NCPA - National Center for Policy Analysis

Reflections during Black History Month: How Government Policy Affects Quality, Affordable Housing

February 16, 2015

In honor of black history month, the NCPA has compiled a list of well-intentioned government policies that have actually hurt black Americans.

Consider what government has done to limit the supply and available of affordable, quality housing:

  • "Smart growth" urban planning (in an effort to reduce "urban sprawl") prices lower- and middle-income families out of the housing market. A study by the Urban Institute (as reported in an NCPA publication) found that smart growth policies reduce both housing affordability and economic opportunity, especially for minorities.
  • Efforts to revitalize urban neighborhoods are often hamstrung by government regulations that raise costs. For instance, the federal Davis-Bacon Act sets construction wages at the prevailing level — which turns out to be the level set by the building trades unions. No federal money can go to a project that doesn't pay at this deliberately inflated scale.
  • Furthermore, one-size-fits-all federal environmental rules raise housing costs in neighborhoods where environmental problems have long gone untreated. Both developers and banks are naturally wary of taking on a property that may come with liability for pollution discovered in the future but caused by owners decades before. Banks can't take environmental improvements as collateral. Thus the amount of equity financing required for a given project increases.
  • Local policies complicate the clearing of titles on abandoned inner-city properties. Developers seeking to acquire these properties are required to pay back taxes, sometimes dating back a quarter-century or more. The message here: Don't buy and improve vacant land that may be dragging down the property values of the entire neighborhood.
  • The loss of housing affordability disproportionately affects minority households due to their generally lower incomes; thus, the white non-Hispanic home ownership rate is 50 percent higher than the ownership rates for Hispanic and African-American households.

Source: NCPA Staff, "Reflections During Black History Month: What Public Policies Are Hurting African-Americans?" National Center for Policy Analysis, February 2015. 

 

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