Housing in the U.S.

Portland is facing a deep housing affordability crisis marked by residential segregation, large gaps between white homeownership and homeownership from other BIPOC demographics, and additional issues. These issues are not unique to Portland. Many cities throughout the country are facing the same problems today. To understand how we got to where we are today, it is important to look back on the history of federal housing policies/laws and reflect on how these policies/laws shaped these issues and affected how different states and cities can and do address their housing crises.

Note: this page is not intended to describe the entire federal housing policies/laws since the 1930s. Some arguably important information will be left out below to ensure brevity and coherence in what is written below. For more detailed information, please visit the sources at the bottom of this page.

Public Spending and Disinvestment. Federal- and state-sponsored public housing continues to be unpopular for many Americans. So much so that in 1999, President Clinton signed the Faircloth Amendment into law which prevents HUD from funding the construction of new public housing units, if such construction would lead to more units owned by Public Housing Agencies then were owned in 1999. This law has remained into effect since and has withstood several attempts for its repeal. This lack of federal funding for new public housing units beyond the 1999 level means that state and municipal governments must provide for their own funding to build new public housing if they are already at the 1999 level. This lack of support for public housing stems from a complicated - and in many ways misinformed - history.

Subsidized apartment buildings, known as “the projects,” were originally built with higher construction standards and for tenants with a broader range of incomes. In fact the nation’s first public housing project was Techwood Homes in Atlanta Georgia (completed in 1936) which was a whites-only apartment complex that replaced an integrated settlement of low-income residents. However, over time public subsidized housing became the housing of last resort in many U.S. cities. Local government mismanagement of the projects coupled with insufficient congressional funding and a lowering of standards for occupancy led to the failure of public housing. Public housing was eventually tied to low-income residents and with that came a host of public misconceptions about the projects, including concentrated poverty and crime. Many of these projects were considered failures, not because of mismanagement and lack of funding, but instead because of the idea itself of providing public housing for low-income individuals. In 1974, President Nixon placed a temporary moratorium on housing spending and the federal government has since shifted its main focus to providing housing vouchers and direct subsidies to tenants as opposed to paying for the construction of more public housing (i.e. through programs such as the Housing Choice Voucher Program, otherwise known as Section 8).

In 1989, Congress created the National Commission on Severely Distressed Public Housing which surveyed the conditions of the nation’s projects. The commission found that only 6% of public homes were “severely distressed” and yet Congress appropriated $600 million to the HOPE VI program - a public housing demolition and replacement effort which was publicized as “urban renewal.” Over 50,000 households were told that they would be “temporarily” relocated, but over half unable to return to their repaired homes (for several reasons including unaffordability). In effect, the HOPE VI program displaced many low-income residents and furthered lowered the amount of public housing units available.

Today, the largest housing subsidy program in the country is the Mortgage Interest Deduction (MID), costing the federal government at least $70 billion per year in tax deductions. MID was written into the U.S. Tax Code in 1913 and grew rampantly - first to $7 billion dollars annually in the mid-1960s followed by $53 billion annually by 1984. While MID was intended to expand homeownership, it primarily benefits higher income households that would likely still be able to afford to own their homes even without the program. Much of the funding for public subsidy programs, administered by states and municipalities, comes from the federal government. $70 billion annually would go a long way in helping local jurisdictions address their housing affordability crises if redirected to other subsidy programs.

Low Housing Density. Walk through most U.S. towns and chances are that you will see different segments of these town broken down by similar uses. In other words, there would be one area dedicated for residential uses, yet another dedicated for retail space, a third for industrial factories and so on and so forth. That is because the majority of towns throughout the U.S. operate under Euclidean zoning in which land usage is separated by type - residential, commercial, industrial, etc. Euclidean zoning is named after the 1926 U.S. Supreme Court decision of Euclid v. Amber in which local governments were granted the ability to determine which land usage type is most suitable for specific properties or zones within their jurisdiction.

While Euclidean zoning has some positive effects (i.e. minimizing residential exposure to areas marked by highly polluting factories), it also bears many negative side effects. By separating retail space from residential zones, for instance, residents living in these towns became more and more reliant on automobile usage - a negative effect on the environment and on the wellbeing of residents that might otherwise be able to walk to nearby stores. Furthermore, Euclidean zoning has frequently been used to separate different types of residential uses (i.e. single-family zoning, no high-rise apartments in certain areas, etc.) which has in turn led to lower housing density (whereas higher density is needed to increase the supply of housing per plot of land), housing discrimination and residential segregation (by economic status and race).

Euclidean zoning, along with parking minimum requirements and other car-centric policies, have reinforced an issue urban planners have dubbed “missing middle housing.” Missing middle housing refers to any type of housing that is larger than single family homes, but smaller than mid-rise apartments. This type of housing is called ‘missing’ because it used to be more prevalent in the U.S. prior to World War II. These homes cost less to build then high-rise apartments but allow for more density and more walkable cities. The lack of such homes has led to residential segregation and urban sprawl. The 1940s in the U.S. saw more car-centric policies which is what ultimately led to this problem we see all throughout the country.

Taking notice of the above-mentioned issues with Euclidean zoning, urban planners and other advocates have looked into other zoning models including form-based code. But these zoning reforms do not come without their own flaws as well (see form-based code source below).

Residential Segregation and Homeownership Gap. As mentioned above and elsewhere on this website, most neighborhoods throughout the country have residentially segregated neighborhoods. In 1933, the Home Owners Loan Corporation (HOLC) was established. HOLC created the Home Loan Criteria, a universal property appraisal system that the Federal Housing Administration (FHA) and other private lenders used to systematically deny African Americans from owning homes through a policy called redlining. Through redlining, the FHA, which was established in 1934 by the National Housing Act in order to help with the nation’s growing housing crisis, required that homes built by FHA loans would only go to white families whereas homeownership in African American neighborhoods were not allowed to be funded by FHA mortgages. Even though the Fair Housing Act of 1968 outlawed these practices, intergenerational wealth-building through the passing down of homeownership to heirs was severely interrupted for African American communities. Plus, redlining enforced residential segregation by denying mortgages for African Americans in “white neighborhoods,” the effects of which we still see to this day.

In 1944, the G.I. bill was passed - which among other benefits for veterans - provided low-cost mortgages and low-interest loans. The G.I. bill was written in a way that gave significant power to local officials whom ended up using this power to systematically deny black veterans from these benefits. The inability to secure mortgages and low-interest loans for black veterans meant that many black veterans were unable to own homes (and eventually pass these homes to the next generation), hence furthering the black-white homeownership gap we see today.

Today’s residential segregation was also furthered by ‘white flight,’ in which a large swath of white urban dwellers left neighborhoods that were becoming more diverse for suburban and exurban, white regions. White flight became more possible through federal mortgage backing and car-centered/suburbanization policies such as the Highway Act of 1956. Today, we see many white families returning to cities; increasing demand for urban housing (which ultimately raises the prices both rental and home-owned units) and often pricing-out or displacing other tenants (who are disproportionately low-income and of minority backgrounds). There is also strong evidence showing that the white flight phenomenon continues to take place to this day in white neighborhoods that are slowly becoming more diverse (see American Psychological Association source below)