PF Mar 2019 - Market Rate Housing - Con Position

Resolved: The United States should promote the development of market rate housing in urban neighborhoods.

Con Position

Our nation is unquestionably gripped in a crises of insufficient housing for low-income families and individuals. Many urban neighborhoods have depreciated in value and food markets and small businesses have moved out further reducing the quality of life for residents in these areas. For the Con position, the current situation is no different than it is for the Pro. Again, I defer to the Aurand, et al evidence for context.

Aurand, et al 2017:

Of the nearly 43.6 million renter households living in the U.S., 11.4 million are ELI. Assuming housing costs should be no more than 30% of household income (the accepted standard for housing affordability), only 7.5 million rental homes are affordable to ELI renters. This leaves an absolute shortage of 3.9 million affordable rental homes (Figure 1). The shortage of affordable housing turns into a surplus further up the income ladder, giving higher income households a broader range of affordable housing options.
Eight million rental homes rent at a price that is affordable specifically to the income range of the 6.5 million VLI renter households with income between 31% and 50% of AMI. VLI households can also afford the units affordable to ELI households. In total, 15.5 million rental homes are affordable to VLI households. More than 19 million rental homes are affordable to the 8.9 million LI renter households with income between 51% and 80% of AMI. LI households can also afford rental homes that are affordable to ELI and VLI households, effectively expanding the supply of affordable rental homes for LI households to 34.9 million. There are 5.9 million rental homes affordable to the 4.4 million MI renter households with income between 81% and 100% of AMI. MI households can also afford rental homes affordable to ELI, VLI, and LI households, resulting in 40.7 million affordable homes for MI renter households. In short, ELI renters face the most severely constrained supply of affordable housing. [3-4] [Note: ELI (extremely low income, AMI (area median income) VLI (very low income) LI (low income) MI (middle income) - see source for precise definitions] 

The Impacts

The link to poor health:

Albee 2015:

Stable, affordable housing is central to the health of individuals, families, and communities. It is well known that poor quality housing that exposes occupants to mold, pests, and/or chemical toxins is harmful to human health. Yet the health effects of housing go far beyond quality alone. Current evidence shows that lack of affordable housing is detrimental to the mental health of people living in low- to moderate-income households and housing insecurity and hypermobility is associated with poor health outcomes, particularly for children and adolescents. Affordable housing leaves families and individuals with more money to spend on necessities, such as health care and nutritious food, and provides emotional and mental health benefits from greater stability and reduced stress.

In addition, to the above link to poorer health outcomes, we can claim the same impacts already presented in the Pro position, since all of these are a consequence of inadequate housing.

The link between housing and poverty:

Cunningham 2016:

How much could increasing housing benefits reduce poverty among children? Urban Institute research shows that increasing access to housing vouchers to a targeted group of about 2.6 million poor, rent-burdened households with children could reduce child poverty by as much as 21 percent (a bigger impact than we see by expanding transitional jobs, child support, the earned income tax credit, Supplemental Nutrition Assistance Program benefits, or increasing the minimum wage to $10.10). Housing isn’t a panacea—it will take a lot more to end poverty—but it’s a good place to start, and one that is supported by the evidence. After finding a stable place to live, attending parenting classes, and working with her case manager, Sabrina is doing well by most measures: she’s working in a construction job, figuring out how to maintain a routine that provides her young kids stability, and finding enough energy to play with them after a long day at work. Life is still hard, but it isn’t falling apart. She can make ends meet. She is thinking about a career after her kids enter school in a few years. She is saving for a washing machine and dryer for her apartment. The latest pictures of her children hang proudly on the wall over the TV.

The link between housing and education:

Cunningham & MacDonald looked at the relationships between inadequate housing and children's education. They identified the obvious effects of homelessness on students and addressed the effect of poor health outcomes (as seen above) on absenteeism and performance in school. In general, we can look to residential instability.

Cunningham & MacDonald 2012:

Residential instability, in many cases, clearly causes frequent school changes. In one study of Chicago elementary school students, only half remained enrolled in the same school over three years, and the majority of school moves were as a result of residential moves (Kerbow, Azcoitia, and Buell 2003). Students who changed schools frequently lag behind their nonmobile students by a year or more in reading and math, and half of this difference can be attributed to mobility (Garriss-Hardy and Vrooman 2005). Low-income families, generally, have high mobility rates (Coulton et al. 2009). Low-income students attending inner-city schools are more likely to change schools frequently: over 17 percent of all third graders have changed schools more than three times, and frequent movers are more likely to have repeated a grade or have low reading scores (GAO 1994; Garriss-Hardy and Vrooman 2005). As the data on children affected by foreclosure indicate, families affected by foreclosure move and change schools more frequently (Been et al. 2011; Comey and Grosz 2011). These school changes may demand the child adapt to a new curriculum and new teacher, and may often require the child to make up schoolwork covered earlier in the year. Further, as Obradovic and colleagues (2009) note, highly mobile students are at risk for “broken bonds” with teachers that may disadvantage those needing the most help in the classroom. [7]

Solvency

Our solvency begins with a rejection of the premise of the resolution. The idea that development of market-rate housing is the answer to the significant lack of availability of housing for lower income individuals is fraught with controversy and misinformation. There is very little firm support for the "filtering" concept whereby middle-income families moving on to newer market-rate housing create availability for lower income individuals. In fact, the Pro has a problem with time-frame as we wait for the slow trickle-down of available units.

Zuk and Chapple 2016:

The filtering process can take generations, meaning that units may not filter at a rate that meets needs at the market’s peak, and the property may deteriorate too much to be habitable. Further, in many strong-market cities, changes in housing preferences have increased the desirability of older, architecturally significant property, essentially disrupting the filtering process. Although our data is not tailored to answer questions about the speed of filtering, other researchers have found that on average across the United States, rental units become occupied by lower income households at a rate of approximately 2.2% per year. Yet in strong housing markets such as California and New England the rate is much lower and researchers find that filtering rates have an inverse relationship with housing price inflation; in other words, places that have rapidly rising housing prices have slower filtering rates [3]

The most immediate help for needy families is to build more subsidized and affordable housing units. And so we reject any claims that doing so inevitably perpetuates a cycle of continuous decay of urban neighborhoods. In fact, the outcome of affordable housing developments is more dependent upon a careful consideration of the many determinants of success. It's what Tatian, et al call "a concerted revitalization strategy".

Tatian, et al 2012:

The location of subsidized affordable housing, and whether it affects a neighborhood differently than market-rate housing, has also been a topic of significant research. The widely held notion that subsidized housing always decreases property values, concentrates poverty, and increases crime is certainly not the case. A more accurate conclusion is that the impact of affordable housing on neighborhoods depends on the context. If subsidized housing is overconcentrated in vulnerable neighborhoods, it can have negative effects on resident and neighborhood outcomes (Freeman and Botein 2002; Galster 2002b; Galster et al. 2003; Popkin et al. 2002). But if it is sited in more stable property value areas, subsidized housing may have no detectable negative impacts on the surrounding neighborhood, Further, if subsidized housing is part of a concerted revitalization strategy in lower–property value neighborhoods, it can have the exact opposite influence, creating positive spillover effects for nearby properties (Ellen and Voicu 2005; Freeman and Botein 2002; Galster 2002b; Galster et al. 2003). [14-15]

We acknowledge that poor planning results in failures. Developments set in already run-down areas will have a lower chance of increasing surrounding property values. Whereas, new developments in thriving areas, with needed support amenities, such as local stores, easy access to transportation, and health-care facilities, are more likely to succeed and thus mitigate the harms of inadequate housing.

Nyuyen 2005:

After forty years and seventeen studies, there are more unanswered questions about the relationship between affordable housing and property values now than ever before. In their desire to provide more affordable housing to those populations in need, there are many promoters of affordable housing who would like to say that neighboring property values do not decline. However, recent studies tell us that affordable housing can indeed lower property values. But, there is more to the story. The likelihood that property values will decline as a result of proximity to affordable housing increases when (1) the quality, design, and management of the affordable housing is poor; (2) affordable housing is located in dilapidated neighborhoods that contain disadvantaged populations (i.e., usually low income and predominantly minority); and (3) when affordable housing residents are clustered. In contrast, instances in which affordable housing appears to have no effect occur when (1) affordable housing is sited in healthy and vibrant neighborhoods, (2) the structure of the affordable housing does not change the quality or character of the neighborhood, (3) the management of affordable housing is responsive to problems and concerns, and (4) affordable housing is dispersed. Furthermore, the evidence reveals that rehabilitated housing always has beneficial outcomes for neighboring property values. [23-24]

It is clear that any kind of new housing can be beneficial to revitalizing neighborhoods and improving the quality of life but Zuk and Chapple clearly state that subsidized housing will have the greatest and most immediate positive advantages.

Zuk and Chapple 2016:

What we find largely supports the argument that building more housing, both market-rate and subsidized, will reduce displacement. However, we find that subsidized housing will have a much greater impact on reducing displacement than market-rate housing. We agree that market rate development is important for many reasons, including reducing housing pressures at the regional scale and housing large segments of the population. However, our analysis strongly suggests that subsidized housing production is even more important when it comes to reducing displacement of low-income households.

The Advantages

First, Con preserves affordable housing, strengthening civic pride and well-being.

Albee 2015:

To ensure that all households, regardless of income level, reap the benefits of safer, healthier urban neighborhoods, practitioners and advocates should work – in partnership with residents – to preserve existing affordable housing, protect renters from rising costs or pressure to move and ensure new development includes affordable options. Without such safeguards, the bundle of benefits that new investment promises may bypass low- and moderate-income households or disrupt elements of the neighborhood that are a source of pride and well-being.

Second, Con enables people to keep more of their incomes.

Wardrip, et al 2011:

Walker (2010) estimates that monthly housing costs for residents in two Low-Income Housing Tax Credit buildings in the Bronx are roughly $500 lower per month than if they paid the Fair Market Rent — a doubling of these residents’ residual income. These studies confi rm that affordable housing makes more money available to residents to satisfy their non-housing needs and likely results in a signifi cant boost to local spending on such essentials as healthcare and groceries. Low-income families tend to spend their residual income to fulfill basic, but otherwise unmet, household needs (Bivens and Edwards 2010), generating signifi cant immediate economic activity. By contrast, higher-income families are less likely to spend and more likely to save increases in residual income, which has much less of an immediate impact on the economy. 

Third, Con increases property values which benefits the local government.

Wardrip, et al 2011:

Where the development of affordable housing does have a positive effect on surrounding property values, the fiscal windfall for municipalities can be significant. A look at the development or substantial rehabilitation of 66,000 units in New York City between 1980 and 1999 finds increasing home values within 2,000 feet of such activity (Schwartz et al. 2006). The authors estimate that properties within this distance appreciated to such an extent that New York City could expect roughly $2.8 billion in additional property tax revenue over the ensuing 20 years (in 1999 dollars), which more than makes up for the city’s $2.4 billion investment in the program. Although this arithmetic does not consider federal and state investments in the projects, it does show that the development of affordable housing can generate significant revenue for a municipality through its impact on the value of nearby properties. [14]

For all these reasons and more, we urge a Con ballot.



Sources:

Albee, A (2015), Preserving, Protecting, and Expanding Affordable Housing, Change Lab Solutions, April 2015. https://kresge.org/sites/default/files/Preserving-affordable-housing-policy-tools-April-2015.pdf


Aurand, A; Emmanuel, D; Yentel, D; Errico, E (2017) The Gap. A Shortage of Affordable Homes, National Low Income Housing Coalition, March 2017. https://reports.nlihc.org/sites/default/files/Gap-Report_2017.pdf


Cunnigham, MK (2016), Reduce poverty by improving housing stability, The Urban Institute, June 26, 2016. https://www.urban.org/urban-wire/reduce-poverty-improving-housing-stability


Cunningham, M & MacDonald, G (2012) Housing as a Platform for Improving Education Outcomes among Low-Income Children, What Works Collaborative, May 2012. https://www.urban.org/sites/default/files/publication/25331/412554-Housing-as-a-Platform-for-Improving-Education-Outcomes-among-Low-Income-Children.PDF


Nyguyen, MT (2005), Does Affordable Housing Detrimentally Affect Property Values? A Review of the Literature, Journal of Planning Literature, Vol. 20, No. 1 (August 2005). http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.723.1077&rep=rep1&type=pdf


Tatian, PA; Kingsley, GT; Parilla, J; Pendall, R (2012) Building Successful Neighborhoods, What Workds Collabrative, April 2012. https://www.urban.org/sites/default/files/publication/25346/412557-building-successful-neighborhoods.pdf


Wardrip, K; Williams, L; Hague, S (2011) The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development: A Review of the Literature, Center for Housing Policy, January 2011. https://providencehousing.org/wp-content/uploads/2014/03/Housing-and-Economic-Development-Report-2011.pdf


Zuk, M; Chapple K (2016) Housing Production, Filtering and Displacement: Untangling the Relationships, IGS Berkeley Research Brief, May 2016. http://www.urbandisplacement.org/sites/default/files/images/udp_research_brief_052316.pdf