Worthy of Investment: The Problem with the Devaluation of Communities of Color

Andre Perry of the Brookings Institution and members of the Fair Housing Task Force recently discussed barriers to fair housing in Pittsburgh and suggested policies to promote housing equity across protected classes.

Andre Perry shared information from a recent report by the Brookings Institution that explored the devaluation of assets in black neighborhoods. The report found that, “differences in home and neighborhood quality do not fully explain the devaluation of homes in black neighborhoods.” In the nationwide study, homes in majority black neighborhoods were found to be worth 23% less than similar homes in neighborhoods with fewer black residents, even when controlling for variables like quality of home and access to amenities. This devaluation equates to an equity loss of $48,000 per home and $156 billion in lost equity across black neighborhoods nationwide.

The effect of housing devaluation has a negative impact on upward income mobility. Raj Chetty, who publishes studies with Opportunity Insights at Harvard University concluded that there is a significant racial disparity in economic mobility and that mobility varies widely across neighborhoods within cities. Their research provides support for “policies that reduce segregation and concentrated poverty in cities.”

In Pittsburgh, devaluation in majority black neighborhoods has resulted in an average 11.6% difference in home value and a -$11,919 absolute price difference. Disparities extend beyond home valuation. Homeownership rates are lower for African Americans. According to the 2010 Census, African Americans represent 26.1% of the population in Pittsburgh, but account for 16.4% of total homeowners. One-third of Pittsburgh’s African-American households own their homes, while nearly two-thirds of white households do.

The Fair Housing Task Force, organized through the City of Pittsburgh Commission on Human Relations, represents interests of protected classes under the Fair Housing Act, which include color, disability, familial status, national origin, race, religion, and sex. For the past two years, the task force has worked with 44 organizations across Pittsburgh to assemble recommendations that address fair housing access in neighborhoods across the city. These policies build off of the work of the Affordable Housing Task Force by using a fair housing lens to address long-standing racial economic disparities within housing.

Housing’s “Missing Middle” in Greater Newport, RI

In the Greater Newport region (covering Newport and Bristol counties in Rhode Island) the  “missing middle” is missing housing for the middle class.Due to high costs and limited availability of denser housing options in the region:

  • 73% of households cannot afford the median home price of $347,500;
  • 28% of homeowners and 49% of renters spend more than 30% of their income on housing, defined as “cost burdened”; and
  • Some owners and many renters have to seek out housing that is not affordable at their income level

In a positive step in advancing solutions to these problems, Fourth Economy and Connect Greater Newport partnered with HousingWorks Rhode Island and the Aquidneck Island Planning Commission to host the 2019 Housing Forum.

Participants gather at the 2019 Housing Forum. Photo by Claire Nelson

The 2019 Housing Forum featured three panels of experts discussing the state of housing in the region. The afternoon break-out sessions allowed for a productive discussion between residents, business owners, elected officials, and community members interested in the future of housing for the region. Solutions proposed during the break out sessions included:

  • Addressing short term and seasonal rentals;
  • Improving public perceptions of affordable and workforce housing;
  • Improving infrastructure to support denser housing;
  • Examining zoning ordinances to allow for denser development; and
  • Leveraging private public partnerships that engage major employers in the region

The needs of regional employers are clear: in order to support the growth of existing businesses and attract new companies to the region, the region must develop housing suitable for the workforce. According to an ongoing survey, 85% of respondents say housing is an issue affecting employers in the region. More than three quarters said that cost of homeownership and renting was a “significant” or “very significant” barrier for their employees.

Connect Greater Newport will build off the success of the 2019 Housing Forum and continue to address the central issues of Greater Newport’s business community.

What are your thoughts? Is housing an issue for your company? If you live in the Greater Newport region – share your thoughts here or contact Connect Greater Newport. Not in Newport? Share your thoughts with us here.

About Connect Greater Newport

Connect Greater Newport is a regional economic development initiative launched in 2018 by the Newport County Chamber of Commerce to serve the region’s business community. Connect Greater Newport’s mission is to support the growth of Greater Newport’s existing businesses and serve as a resource to attract new companies to the region.

Amazon HQ2 vs. DC Housing

Now that cities across the country have properly grieved the loss of the HQ2 they never had, and NYC pretty much dumped Amazon on their Valentine’s day date, we have some serious questions. How many communities have policies in place to handle an economic shock like landing an HQ2? How does plopping 25,000 new high paid tech workers in a city affect housing? This post will look at how Amazon HQ2 might impact housing in Washington, DC.

There are a few things we know:

  • Washington DC is one of the most expensive housing markets in the US. The median rent is $2,146 per month.
  • Speculation is rampant. The day of the official announcement there was a 435 percent jump in Zillow users viewing homes in Arlington compared to the same day a year earlier.
  • If you already own a home, you’re lucky. But for those looking to purchase a home or rent, costs are expected to rise.
  • Displacement may be an even bigger issue. As costs rise, those that can’t afford housing are pushed farther away from the economic opportunities found in city centers.

As we’ve previously written about HQ2, in places like Seattle, San Francisco, and Washington DC, the cost of living can rise beyond the reach of many non-tech workers.

Over the past decade, the median home price in Washington DC has risen more than 50 percent, from $365K in 2009 to $581K in 2019. Along with that, the cost of rentals has increased significantly, now requiring a minimum salary of $85,840 to afford a median-priced apartment in DC. Ouch.

An estimated 136,000 renters in the DC metro area now spend more than half of their income on rent.

Over the next decade, some policymakers are seeking to stabilize rent and construct new rental units. Communities surrounding HQ2 have promised to create and preserve 2,000 to 2,400 affordable and workforce housing units from 2019 to 2029. These policies will not be enough to both catch up with the past decades’ rising housing costs and adequately address the housing impact of HQ2. An estimated 136,000 renters in the DC metro area now spend more than half of their income on rent. The promised units would address less than two percent of the existing gap.

For communities watching from the sidelines, here are a few resources for thinking about an equitable housing strategy:

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Regional Economic Development Collaboration 101: Webinar

With much of our work revolving around Regional Economic Development, we decided to host a webinar about Regional Economic Development Collaborations – sharing insights and lessons learned with our panelists:

If you missed the webinar, it’s not too late! See the recording here.

Questions about this topic? Reach out!

Top 5 Questions About the Community Index Tool

The Community Index began six years ago as an effort by our team to document the key indicators of current and future vibrant communities. Fourth Economy takes a holistic approach to economic and community development. Our model considers a range of criteria to measure economic strength. The Community Index is made up of 20 indicators across five themes: Investment, Talent, Sustainability, Place, and Diversity. While we know there is no single recipe for economic success, we also know that these five areas are critical ingredients in vibrant communities everywhere.

From 10 to 1,837

Each year, we publish a list of the top 10 scoring counties. In 2018, we developed an interactive tool to allow others to see how our Index model ranks counties across the country. This year’s Community Index features data on 1,837 of the 3,007 counties in the United States, covering all counties with a population of 20,000 or more. Each benchmarks against all counties in the state, geographic region, and similar population size.

A great conversation starter

We debuted the Community Index tool at the International Economic Development Council conference in Atlanta. Our first users were inquisitive and had some great questions. Some of the most interesting questions we fielded include:

  1. What outcomes were unexpected?
    We were glad to see that the model does not identify a specific recipe for economic success. Communities that score highly across our categories do not come in one mold, but many—from rural cultural hubs to small, developing cities to booming metro regions.
  2. What should I do with this tool? How is it useful?
    We hope that people will use the dashboard to explore the economic strengths and weaknesses of specific communities, use the Index map to see who is doing well across the country overall and in specific metrics, and use the top ten to read about some particularly strong examples of regional economies.
  3. Why do all the counties with cities score so well?
    Generally, more densely populated places have economic and cultural assets that more rural or suburban places do not, and the model picks up on this. So on one hand, it’s important to compare among similarly-sized places. That’s why we’ve organized the counties by size categories. So, when comparing large cities, it’s important to realize that a score of, say, 85 (as with Allegheny County, PA) is not as high relative to its geographic peers as a score of 85 for small communities. BUT, there are also many small communities that do well in our model. Look, for instance, at our top ten list for mid-sized counties. Or, look at the even smaller communities of Juneau, AK, or Wasatch, UT, for some high-scoring examples.
  4. Why didn’t we look at counties with fewer than 20,000 people?
    Many of the indicators that inform the index model are population-based statistics that have been collected from sources like the US Census Bureau. For small populations, these data are less reliable (i.e., come with greater margins of error) and can be more significantly influenced by single contributors (e.g., a company opening or closing), so for that reason, we’ve chosen not to include small, rural counties in this version of the model.
  5. Why did you analyze at a county level?
    We analyzed at a county level because of the data set availability. It’s easy for us to combine indicators and to do a multi-county analysis for a region. For specific projects, we could apply the index model to other types of geographies, or conduct or more nuanced analysis (for geographies that are either larger or smaller than counties), but that is not part of this tool.

Looking forward

We see the Community Index as a starting point for communities, providing them with a baseline to help understand where they are doing well and see where there is room for improvement. Many of our most interesting projects stem from conversations with communities about where they are and where they want to be. Do you have a question you’d like us to answer? Reach out!

Visit the Community Index

Donuts! A New Metric for our Community Index

The Community Index began six years ago as an effort of our team to document what key indicators are measures of current and predictors of future vibrant communities. Each year we publish top 10 lists of counties, organized by population size.

Last year, we developed this tool to allow others to see how our Index model ranks counties across the country. The Index models communities across five categories:

This year, in looking at improving the data behind the model, we discovered that we were missing a key element in our Index: Donuts!

  • Investment: active businesses, access to capital, and investment in physical infrastructure
  • Talent: a growing workforce with education and job skills, equipped to excel in high-wage opportunities
  • Sustainability: transportation, land use, and environmental conditions that promote healthier lifestyles and a healthier planet
  • Place: affordable housing and transportation options that provide access to recreational and cultural amenities
  • Diversity: personal and professional interaction across lines of race/ethnicity, age, and wealth

This year, in looking at improving the data behind the model, we discovered that we were missing a key element in our Index: Donuts!

Today, we’re announcing that the five index categories have now become six:

  1. Investment
  2. Talent
  3. Sustainability
  4. Place
  5. Diversity
  6. Donuts

Who doesn’t like donuts? There is nothing better to pair with your early morning coffee or as a pick me up in the afternoon. Donut shops attract talent, make places more vibrant, and bring in investment from related industries.

Similar to our top ten lists, Best Places publishes a list of Top Ten Donut Cities:

  1. Providence-Warwick, RI
  2. Worcester, MA
  3. Boston-Cambridge-Newton, MA
  4. Hartford-West Hartford-East Hartford, CT
  5. New Haven-Milford, CT
  6. Bridgeport-Stamford-Norwalk, CT
  7. Springfield, MA
  8. Scranton–Wilkes-Barre–Hazleton, PA
  9. Dallas-Fort Worth-Arlington, TX
  10. Albany-Schenectady-Troy, NY

We’re spending April Fool’s day working on the math to incorporate these measures into our index, but in the meantime, visit the Fourth Economy Community Index to see how your community stacks up across our current indicators in Investment, Talent, Sustainability, Place, and Diversity, and let us know what you think.