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The impact of housing diversity across the country

03/21/2017

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The relationship between housing affordability and the makeup of a neighborhood continues to impact the overall health of many metropolitan areas around the country.

New data from Trulia look at whether or not housing markets are becoming more or less economically diverse.

What’s economic diversity?

Economic diversity involves offering opportunities for new buyers and making communities less homogenous.

Trulia’s report found that there’s a strong relationship between the unevenness of housing values across metros and the racial and income segregation within a metro area.

America’s biggest housing markets are becoming more economically diverse, neighborhood by neighborhood; however, in most markets, the most affordable housing is disappearing even in more moderately priced neighborhoods.

Fifty-five out of the 100 biggest metro areas have fewer neighborhoods categorized as “very low value” than five years ago, another sign of the housing recovery.

The data also found a strong relationship between population and the balance of rentals and owner-occupied homes.

The more populated metro areas tend to have a greater mix of rentals and owner-occupied housing across neighborhoods, while the smaller metros are more likely to be segregated in terms of rental and owner-occupied homes.

During the housing crisis, some of the neighborhoods in the lowest price tiers were hardest hit by large amounts of foreclosures. Home values have bounced back in many of these neighborhoods; however, for the most part, homes that were rentals have remained rentals.

What did the study examine, and what else did it find?

The study reviewed measures of home values and racial or income segregation. Markets that are more segregated by housing values tend to also be more segregated in terms of household income and white/non-white residents.

Areas with the largest segregation of home values in 2016 were:

Detroit Milwaukee Fairfield County, Conn. Birmingham, Ala. Dayton, Ohio

Milwaukee and Detroit are also two of the most-segregated cities in terms of black and white residents, though the study stresses that these factors are not necessarily causally related.

Across the 100 largest metros, the segregation of home values decreased by 1.62 index points from 2011 to 2016, but the segregation between rental and ownership units fell by just 0.06 index points. The report speculates that expanding choices for affordable housing in all neighborhoods may help ease racial and income segregation.

The role of legislation

In 2015, the Obama administration created a requirement that cities and localities account for how they will use federal housing funds to reduce racial disparities.

The Affirmatively Furthering Fair Housing (AFFH) ruling is meant to continue the work of the Fair Housing Act but has met with plenty of controversy. Housing advocates have been staunch supporters, but some critics have called the ruling heavy-handed.

A recent article by Slate found that the rule has made a difference.

It reports that HUD ordered 22 jurisdictions to comply with the AFFH rule during the first year and that since that time, Philadelphia has conducted deeper investigation into its eviction crisis and the Kansas City area is working on a more even distribution of Section 8 vouchers.

The AFFH rule was seen as a way to spur conversation on public policy regarding housing. It’s too early to say whether the Trump administration will look to maintain, scale back, remove or simply decline to enforce the legislation.

Deidre Woollard is the co-founder of Lion & Orb, a real estate public relations company. Follow her on Twitter @Deidre.

Email Deidre Woollard

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