Rethinking Local Affordable Housing Strategies: Lessons From 70 Years of Policy and Practice
Introduction
This report, commissioned by the John S. and James L. Knight Foundation, examines the effectiveness of various affordable housing strategies implemented over the past 70 years, offering insights for state and local leaders. It focuses on rental assistance, homeownership programs, and land use regulations, assessing their impact on seven key policy goals. These goals include preserving and expanding quality housing, making housing more affordable and accessible, promoting diversity, building household wealth, strengthening families, linking housing with support services, and encouraging balanced metropolitan growth. The report underscores the need for a comprehensive approach to housing policy that addresses more than just affordability.
Rental Housing Assistance
Rental assistance programs are a cornerstone of housing strategies, encompassing both subsidised production and demand-side assistance, such as vouchers. The report notes that while these programs are vital, their success is not guaranteed6. Public housing, initiated by the 1937 Housing Act, and private-sector rental production programs expanded the affordable housing stock but faced challenges such as high costs and poor quality. By the 1980s, the focus shifted to tenant-based subsidies due to affordability concerns. The Low-Income Housing Tax Credit (LIHTC) and HOME programs emerged, devolving responsibility to state and local agencies. The HOPE VI program aimed to revitalise distressed public housing through physical improvements and community services. The effectiveness of these programs varies across the seven policy goals. While production programs increase the supply of affordable housing, their affordability depends on the depth of subsidies. Moreover, these programs often do not guarantee permanent affordability. Demand-side subsidies, like vouchers, offer more housing choices and can promote diversity, but their success depends on implementation.
Homeownership Assistance
Homeownership programs have long been a focus of US housing policy, facilitated by tax preferences and government support for housing finance18. The report categorises homeownership policies into supply-side mortgage credit, demand-side assistance, and direct housing production. Supply-side interventions, such as the establishment of Fannie Mae and Freddie Mac, have increased the flow of mortgage credit. The Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA) aim to ensure equitable lending practices. Mortgage market innovations like automated underwriting and risk-based pricing have also expanded access to credit. However, homeowner education and counselling are crucial to support homeowners and reduce risks. Homeownership programs can build household wealth and promote neighbourhood stability, but not every household will benefit equally. Additionally, these programs often do not substantially increase the supply of affordable housing.
Land Use Regulations
State and local regulations significantly affect the private housing market. Exclusionary zoning and development regulations can limit affordable housing. Growth management policies, however, aim to accommodate development while preserving public goods. The report highlights three remedies to exclusionary practices: reforming zoning requirements, adopting inclusionary zoning, and statewide efforts to promote regional strategies. Inclusionary zoning, which mandates affordable units in new developments, can increase supply, but may not reach the poorest households. Rent controls are also examined, but their effectiveness in making housing more affordable is debated. Regulatory schemes promoting affordable housing across regions can be more effective than voluntary local initiatives.
Implications for Local Action
The report concludes that housing strategies should be tailored to local market conditions and metropolitan realities. It stresses the importance of considering the specific needs of different housing markets, noting that strategies must address the unique circumstances of each city and region, as well as the individual neighbourhoods within those jurisdictions. It also emphasises the need to acknowledge that housing markets are regional, and policies should be designed accordingly. Effective implementation and accountability are also crucial for achieving housing policy goals. Policymakers are urged to consider their local context, collaborate with various stakeholders, and carefully assess the capacity of implementing agencies.
The report provides a comprehensive framework for state and local leaders to design and implement effective affordable housing strategies. By considering the lessons of the past, policymakers can make better decisions to promote stable families and healthy communities.
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