• Housing Policy in the New Millennium
  • Volume 5, Number 2
  • Managing Editor: Valerie F. Dancy

Symposium

Housing Policy in the New Millennium

Advisory Board

Managing Editor: Valerie F. Dancy

Guest Editor: Susan M. Wacther


Elijah Anderson
University of Pennsylvania

Roy Bahl
Georgia State University

Ann Bowman
University of South Carolina

Henry Coleman
Rutgers University

Greg Duncan
University of Michigan

Amy Glasmeier
Pennsylvania State University

Norman J. Glickman
Rutgers University

Harvey Goldstein
University of North Carolina

Jane Gravelle
Congressional Research Service

Steven P. Hornburg
Research Institute for Housing America

Helen F. Ladd
Duke University

Wilhelmina A. Leigh
Joint Center for Political and Economic Studies

Laurence E. Lynn, Jr.
University of Chicago

Sandra Newman
Johns Hopkins University

John Tuccillo
National Association of Realtors

Avis Vidal
The Urban Institute

Don Villarejo
California Institute for Rural Studies

Cityscape: A Journal of Policy Development and Research strives to share HUD-funded and other research on housing and urban policy issues with scholars, government officials, and others involved in setting policy and determining the direction of future research.

Cityscape focuses on innovative ideas, policies, and programs that show promise in revitalizing cities and regions, renewing their infrastructure, and creating economic opportunities. A typical issue consists of articles that examine various aspects of a theme of particular interest to our audience.

Guest Editor's Introduction

Susan M. Wachter, The Wharton School of the University of Pennsylvania.

On October 2 and 3,2000,HUD 's Office of Policy Development and Research (PD&R) and Office of Housing convened Housing Policy in the New Millennium a conference called to assess the present and future state of national housing policy and HUD 's continuing role in those policies.

In calling the conference, the organizers contrasted urban recovery and record-high homeownership rates with the "cruel irony that by the very fact that most communities are doing very well in this booming economy, the better economy has resulted in the shortage of affordable housing becoming more acute." For this reason, "even in prosperous times, a proactive government policy is needed to ensure that the growing housing needs of low- and moderate-income households are met."

What that proactive policy ought to look like was the question posed to conference participants. In recommending future policies, the conference leaders called upon participants to build upon the "successes and lessons" of the past while understanding the policy challenges of the future.

In that spirit, and with that charge, respected policy analysts engaged with the practitioners and advocates during the course of 2 days to consider the future direction of national housing policy.

The nine papers in this special issue of Cityscape all derive from presentations made at the Housing Policy in the New Millennium conference.

This Cityscape issue begins with a paper by Michael H. Schill and Susan M. Wachter. Schill and Wachter suggest that national economic growth, declining unemployment, a large Federal budget surplus, and a HUD that is more able to function in responsible ways makes this an ideal time to think about and experiment with new approaches to providing affordable housing. The authors articulate seven principles that they believe summarize the broad experience of housing practitioners and researchers and that should be incorporated into a forward-looking national housing policy. These principles are:

  • Housing policy must be linked to other social policies.
  • Housing policy must fix the mistakes of the past and "do no harm " in the future.
  • To the greatest extent possible, housing programs should work with the market rather than against it.
  • Incremental vouchers are a critical element of any housing policy.
  • The Federal Government needs to improve the ability of existing supply-oriented programs to serve the lowest income households.
  • Housing policy cannot adopt a "one size fits all" model.
  • Regional solutions are necessary and require that States and localities become responsible partners in low-income housing efforts.

The second article in this volume, by Richard K. Green, examines the role and importance of homeownership in America and the Federal policies that have promoted homeownership. The article, "Homeowning, Social Outcomes, Tenure Choice, and U.S. Housing Policy," examines what is known about the social value of homeownership, particularly in regard to owner-occupant housing maintenance, civic participation and awareness, and the educational attainment of children living in housing owned by their parents. Green 's survey of the housing literature concludes that, generally, researchers have found that homeownership is good social policy. Researchers also recognize the need for a strong base of rental housing stock because this housing provides increased mobility options due to the lower transaction costs associated with renting rather than buying and selling a home.

Green then turns to matters of policy and discusses ways in which the Federal Government promotes homeownership. He notes that Federal policies have made homeownership less expensive and more accessible to more households. Thinking in terms of future policy directions, Green suggests that whereas current policy has focused on making ownership financially attractive and overcoming capital constraints-but usually not at the same time-the next generation of public homeownership policy could look to combine these two approaches, perhaps through a refundable mortgage credit.

Continuing the theme of homeownership, the third article in this special edition of Cityscape is by Stuart A. Gabriel, who examines the demography of homeownership and which populations must see increases in their homeownership rates if HUD is to fulfill its stated goal of having a 70-percent national homeownership rate. The article reviews factors that have led to the recent expansions in the national homeownership rate as well as factors that might constrain further homeownership rate increases. Gabriel examines both publicly pursued housing policies that have spurred homeownership increases as well as demographic, economic, and educational attainment factors that are also behind the recent homeownership rate increases.

Concluding the homeownership portion of this volume, Frederick J. Eggers looks at the numbers and the policies behind the numbers that have resulted in the Nation 's record high homeownership rate. The article documents recent increases in homeownership rates and how these national changes have affected various segments of the population. Eggers analyzes the relative roles that have been played by the strong economy, demographic shifts, and specific Federal housing policies that have encouraged homeownership. Eggers concludes that each of these factors, including specific Federal policies regarding the use of Federal Housing Administration insurance, the presence of the Community Reinvestment Act, and the setting of strong housing goals for Fannie Mae and Freddie Mac, were significant factors in the Nation 's setting of a new homeownership rate record.

The next four articles of this issue examine rental housing and HUD 's efforts to use vouchers in ways that increase opportunities for families and improve neighborhoods. The first of these articles is by Mark Shroder and concerns HUD 's Moving to Opportunity (MTO) demonstration program. MTO is an experiment in social and geographic mobility. The article summarizes the history of the experiment, which is embedded in the Gautreaux order to desegregate public housing in Chicago and Federal legislation calling for HUD to enable families to move out of areas of high poverty concentration and into areas with low concentrations. In response, HUD selected five cities to participate in MTO demonstration programs. Shroder explains how families were randomly selected from among households that volunteered to participate in this demonstration in order to provide statistically rigorous evidence regarding the effectiveness of mobility counseling and the long-term impacts on families who move to low-poverty communities. The article discusses the differences in how each city implemented the program and concludes by reporting preliminary findings from four independent, HUD-funded research projects that are examining the social and economic effects on participating families.

In a further examination of the relationship of deconcentration to desired policy outcomes, Jill Khadduri examines the way poverty neighborhoods and mixed-income projects are defined, noting that these issues impact both voucher programs and HUD 's HOPE VI production program. Khadduri indicates that poverty indicators have generally been used as a proxy for neighborhood quality but that significant gradations in poverty rates exist within these definitions and that these gradations, as well as other noneconomic measures, may provide more precise ways of assessing neighborhood viability.

Khadduri also analyzes how the concept of mixed-income is incorporated into various housing programs, noting that public housing assists those with incomes below 30 percent of the area median but can now market units to those with incomes as high as 80 percent of the area median. Many units developed via the HOPE VI program are explicitly marketed to those with higher household incomes in an effort to spur the creation of mixed-income communities. The Low Income Housing Tax Credit (LIHTC) is also used as a tool for income mixing. LIHTC units are able to assist households with incomes as high as 60 percent of the area median income (AMI), but tend to focus on households earning less than 50 percent of AMI. However, some project sponsors develop projects in which only some of the units receive LIHTC assistance, with the balance of the housing developed being available to higher income populations.

Khadduri concludes that much still needs to be learned about what constitutes a viable neighborhood and the effectiveness of public policies that encourage income mixing as a strategy for maintaining or achieving neighborhood viability. For example, Khadduri suggests that other factors, such as the level of social interaction that takes place between higher and lower income households, may be more important than simply the presence of higher income households in diminishing antisocial behaviors.

Jeffrey M.Lubell's background paper, "Recent Improvements to the Section 8 Tenant-Based Program," highlights the changes that have recently been made in the Section 8 program in an effort to increase the effectiveness of this tenant-based approach to providing affordable rental housing. For 25 years the Section 8 tenant-based program, now known as the Housing Choice Voucher program, has helped millions of families afford decent quality rental housing. Housing Choice Vouchers continue to be the largest and most rapidly growing form of aid to those low-income households seeking affordable housing. Though a mainstay of Federal housing policy, during the past 2 years HUD has initiated nine important program reforms to simplify the management of the program, give program administrators greater flexibility in setting maximum allowable rent rates, and expand available housing choice for voucher holders. The article identifies each specific reform and notes how that reform is working to make the Housing Choice Voucher program more effective.

In her article on the future of housing vouchers, Barbara Sard states that housing vouchers are the best form of housing assistance because vouchers can meet the affordability needs of very low-income households while maintaining the flexibility to meet the changing needs of poor families. If particular importance is the ability of vouchers to provide mobility for poor households so that they can exit impoverished neighborhoods or move to places with greater economic opportunity. However, Sard points out that this is true only if voucher holders can truly access housing in better locations. Sard calls for continuing reform of the voucher program to fully maximize the potential of vouchers as a poverty alleviation strategy. Specifically, Sard calls for strategies to overcome:

  • Landlord reluctance to participate in the program.
  • The lack of adequate quality housing.
  • The lack of housing that meets HUD 's fair market rent requirements.
  • Public housing authority administrative practices that diminish the ability of participating households to find suitable housing.
  • Problems inherent in the families participating in the program that result in families not being able to find a suitable unit.

This issue of Cityscape concludes with Cushing Dolbeare's article on the challenge and context of housing affordability. Dolbeare states that the root of the housing affordability problem is the lack of low-income housing programs at the scale necessary to make significant progress in addressing national housing needs. She believes that the emphasis on worst case housing needs has obscured the full extent of national housing needs. Dolbeare notes that worst case needs refers to less than one-half of all households with these severe problems, and ignores the less critical but still real problems of an additional 21 million households. Dolbeare 's article concludes with an examination of the potential use of other mainstream programs to deal with the housing affordability gap, including the Earned Income Tax Credit, SSI, and the food stamp excess shelter deduction.

Conclusion

As we move into the next century, the Nation can clearly take pride in its rising homeownership rate and the benefits that homeownership is conferring upon more and more families. However, at the same time, we must recognize that by measures of worst case needs, national housing problems are increasing and more and more very low-income households are having an increasingly difficult time accessing decent, safe, and affordable housing.

As we consider the policies of the future, we must be mindful of ways in which homeownership policies might be reconfigured so that tax subsidies that encourage homeownership might benefit those whose incomes are insufficient to take advantage of current law provisions that would identify populations who could receive tax or income subsidies as an entitlement. We also see a continuing need to expand the use of vouchers and/or develop new policies that would identify populations who can receive tax or income subsidies as an entitlement. Pursuing these policy paths and others suggested by the papers in this volume will bring us closer to fulfilling the pledge of decent, safe, and affordable housing for all.

Principles To Guide Housing Policy at the Beginning of the Millennium
by Michael H. Schill and Susan M. Wachter

Homeowning, Social Outcomes, Tenure Choice, and U.S. Housing Policy
by Richard K. Green

Opening the Doors to Homeownership: Challenges to Federal Policy
by Stuart A. Gabriel

Homeownership: A Housing Success Story
by Frederick J. Eggers

Moving to Opportunity: An Experiment in Social and Geographic Mobility
by Mark Shroder

Deconstruction: What Do We Mean? What Do We Want?
by Jill Khadduri

Recent Improvements to the Section 8 Tenant-Based Program
by Jeffrey M. Lubell

Housing Vouchers Should Be a Major Component of Future Housing Policy for the Lowest Income Families
by Barbara Sard

Housing Affordability: Challenge and Context
by Cushing N. Dolbeare

 

 

Cityscape is published three times a year by the Office of Policy Development and Research (PD&R) of the U.S. Department of Housing and Urban Development. Subscriptions are available at no charge and single copies at a nominal fee. The journal is also available on line at http://www. huduser.gov/periodicals/cityscape.html.

PD&R welcomes submissions to the Refereed Papers section of the journal. Our referee process is double blind and timely, and our referees are highly qualified. The managing editor will also respond to authors who submit outlines of proposed papers regarding the suitability of those proposals for inclusion in Cityscape. Send manuscripts or outlines to Cityscape@hud.gov.

Opinions expressed in the articles are those of the authors and do not necessarily reflect the views and policies of HUD or the U.S. government.

Visit PD&R’s website, www.huduser.gov, to find this publication and others sponsored by PD&R. Other services of HUD USER, PD&R’s research information service, include listservs, special interest and bimonthly publications (best practices and significant studies from other sources), access to public use databases, and a hotline (800–245–2691) for help with accessing the information you need.

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