Housing Supply and Affordability was listed as the #6 issue in the 2021-22 Top Ten Issues Affecting Real Estate® by The Counselors of Real Estate®.

When I wrote on this same topic a year ago, there was a shortage of 7.2 million affordable and available rental homes for extremely low-income renter households, (those whose incomes are less than either the poverty guideline or 30% of their area median income).^{1, 2}

This year, the shortage has been reduced to 6.8 million.³

That is progress, but it does not move the needle far enough. This year, I see such a bright light at the end of the tunnel, and we may actually be positioned to build enough new affordable housing to finally move the needle in a significantly positive way. Hopefully, the light is real this time and not the proverbial oncoming train.

The barriers to eliminating housing discrimination and producing more affordable housing (“AH”) highlighted in the 2020 article were: 1) the pervasiveness of the “not in my backyard” (“NIMBY”) attitude, 2) “Home Rule” which allowed the NIMBYs to keep AH out of their back yard by allowing politics, not need, to control outcomes, 3) shortage of financing subsidies, and 4) recognizing that poverty is the root problem, and that creating the opportunity to develop one’s abilities and talents through vocational or college education is the solution.

Question 1: When did housing discrimination in America start and where are we today?

The beginnings of housing discrimination in America can be seen in the early colonies in the 1600s. In the Jamestown Colony, black and white indentured servants were treated much differently. The enslavement of people of African descent became more widespread as the colonies grew. Slavery was widely accepted by many of the most influential and powerful figures in early American history.

The Declaration of Independence and the American Revolution did not advance any substantial rights or freedom for black people. In determining a state’s population for representation in Congress, Article 1 of the U.S. Constitution treated enslaved people as “three-fifths” of a person.

Before the Civil War began, U.S. federal courts did not recognize rights for persons of African descent, whether or not they were enslaved. The federal government did nothing to prohibit discrimination, and discrimination was rampant even in the northern free states. In the 1857 U.S. Supreme Court case Dred Scott v. Sanford, the Court held the position that persons of African descent were not “citizens” even if they lived in a free state, and therefore they were still not entitled to any rights.

After the Civil War, the abolition of slavery further granted rights of citizenship to black people. Congress then passed the Civil Rights Act of 1866, which granted the right to inherit, sell, or purchase property to all citizens regardless of race. However, these rights were not upheld, and the gains from Reconstruction were lost as “Jim Crow” laws enforcing racial segregation were created.

After World War II, the federal government subsidized the development of suburbs on the condition that they would be only sold to white families.⁴ Jim Crow laws were challenged in 1954, with the Brown v. Board of Education decision dismantling the “separate but equal” doctrine from the 1896 Plessy v. Ferguson decision. In 1962, equality in housing began to be addressed. That year, President Kennedy signed Executive Order 11063, entitled “Equal Opportunity in Housing.” It prohibited discrimination in the sale, rental or use of all residential housing that was owned, operated, or financed by the federal government. However, while it had good intentions, there was little real impact on the housing market in general, as it lacked judicial enforcement.

Two years later, another step was taken. Congress passed Title VI to the Civil Rights Act of 1964, which prohibited discrimination in public accommodations, in all federally assisted programs, and in employment on the basis of race, color, religion, sex, and national origin.

The real change in fair housing came in 1968, a year that is considered the birth of the modern fair housing movement. In March of that year, the Kerner Commission Report said that America was heading for two societies that were separate, but unequal.⁵

That same year, two historic events occurred that forever changed the housing market.

First, at sunset on April 4, 1968, Martin Luther King, Jr. was fatally shot while standing on the balcony of the Lorraine Motel in Memphis, Tennessee. There were riots in 130 American cities and 20,000 arrests. King’s funeral on April 19^th was an international event. Within one week of his death, on April 11, Title VIII of the Civil Rights Act (also known as the Fair Housing Act) was enacted into law by President Lyndon B. Johnson. The Fair Housing Act banned discrimination on the basis of race, color, religion, and national origin in most types of public and private sector housing transactions. The Act also contained a variety of remedies to address both public and private housing discrimination. Unlike previous attempts to create equality, this act included an enforcement provision, and the Housing and Urban Development Authority was born.

Second, in June, the U.S. Supreme Court rendered its decision in Jones v. Alfred H. Mayer Co., and held that the Civil Rights Act of 1866 banned racial discrimination in private, as well as government housing. The Fair Housing Act outlawed a variety of private discriminatory acts, including refusal to rent, sell, or belong to a housing-related organization, discrimination in the terms of sale or rental, blockbusting, and discrimination in advertising and in the use of real estate services.

The Fair Housing Amendments Act of 1988 added provisions to prevent discrimination based on mental or physical disabilities or familial status.⁶

Answer 1: So, where we are today is basically this; if you discriminate in housing with any person in a protected class of people, you have broken the law.

Question 2: What are the numbers – how much affordable housing do we need?

According to the National Low Income Housing Coalition, the U.S. has a shortage of 6.8 million rental homes affordable and available to extremely low-income renters, whose household incomes are at, or below, the poverty guideline or 30% of their area median income. There are 37 affordable and available rental homes for every 100 extremely low-income renter households. Extremely low-income renters face a shortage in every state and major metropolitan area, including the District of Columbia. Among states, the supply of affordable and available rental homes ranges from only 20 for every 100 extremely low-income renter households in Nevada to 61 in Mississippi and Wyoming. Among the 50 largest metropolitan areas in the U.S, the supply ranges from 16 affordable and available rental homes for every 100 extremely low-income renter households in Las Vegas, Nevada, to 50 in Providence, Rhode Island.⁷

According to the Harvard Joint Center for Housing Studies, nearly one in three households spend more than 30% of their income on housing. Almost half of all renters are in that category, including more than ten million households that spend more than 50 percent of income on housing costs. Nearly 75% of very poor renter households, those earning less than $15,000 annually, spend more than half of their income on housing costs.⁸

Answer 2: We need nearly 7 million new affordable homes for the lowest income cohort of our population.

Changes Over the Last Year

The two most impactful barriers to producing more AH highlighted in my last article were: 1) NIMBYism combined with zoning by Home Rule and, 2) the shortage of AH financing.

Here is what’s occurred over the last year that gives me hope.

From NIMBY to YIMBY

In 2020, we saw the pervasiveness of the NIMBY (Not In My Back Yard) syndrome made worse by “Home Rule”, which empowers the NIMBYs to keep AH out of their back yard by implementing exclusionary zoning, which has resulted in low-income people being discriminated against by being priced out. This is an unfortunate, but orchestrated, end-run around the Fair Housing Act’s prohibition against discrimination in housing.

Soon after publication, a comment on my 2020 Real Estate Issues article from a Harvard Professor was emailed which said:

“George Vallone hits the nail on the head about the inability of developers to get past local municipality opposition and NIMBYism toward affordable housing, even in the face of drastic needs. Since its passage in 1969, Massachusetts’ 40B legislation has generated more than 70,000 new units of which half are income restricted.⁹ …This program overrides local zoning codes in municipalities that do not meet a 10% hurdle of affordable housing units and prevents local officials from stopping new affordable housing projects that meet the guidelines. It is arguably the most effective affordable housing legislation in the country to overcome NIMBYism and is a worthy, though contentious, model for the rest of the country.”¹⁰

From city government actions to President Biden’s infrastructure plan, the momentum to end exclusionary zoning and land use policies that contribute to both our housing crisis and neighborhood segregation is mounting. Biden’s plan sets the national stage for housing policy reform that will make neighborhoods more equitable by encouraging local governments to end widespread local rules that prevent smaller, more affordable housing from being built, such as multifamily housing bans and excessive minimum lot size requirements for new housing.¹¹

Cities like Sacramento and Berkeley have taken the lead in recent months passing resolutions to end certain exclusionary zoning laws in their jurisdictions. The impetus for these reforms is a movement led by grassroots YIMBY groups, fair housing advocates and racial equity organizations who want to make it legal to build smaller, naturally affordable multifamily housing in more high-opportunity neighborhoods near transit and jobs — making them accessible to more people of color and low- and middle-income families. The impact of this movement is cascading to other cities throughout California, with Oakland, San Jose, Culver City and San Francisco all reviewing similar proposals.¹²

In early May 2021, a bipartisan and bicameral group of lawmakers reintroduced the Yes In My Backyard (YIMBY) Act.The YIMBY Act will require recipients of Community Development Block Grant (CDBG) program funding to publicly report on how they are addressing a suite of local housing policies, primarily exclusionary zoning, and land-use ordinances. On March 2, 2020, the YIMBY Act passed the House of Representatives without opposition.¹³ In the 117^th Congress, Senators Todd Young (R-IN) and Brian Schatz (D-HI) are leading the charge in the Senate, with Derek Kilmer (D-WA) and Trey Hollingsworth (R-IN) sponsoring the legislation in the House.

Beginning on July 1, 2021, the “Virginia Fair Housing Law; Unlawful Discriminatory Housing Practices Act” (VA HB 2046), from Delegate Jeff Bourne (D-Richmond) took effect. Virginia became the third state in the nation to officially go on the books as saying no to NIMBYs. Localities across Virginia are no longer allowed to deny building permits to projects “because the housing development contains or is expected to contain affordable housing units occupied or intended for occupancy by families or individuals with incomes at or below 80% of the median income of the area.”¹⁴

On June 3, 2021, Representative Adam Smith (D-Wash.) introduced the Promoting Affordable Housing Near Transit Act to promote AH Transit-Oriented Development (TOD) near transit lines and city centers. The bill would allow certain transit agencies to transfer underutilized land and buildings directly to community-based organizations at zero cost for the creation of AH. The Act would solve the combined problems low-income families face of access to AH and public transportation. The Act unfortunately does not include as-of-right zoning for these AH-TOD projects.¹⁵

Affordable Housing Financing

In 2020, we saw a shortage of Affordable Housing financing subsidies.

Now in 2021, Biden’s AH commitment in the American Jobs Plan for the U.S. Department of Housing and Urban Development includes:

• $45 billion for the national Housing Trust Fund for the very poorest households, those whose incomes do not exceed more than 30% of area median income.
• $35 billion for the HOME Investment Partnership Program, a George H.W. Bush–era initiative that gives states and localities grants for affordable housing.
• $2 billion each into the Section 202 program (for the elderly) and project-based rental assistance (subsidies tied to units, not specific tenants), the first issued in more than 20 years.
• $105 billion in new and expanded tax credits, for renovation and construction projects and includes $55 billion for Low Income Housing Tax Credits (LIHTC). Together these plans aim to spur the construction of some 500,000 to 600,000 low-cost apartments over the next five years.
• $10 billion for a new Community Revitalization Fund for investments in parks, incubators, and other shared amenities.
• $250 million for Main Street grants to spark economic activity in America’s small downtowns to increase home values and productivity in distressed or overlooked communities. “This proposal in particular is an opportunity to invest in small and medium-sized cities,” says Peggy Bailey, senior advisor on rental assistance at HUD, referring to the new Community Revitalization Fund, “not just in housing, but in business districts in those small towns.”¹⁶
• $40 billion to public housing for badly needed investments and upgrades (short of an estimated $70 billion in capital needs faced by public housing).
• $5 billion zoning reform program that will be used for local housing policy grants for cities and counties looking to ease restrictive zoning. Progressives and libertarians alike have been searching for a role that the federal government can play in breaking down exclusionary barriers to housing that result in segregation and concentrated poverty.
• $68 billion for weatherization, energy efficiency, and home rebates.
• $2 billion for investment in housing for Indigenous communities with most going to Indian Block Grants for AH. Parts of the bill will strengthen the relationship between HUD, USDA, and the Department of the Interior to make these funds more easily available.

Conclusion

We are seeing a number of legislative initiatives to defeat ‘NIMBY’ism at the local and national levels, as well as a massive infusion of AH financing. Taken together, the light at the end of the tunnel looks much more like the bright sunshine of hope that we are finally moving towards the end of affordable housing discrimination than the headlight of an oncoming train! •

Endnotes

^{1. George Vallone, CRE. “Affordable Housing: The Same Problems, Only Worse.”  Real Estate Issues, The Counselors of Real Estate, July 15, 2020. https://cre.org/real-estate-issues/affordable-housing-the-same-problems-only-worse/ (accessed July 14, 2021). ↩}

^{2. The Gap: A Shortage of Affordable Rental Homes. National Low Income Housing Coalition, March 2018. https://reports.nlihc.org/sites/default/files/gap/Gap-Report_2018.pdf (accessed July 14, 2021). ↩}

^{3. The Gap: A Shortage of Affordable Rental Homes. National Low Income Housing Coalition, March 2020. https://reports.nlihc.org/sites/default/files/gap/Gap-Report_2020.pdf (accessed July 14, 2021). ↩}

^{4. Richard Rothstein. The Color of Law: a Forgotten History of How Our Government Segregated America. Liveright, 2018. ↩}

^{5. “The Kerner Commission, 40 Years Later.” Bill Moyers Journal, March 28, 2008. https://billmoyers.com/content/the-kerner-commission-40-years-later/ (accessed July 14, 2021). ↩}

^{6. For a complete timeline of all Legislative and Judicial Decisions impacting Fair Housing policy in America see the Appendix. ↩}

^{7. Supra note 3. ↩}

^{8. America’s Rental Housing 2020. Joint Center for Housing Studies of Harvard University.
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2020.pdf (accessed July 14, 2021). ↩}

^{9. “Chapter 40B and MassHousing.” MassHousing. https://www.masshousing.com/en/programs-outreach/planning-programs/40b (accessed July 14, 2021). ↩}

^{10. Richard B. Peiser, Michael D. Spear Professor of Real Estate Development, Harvard Graduate School of Design Email via email on August 23, 2020. ↩}

^{11. Brian Hanlon and Adam Brione. “California leaders have no more excuses for their inaction on housing reforms.” The Sacramento Bee, May 23, 2021. https://www.sacbee.com/opinion/op-ed/article251019594.html (accessed July 14, 2021). ↩}

^{12. Ibid. ↩}

^{13. “U.S. House Says Yes In My Backyard.” Up for Growth Action, March 2, 2020. https://www.upforgrowth.org/news/us-house-says-yes-my-backyard (accessed July 14, 2021). ↩}

^{14. Wyatt Gordon. “Can Virginia legislate away the NIMBYs?” Virginia Mercury, May 26, 2021. https://www.virginiamercury.com/2021/05/26/can-virginia-legislate-away-the-nimbys/ (accessed July 14, 2021). ↩}

^{15. “Rep. Smith Introduces Bill Promoting Affordable Housing Near Transit.” Representative Adam Smith, Washington’s 9th District, June 3, 2021. https://adamsmith.house.gov/press-releases?ID=A8B26BBA-0FAA-4C85-A9C3-0BB5D5A98E8F (accessed July 14, 2021). ↩}

^{16. Kriston Capps. “What the White House Means When It Says Housing Is Infrastructure.” CityLab, Bloomberg, May 26, 2021. https://www.bloomberg.com/news/articles/2021-05-26/what-s-in-the-biden-administration-s-housing-plan (accessed July 14, 2021). ↩}