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Harvard JCHS Study Draws Correlation Between Zoning, Rental Deserts and Segregation

Published by Peter Lawrence on Tuesday, April 23, 2024 - 1:31PM

More than one-third, 35%, of census tracts in the 100 largest metropolitan areas in the United States are considered a rental desert, according to new research from the Harvard Joint Center for Housing Studies (JCHS), and 14% of census tracts are considered an extreme rental desert. During a recent webinar, JCHS previewing forthcoming research entitled Rental Deserts, Zoning, And Segregation: Evidence From The 100 Largest Metro Areas, Magda Maaoui of the Harvard Graduate School of Design and colleagues discussed the link between the geography of rental deserts, restrictive zoning and neighborhood segregation levels. 

The term “rental desert” was defined by JCHS to mean an area where less than 20% of homes are occupied by a renter or vacant for rent. An “extreme rental desert” is an area with less than 10% of homes occupied by a renter or vacant for rent. 

Maaoui said many of these rental deserts are the result of exclusionary zoning and are linked to increased segregation among the 100 largest metropolitan areas. The assertion that single-family zoning has become a problem for Americans is supported by a New York Times article citing zoning data for individual cities from UrbanFootprint. The article reported that it is illegal on 75% of the residential land in many American cities to build anything other than a detached single-family home.

Exploring Links Between Rental Deserts and Segregation

The forthcoming study poses the following research questions:

  1. What share of neighborhoods in 100 largest metropolitan areas are rental deserts, and how do the characteristics of these neighborhoods differ from mixed-tenure and high-rental neighborhoods?
  2. How does restrictive zoning contribute to the limited geography of rental options?
  3. How are rental deserts in the largest 100 metropolitan areas distributed spatially?
  4. What is the relationship between the spatial distribution of rental deserts in the 100 largest metropolitan areas and patterns of racial and socioeconomic segregation?

To answer these questions, Maaoui divided her research methods into three sections: defining and mapping metropolitan area rental deserts, investigating associations with restrictive zoning and resulting variations of rental deserts, and correlating rental housing segregation with socioeconomic and racial segregation.

Research Findings Link Metropolitan Rental Deserts, Restrictive Zoning and Segregation Levels

Contextualizing the Rental Housing Market 

Maaoui said during the webinar that historically, some communities have blocked the construction of multifamily housing, affordable rental options and housing for communities of color. Maaoui said suburbs have traditionally been for single-family housing but needs and demographics are changing. She said zoning actively functions as a barrier to meeting a variety of housing needs. Maaoui said that this forthcoming study is the first of its kind because it will provide a national review of the impact of zoning barriers on rental housing access. 

Her literature review in the forthcoming report suggests that there is a strong link between exclusionary zoning and the lack of housing options. Maaoui said that cities with the least amount of new construction of total properties have the most restrictive land use regulations that make building anything but single-family housing difficult. She cited a report by the National Multifamily Housing Council, which showed that zoning and other regulatory costs account for 40.6% of the cost of multifamily development. She stated that almost 70% of low-income households live in rental housing, and she said that restrictiveness of land use through single-family zoning is linked with higher levels of income and racial segregation. 

Though it is unclear which definition of “low-income” Maaoui used in this report (a common definition is at or below 80% of the area median gross income), the forthcoming research will likely make this clearer. She cited a 2016 paper by Raj Chetty which argued the lack of affordable housing in amenity-rich neighborhoods can also impact household life trajectories, including health, school, or job access. Maaoui said these inequalities coincide with unequal homeownership rates to communities of color due to socioeconomic segregation. She also said income segregation increases the gap of types of housing that high- and low-income households can afford. 

Defining and Mapping Rental Deserts

The forthcoming study found that one-third of Census tracts are rental deserts in the largest 100 metropolitan areas, with most of rental deserts being in the suburbs: 68% of census tracts in a rental desert were suburbs, while only 55% of census tracts in a non-rental desert rental market were suburbs. Maaoui said that Not-In-My-Backyard (NIMBY) politics in suburbs are more common which has led to single-family homes being more common in rental deserts. The mean share of single-family homes was much higher in metropolitan rental deserts in this study, while multifamily properties with five or more homes were scarce. After analyzing the share of rental deserts in the 100 largest metropolitan areas, she found the presence of rental deserts has a negative correlation with renter rates.

Linking Rental Deserts to Restrictive Zoning

Maaoui said zoning matters because it regulates land uses, determines how a development should look and feel, and provides processes to develop land. Using data from the National Zoning and Land Use Database, this study performed a regression model to link rental deserts with zoning. The study found that the Washington, D.C., metropolitan area had the highest score for restrictive zoning among the 100 largest metropolitan areas. 

Linking Rental Deserts to Neighborhood Segregation Levels

A divergence index was used to measure segregation in this study. According to Othering and Belonging Institute at University of California, Berkeley, the Divergence Index, “compares the relative proportions of racial groups (or any other groups) at smaller and larger geographies, looking for the degree of ‘divergence’ between the two geographies, such as between a census tract and a county.” This method was used to measure segregation because it compares relative proportion of rental housing to smaller and larger geographies. Doing this allowed Maaoui to divide the 100 largest metropolitan areas into four categories based on high/low divergence and high/low rental rates. During the seminar, Maaoui said that by limiting the number of rental options, neighborhoods effectively exclude lower-income households from their communities. The concentration of the rental stock also contributes to segregation by race and ethnicity since people of color are more likely to have lower incomes and are more likely to rent rather than own their homes, as documented by JCHS’ State of the Nation’s Housing. A Stanford News article cited a study conducted by Stanford University which showed that socioeconomic segregation lends itself to long-standing and ongoing discrimination

Maaoui said that homeownership is key to creating generational wealth and emphasized that median household incomes in renter neighborhoods are lower. The study found that less than 17% of rental desert households in the 100 largest metropolitan areas are headed by a person of color, and rental deserts count more white households than people of color. Maaoui found that in the rental deserts of the 100 largest metropolitan areas, housing and racial segregation were positively correlated. 

Addressing Racial Segregation Through Policy Reform

Maaoui said racial segregation is often framed as a problem that is difficult to solve. This study provides a starting point. The policy recommendations made by Maaoui during the seminar were zoning reform, shifts to by-right approval processes and policy design toolkits addressing NIMBY opposition. Maaoui said that reducing the amount of single-family only zoning can increase the number of rental options available in desirable locations and reduce the number of rental deserts. In addition to zoning reform, Maaoui said that the United States should start building more homes at a lower price and expanding housing subsidies in a range of communities in metropolitan areas. 

One key subsidy to build more affordable rental housing is the low-income housing tax credit (LIHTC), which has financed more 3.8 million affordable rental homes in the United States since its inception in 1986, according to the National Council of State Housing Agencies. The Biden-Harris Administration has proposed LIHTC expansions in its fiscal year 2025 budget request, inspired by proposals from the Affordable Housing Credit Improvement Act (AHCIA, S. 1557, H.R. 3238), which are estimated to finance more than 1.3 million affordable homes over a decade. Additionally, a version of the Neighborhood Homes Tax Credit (NHTC) as envisioned in the Neighborhood Homes Investment Act (NHIA, S. 657, H.R. 3940) was proposed in Biden’s FY 2025 budget. This tax credit would cover the gap between construction cost and sales price for rehabilitated or newly built single-family homes in distressed communities, helping more low- and moderate-income households access homeownership. The proposed LIHTC revisions and the NHTC are expected to finance as many as 1.7 million homes combined.

Developing more affordable homes can be a difficult process to navigate alone. Novogradac’s LIHTC Working Group works to resolve the technical and administrative issues of its members. Additionally, Novogradac will be hosting its Novogradac 2024 Affordable Housing Conference from May 2-3 in San Francisco. This conference provides an opportunity for affordable housing advocates to network and discuss solutions to hurdles and real-world complications with other experienced professionals in the field. Click here to register and join hundreds of industry colleagues in this valuable experience. 

 

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