Terner Center Blog: No Limits

A ‘Safe Haven’: Resident Stories Convey the Benefits of Affordable Housing

Posted on by Carolina Reid

The Low-Income Housing Tax Credit (LIHTC) has become the most important funding source for affordable housing development in the United States, producing nearly 3 million housing units since its inception in 1986 and housing over 13 million people.

Despite its significance in the housing market, relatively little research has been undertaken to document and understand the experiences of residents living in LIHTC-funded properties. Today, the Terner Center is releasing a new study addressing this research gap. Our analysis sheds light on how living in LIHTC properties impacts low-income residents, particularly with regard to housing stability, economic mobility, and access to education.

We conducted interviews and surveys with over 250 residents living in 18 properties across California, located in neighborhoods with varying levels of poverty. Overall, the results of the survey reveal many advantages to living in a LIHTC-funded property.

Unsurprisingly, affordability was the greatest benefit reported by LIHTC residents. In describing their living situations prior to moving into a LIHTC property, residents reported conditions that were unaffordable, unsafe, and dire. One in five of those surveyed said that they had experienced homelessness before moving into their current unit, with another twenty percent reporting that they had been forced to move involuntarily, either as the result of an eviction or rent increase.

Housing and Financial Situation Prior to Moving into LIHTC Unit

In contrast, living in a LIHTC building provides much needed housing stability, which in turn positively impacts residents lives.  One of the most common terms used to describe their new home was a “safe haven,” a place where residents are protected from sharp rent increases or poor living conditions.  In turn, this housing stability allowed residents to improve their work prospects and invest in their own and their children’s education.

The majority (58 percent) of working-age residents we surveyed were employed. We also found that the educational outcomes in the schools that LIHTC residents in our sample attend are on par with California averages, and that the majority of parents were happy with their children’s school. Another positive finding: nearly 60 percent of college-aged children in the sample were enrolled in college.

Yet many of the residents’ jobs were precarious, and lacked good wages, benefits and opportunities for advancement.  Residents articulated the challenges of earning enough to find any other housing they could afford.

The Job Characteristics of LIHTC Residents

Beyond considering affordability, employment and educational outcomes, the study offers insights into how residents perceive their neighborhoods, capturing a far more nuanced appraisal of communities than is often captured in data. Many residents feel strong ties to the neighborhood, even when poverty rates are high, and see the benefits of investing in the neighborhood as a way to promote community development and ensure affordability in the face of gentrification pressures. This aspect of the study provides important context for recent regulatory focus on the siting of LIHTC and other affordable housing properties: we conclude that while LIHTC policy has a role to play in promoting fair housing goals, it is important not to forget that neighborhoods in California are changing rapidly, and that residents often develop strong social and cultural ties to the places they live.

Finally, the study highlights that siting LIHTC buildings in lower poverty neighborhoods is insufficient on its own to expand opportunity for low-income, working families. In spite of the study’s positive findings, broader housing market and labor conditions are likely to keep most residents in LIHTC properties for the foreseeable future; constrained supply and low wages make it nearly impossible for LIHTC residents to find similar quality housing they can afford on the private market.  Research and policy devoted to expanding housing options for those at 80-120 percent AMI is needed to ensure LIHTC can serve as platform for economic and housing mobility. In addition, the state should continue to identify policies that encourage cities to identify and zone land for multifamily housing, boosting overall supply. Further research is also needed to explore the outcomes for LIHTC tenants across the United States to better understand the role that affordable housing plays in promoting economic mobility.  Nonetheless, this study provides an important snapshot of the experiences of LIHTC tenants in California, and gives us a better understanding of the impact of this important tool in the affordable housing landscape.

Renting the Dream: The Rise of Single-Family Rentals

Posted on by Carolina Reid, Carol Galante, Rocio Sanchez-Moyano

Tenants living in single-family homes in the United States represent the fastest growing segment in the housing market today, but neither academic literature nor public policy has kept pace with their growing importance. Today, the Terner Center is releasing a new study seeking to better understand this group of renters, the homes and neighborhoods they occupy, and the policies that might better support their success. Our study presents data on single-family renters living in a range of housing markets across the country. Our first question: why has this market segment grown so fast? In short: a boom in single-family home…

It All Adds Up: The Cost of Housing Development Fees in Seven California Cities

Posted on by Sarah Mawhorter and David Garcia

In the summer of 2017, the Terner Center embarked on a seemingly straightforward task: determine the amount and type of fees levied on new residential development in seven California cities. What was initially thought to be a clear assignment turned into an odyssey of combing through difficult-to-obtain fee schedules, cobbling together piecemeal information across city departments, and repeatedly interviewing various city planning officials. The onerous and lengthy process our research team faced tells the story of the development fee process in California. While fees act as an important tool to mitigate the effects of new construction, the development and administration…

Perspectives: Practitioners Weigh in on Rising Housing Construction Costs in San Francisco

Posted on by Carolina Reid and Hayley Raetz

It is no secret that producing new housing in California is an expensive endeavor. Our Cost of Building Housing Research Series recently launched with the goal of understanding why this is the case, breaking down the elements of the housing development process to identify key cost drivers and potential private and public sector solutions. Today we are releasing our first brief of the series, which examines rising housing construction costs in San Francisco from the perspective of non-profit and market-rate housing developers, architects, and other practitioners on the ground. The brief shares findings from a series of interviews and focus…

Announcing New Terner Center Series: The Cost of Building Housing

Posted on by Terner Center for Housing Innovation

In recent years, the housing affordability challenges faced by high-cost regions have gone from bad to worse. A number of factors, including shrinking public subsidy, explosive job growth, wage stagnation, and a severely constrained supply of housing have all been widely cited as drivers (with each region facing a unique set of circumstances). Another factor that is compounding the housing affordability issue is the actual amount of money it takes to build a housing unit. In recent years, the cost of building has skyrocketed in places like San Francisco - in some cases increasing by up to 50 percent -…

ADU Update: Early Lessons and Impacts of California’s State and Local Policy Changes

Posted on by David Garcia

A multi-pronged approach to alleviating the shortage of housing in California and other high-cost regions is urgently needed. As we have discussed in past research, Accessory Dwelling Units (ADUs) - built with a small footprint predominantly in under-utilized single family neighborhoods - can offer much needed naturally-affordable supply to the market. In the fall of 2016, the California State Legislature passed a set of bills intended to clear the way for the proliferation of ADUs  in California. Even before these changes were adopted, many leaders at the local level were pioneering policies to make it easier for residents to build…

New State Policies Aim to Boost Access to Opportunity through Housing

Posted on by Elizabeth Kneebone and Carolina Reid

In California, the Tax Credit Allocation Committee (TCAC) plays an important role in determining where and how Low Income Housing Tax Credits (LIHTC) get allocated for the production of affordable housing. On Wednesday, TCAC adopted a series of policy changes aimed at increasing the development of affordable housing options for families in higher opportunity communities, signaling a commitment to advancing fair housing goals amid the state’s broader agenda to address California’s housing crisis. The regulations seek to respond to a growing body of evidence that communities that provide low-income families access to good schools and safer, lower-poverty, and less segregated…

A Reform Proposal for the Federal Housing Administration

Posted on by Carol Galante

Media reports and other sources in Washington, D.C. suggest momentum is building for housing finance reform. According to a recent piece in National Mortgage News, “the White House and congressional GOP are eyeing a tight window between tax reform and the 2018 midterms to pass housing finance reform. And with key policymakers readying their exit, the effort could be the most concerted push yet.” As policymakers debate the future of the nation’s housing finance system, I urge them not to overlook both the importance of the Federal Housing Administration and the improvements it needs in order to fulfill its mission and…

Scaling Off-Site Production in the United States: Lessons Learned from Swedish Leader Lindbäcks

Posted on by Mark Trainer and Carol Galante

When it comes to innovation in housing, what does the U.S. have to learn from Sweden? More than you might think. Though they have different histories, economies and social contexts, Sweden and the United States share many housing market challenges – including significant barriers to new construction and high cost of production leading to rapidly appreciating housing prices, especially in urban centers. The Terner Center recently published a policy brief providing a detailed examination of the Swedish housing system, and a companion summary outlining key similarities and differences with the United States. And last month, the Terner Center for Housing…

Lessons for the Future of Public Housing: Assessing the Early Implementation of RAD

Posted on by Carolina Reid

In its 2018 budget, the Trump Administration is proposing to slash public housing funding by $1.8 billion. This cut represents a 29 percent decline from 2017, and will compound a longstanding trend of underinvestment in public housing and worsen an already dire situation. Over time, these shortfalls in federal funding have resulted in a $26 billion backlog in needed repairs, leaving many residents in public housing units across the country with untenable living conditions and a precarious housing future. In addition, every year we lose valuable units of public housing to demolition because of this lack of investment: HUD reports…