Are affordable housing units good or bad?
A new study by Stanford economists looks to answer that question.
According to research conducted by Stanford professors Rebecca Diamond and Tim McQuade, affordable housing is a key factor in increasing racial and income integration in black communities.
Affordable housing also was shown to lower crime rates and to raise property values.
Diamond says the reason is simple. "When a corporate developer comes in and builds nicer, new housing, it makes the neighborhood more desirable as a potential place to live."
As obvious as all this may seem, the study's findings are actually somewhat controversial. Much of the funding for these homes comes from the federal government, and The New York Times recently published a story that asserted that the government tax credits developers use to build affordable housing help to keep cities segregated.
Diamond and McQuade's study rebuffs this assertion.
Using a decade's worth of data sourced from more than 7,000 developments built with federal tax credits in 15 states, the researchers found that the program actually results in more racially desegregated neighborhoods over time.
According to their research, building affordable housing in low-income, high minority neighborhoods lowers the share of black residents in the surrounding community by three percentage points. Desegregation was also found in wealthier, high-minority communities.
"That's a pretty big effect just by developing one building," Diamond said.
The greatest impact affordable housing has is the home value appreciation, which skyrockets to 6.5 percent within a tenth of a mile of the housing development.
In white neighborhoods, building affordable housing does not have the same effect, however.
Per the data, in white neighborhoods with median incomes above $54,000, property values declined 2.5 percent within a tenth of a mile of affordable housing developments.
"People have a preference of who their neighbors are, and perhaps higher income people just don't want to live with lower-income residents," Diamond said.
Sadly, no surprises there. But Congress is trying to change that.
There's currently a bill in the Senate that would address the issue of higher-income communities rejecting the construction of affordable housing.
The bill would make it so that states that collect and hold federal tax credits for affordable housing would no longer have to tell local officials that affordable housing complexes were being planned in their communities.
The idea is that this would keep people from blocking affordable housing developments out of fear of certain people moving into their neighborhoods.
"We should not have affordable housing all going into low-poverty neighborhoods or high poverty neighborhoods. It can't be all or nothing," said Katherine O'Regan, an NYU professor who worked in Obama's Department of Housing and Urban Development.
By having affordable housing going to neighborhoods across the economic spectrum, more people would be able to experience the racial and economic benefits that the Stanford professors found.
One paper probably won't change housing policy across the United States. But having hard data like this is certainly a start.
If you'd like to read Diamond and McQuade's work for yourself, it will be published later this year in The Journal of Political Economy.