Housing Policy Shapes Our Communities

By Sean Veal, MPPA ‘13

Housing is fundamental to the development of our communities and our lives. Policies that shape the housing landscape have worked to the benefit, and to the detriment of communities across the country. On April 20th, 2021, I had the opportunity to discuss the impact of housing policies on our communities as a guest lecturer for Dr. Khan’s course entitled “Understanding Development: Challenges and Opportunities.”

The discussion began with an explanation of a common affordability metric known as the housing cost burden measure. A cost-burdened household is one that spends over 30 percent of total household income on housing costs. For renters, housing costs include rent and utilities, and for homeowners, housing costs are comprised of the mortgage, private mortgage insurance, homeowner’s insurance, and property tax. The cost burden measure is imperative to understanding affordability challenges that renter and homeowner households endure.

Consequently, housing affordability disproportionately impacts renter households of color. According to the 2020 State of the Nation’s Housing Report produced by the Harvard Joint Center for Housing Studies, Black and Hispanic renter households were cost-burdened at rates of 53.7 percent and 51.9 percent, respectively. Meanwhile, white renter households were cost-burdened at 41.9 percent. These rates illuminate the unequal result of housing affordability by race with renter households of color absorbing the lion’s share of cost burdens.

Housing policy is a tool that at times created affordability dilemmas that are ever-present for households and amplified for communities of color. Discrimination and inequitable housing policy historically perpetuated housing affordability in tight markets through formerly legal mechanisms such as redlining, restrictive housing covenants, steering, and exclusionary zoning as described by Richard Rothstein in his book The Color of Law. The de jure discrimination fostered by housing policy that Rothstein describes has contributed to the housing affordability challenges experienced today, particularly by households of color.

Despite previous housing policies that prevented equal access to housing, there are current policies that have mitigated a stark history of housing inequality through approaches that increase the affordable housing stock, require cities to allocate ample housing for population growth, and provide subsidies to low-income households. These policies are witnessed through programs sponsored by the federal, state, and local governments.

A federal tax program that has improved the affordable housing stock is the Low-Income Tax Credit that incentivizes private developers to build affordable housing for low-income households in exchange for future tax credits. This IRS tax program has been instrumental in improving the affordable housing stock in the nation.

At the state level, the California Housing Element Law and the Regional Housing Needs Assessment (RHNA) mandate that localities plan for housing supplies that account for and anticipate future growth of their community based on demographic projections. These plans are periodically required to be produced by each city in California. Furthermore, the proposed housing elements and RHNA plan must be approved by the state. Engrained in urban planning, the state-enforced housing policy programs hold cities accountable to accommodate population growth and housing needs.

Lastly, an example of a local housing policy is bonds provided by a city to support developers subsidize affordable housing developments. Proposition HHH is a local example in which Los Angeles voters approved 1.2 billion dollars to finance permanent supportive housing developments to abate rising levels of those experiencing homelessness in the City of Los Angeles.

The high-level overview of housing affordability metrics, affordability challenges, and housing policy were all presented to students to illustrate the impact of housing policy on communities. The confluence of housing policies at the federal, state, and local level exemplifies how housing policy shapes housing in communities.

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