Can More Housing Supply Improve Outcomes for Vulnerable Communities? Mechanisms and Challenges

Session Submission Type: Panel

Abstract

The lack of housing is a persistent challenge, impacting both multifamily and single-family housing. As a result, it can limit opportunities for renting and owning alike. The importance of producing more housing has emerged as an important policy topic in state and local jurisdictions as well as federal policy conversations. Amidst a growing need for evidence by policy makers, research can expand our understanding of the hurdles to more supply and the conditions needed for it to improve household outcomes.

Exploring the rental side of the housing market, Downes, Soriano and Zuo illustrate how the low-income housing tax credit program (LIHTC) can help to boost mobility among low-income households. However, federal incentives that promote LIHTC development in high-poverty areas can dampen mobility to opportunity rich communities. Instead, within six months of application, applicants who successfully place into a LIHTC-funded unit reside in lower-quality neighborhoods compared to similar but unsuccessful applicants, and these effects tend to increase over time.

The mechanism of mobility is explored in the work of Neal, Sawo and Balakrishnan as well, with a focus on the move from renting to owning one’s home. The authors describe homeownership as a match between renter households and for-sale single-family inventory. They use matching theory largely built in the labor literature to demonstrate a positive relationship between for-sale single-family supply and homeownership rates, which prompts the creation of a ratio of renter households relative to the for-sale inventory, akin to a Beveridge Curve. They present this ratio as a measure of market tightness and show that the single-family for-sale market is historically tight. They also apply their findings to communities of color, finding that more supply does increase homeownership rates, but it does not eradicate racial homeownership rate gaps.

The Neal et al. research motivates important questions about how to increase single-family housing supply. Meehan’s work partly addresses this inquiry. Meehan notes that LIHTC, explored in the Downes et al. work, is often associated with multiunit buildings. But it can also be used to finance the construction of single-family homes, known as scattered-site developments. Scattered-site developments that include tenant ownership provide low-income renters a pathway to homeownership. However, very few LIHTC developments are scattered-site. Meehan finds that that a majority of states favor tenant ownership in tiebreaker scenarios. However, scattered-site development is mentioned less often in state qualified action plans, and is generally not awarded any points for a development proposal.

Policy Area

• Housing, Community Development, and Urban Policy

Chair

• Linna Zhu, Urban Institute

Discussants

• Brian Y. An, Georgia Institute of Technology

• Carolina K Reid, University of California, Berkeley

Organizer

• Michael Neal

Individual Presentations

• Can Moves to Opportunity be Constructed? - Non-Presenting Co-Author: Henry Mason Downes, University of Notre Dame; Presenting Author: George Wayne Zuo, RAND Corporation

• Can Increasing Housing Supply Advance Racial Equity in Homeownership? - Presenting Author: Michael Neal

• LIHTC scattered site developments and tenant ownership in state qualified allocation plans - Presenting Author: Patrick Meehan, University of Michigan

• Where to Build Affordable Housing? Evaluating the Tradeoffs of Location - Presenting Author: Cody Cook, Yale University