities with the healthiest real estate markets. Sad to say: High walkability seems to be correlated with moribund real estate economies. The cities are (from left to right): Jersey City, Newark, Hialeah, Buffalo, Rochester, St. Paul, Cincinnati, Richmond and Madison. (Click for more legible image.)

This graph shows how the midsized cities (excluding Arlington) with Top 10 walkability rankings score in WalletHub’s latest ranking of cities with the healthiest real estate markets. Sad to say: High walkability seems to be correlated with moribund real estate economies. The cities are (from left to right): Jersey City, Newark, Hialeah, Buffalo, Rochester, St. Paul, Cincinnati, Richmond and Madison. (Click for more legible image.)

There is an interesting juxtaposition of news items today. Redfin, the real estate brokerage website, has published a list of the Top 10 most walkable midsized cities in the country. Arlington County (a highly urbanized county) scored third and Richmond scored ninth, based on their Walk Score rankings.

Arlington won kudos for its Ballston-Virginia square neighborhood, where residents can walk to an average of 13 restaurant, bars or coffee shops within five minutes. While the Washington metropolitan area is notorious for its traffic, many Arlington residents live car-free, opting to get around on foot, bike and public transportation.

Richmond earned recognition for the revitalization of neighborhoods surrounding downtown, including Jackson Ward, Shockoe Bottom, Monroe Ward, the riverfront and Manchester. The Fan and Carytown neighborhoods to the west of downtown also stood out for their walkability.

To many urban theorists, walkability is a critical determinant of a community’s livability, ranking close behind the cost of real estate, the quality of schools and the level of taxes in what people take into account when deciding where to live. But it’s no guarantee of prosperity or rising real estate values…. which brings us to the other news item. Continue reading →

The Failure of Preservation

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by Michael Lewyn

In an excellent blog post, Reuben Duarte explained that many big-city zoning disputes involve a conflict of visions: a “preservation camp” favors preserving neighborhood character at all costs, while an “affordability camp” favors construction of new housing in order to make the city more affordable.

Duarte write that the preservation camp’s interests “hover around preventing evictions of tenants in long-held residences, but also includes the topics of traffic (“this neighborhood can’t support more development, because, traffic!”), parking (replace “traffic” with “parking”), and neighborhood character (“building is too tall or too dense!” “Views!”).”

It seems to me that to the extent government uses preservation as a reason to exclude new housing, arguments based on “neighborhood character” fail on their own terms: either because limiting housing supply itself changes neighborhood character, or because it forces less exclusionary places to change their character.

Zoning restrictions designed to limit traffic create the second problem. For example, suppose a city freezes a neighborhood’s housing supply in order to limit traffic and parking. Other things being equal, fewer households mean fewer cars. So at first glance, this policy has no losers. But if a city or region is adding households, those new households have to go somewhere. And if they don’t go to your neighborhood, they go to another neighborhood, adding cars (and thus traffic/parking problems) to that neighborhood. Continue reading →

Not Racist- But Similar to Racism

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by Michael Lewyn

Is zoning racist? After a committee designed to study Seattle’s zoning codes suggested some significant reforms to the city’s code, Mayor Ed Murray said: “In Seattle, we’re also dealing with a pretty horrific history of zoning based on race, and there’s residue of that still in place.” Even if this remark is factually true, it doesn’t mean that today’s zoning is racist: low-density zoning exists in black neighborhoods as well as white ones, and opposition to changing such zoning crosses color lines.

But it seems to me that even though zoning is not consistently or intentionally racist, zoning is similar to racist housing discrimination (or “RHD” for short) in a few ways. Both involve a politically influential dominant class (in one case, whites generally; in the other case, homeowners of all colors) who have the votes to impose their will on the political process. In both situations, the dominators use their political power to exclude someone else from its neighborhood; racists usually seek to exclude blacks, while pro-zoning homeowners usually seek to exclude new residents regardless of color (to the extent that zoning is designed to exclude housing smaller or more compact than the status quo, such as smaller houses or multifamily dwellings).*

Both RHD and low-density zoning do, on balance, exclude blacks more than whites—though of course RHD does so much more consistently. One purpose of zoning is to raise housing prices (or, as courts and homeowners euphemistically say, “values”). And higher housing prices mean higher rents, which means that everyone has to pay more for less. If you don’t have any money, you are obviously going to suffer more from that policy than someone who has plenty of money, since the difference between having a small apartment and sleeping on the street is a bit more significant than the difference between having a 8000-square-foot mansion and a 12,000-square-foot mansion. And since blacks tend to have less money than whites, on balance blacks are going to suffer a little more than whites from these policies, just as they are going to suffer more from any tax imposed without ability to pay (for example, an increase in bus fares).** Continue reading →

Airbnb and Affordable Housing, Part 2

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by Michael Lewyn

A few months ago, I blogged about the impact of Airbnb on rents for traditional month-to-month or year-to-year tenancies. I suggested that this impact was pretty minimal, reasoning as follows: even in a large city such as Los Angeles, Airbnb units are less than 1 percent of all rental units. So even if every single Airbnb unit would (in the absence of Airbnb) otherwise be part of the traditional rental market, Airbnb is unlikely to increase rents in that market.

The comments (and a recent San Francisco Chronicle story) raised an interesting response to my theory: what matters isn’t the percentage of all rental units, but the percentage of all rental vacancies or all new housing units. In the words of the Chronicle story: “where a typical year sees just 2,000 new units added, a few hundred units off the market makes a significant dent.”

But as I thought about the argument, I was less and less persuaded by it. Here’s why: first, the number of vacancies is limited to new housing units. San Francisco has just over 236,000 rental housing units. The units other than the new units are not owned by their current owners or occupants forever: rather, they shift around from occupied to unoccupied as tenants move, and as owner-occupants become landlords or vice versa. So the number of units vacant at any given point in time is a bit higher than the 2000 figure, and the number of units that become vacant at some point over the next year or two will be higher still. Continue reading →

Throwing the Poor Out of Suburbs

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by Michael Lewyn

Much has been written about gentrification and about the specter of poor people being displaced from cities — despite the fact that nearly every central city still has higher poverty rates than most of its suburbs.

But the City Observatory blog has an interesting post about one Atlanta suburb’s attempt to gentrify not through market forces, but by using public money to buy up and destroy an apartment complex dominated by low-income African-Americans.  In other words, the city’s goal isn’t gentrification that might result in displacement — it is displacement as a goal in itself, gentrification or no gentrification.

(Cross-posted from cnu.org)

Are Foreigners to Blame for High Housing Prices?

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by Michael Lewyn

Every so often I read an argument that says something like this: “There’s no way that rents can ever go down in expensive cities like New York and San Francisco, because rich foreigners are buying up everything, and as a result demand is essentially infinite. So there’s really no reason to allow new apartments because the foreigners will just buy them all.”

This argument could certainly be true in theory: for example, if an entire city were so expensive that only wealthy foreign investors could afford to live there. But it doesn’t seem to fit the social reality of the expensive city I am most familiar with (New York).

If demand was essentially infinite, there would be some evidence of this fact other than high real estate prices. For example, if New York was growing faster than any city in the United States, there might be a credible argument that new demand is truly insatiable. In fact, many low-cost cities are growing far more rapidly than New York and yet have cheaper rents. Between 2000 and 2010, Austin and Raleigh (both of which are far cheaper than New York) grew by 20 and 46 percent, respectively, while New York grew by less than 10 percent.

It could be argued that New York is dissimilar to other high-growth cities, because the number of wealthy foreigners is so huge that it makes New York a high-growth city. For example, if New York had to accommodate not only half a million new residents per decade but also three million wealthy foreigners seeking second homes, its housing-consuming population would have grown by about 45 percent over the past decade, about the same level of population increase as Raleigh. But are there really that many wealthy foreigners in the New York housing market? Continue reading →