May 10, 2018 1:01PM

What Secretary Carson Should Know about Affirmatively Furthering Fair Housing (AFFH)

This week, housing activists sued Secretary Carson and the Department of Housing and Urban Development (HUD) for delaying implementation of Affirmatively Furthering Fair Housing (AFFH), a controversial Obama-era HUD rule. The suit claims AFFH "was of great importance to Congress in enacting the [Fair Housing] Act."

But as I've outlined previously, there isn’t a linear relationship between the Fair Housing Act and AFFH. The Fair Housing Act is focused on discrimination in the housing market and AFFH is focused on segregation.

There are other problems with AFFH. For example, AFFH requires federal and local government to spend up to $55 million annually collecting information, a good deal of which is unhelpful to its objective of understanding why racial segregation occurs. AFFH requires local governments to provide information on racial and ethnic concentrations, but that information doesn’t really tell policymakers what they want to know.

If policymakers are interested in determining the cause of racial segregation in cities, they don’t have to collect data and guess at it. A major cause of racial segregation is already known: zoning regulation. Zoning regulation segregates by race because race is frequently correlated with income.

Zoning segregates by income through density limits, minimum lot sizes, and by reducing the supply of housing in cities, thereby creating regional housing affordability issues that push low-income racial minorities out.

San Francisco’s mass exodus of racial minorities is a good example of this in practice. As one Atlantic article put it, “The people moving out [of San Francisco] are less likely to have completed college, and they tend be older, African American, and Hispanic…Perhaps no aspect of the annual migration in and out of San Francisco is as notable as the outflow of African Americans.”

The data supports the idea zoning increases segregation. In one study, 50 percent of the difference in levels of racial segregation between leniently regulated (less-segregated) Houston and restrictively zoned (more-segregated) Boston were a result of restrictive regulation. In another study, reducing zoning regulation was estimated to reduce the difference in racial segregation by at least 35% between the most and least segregated areas.

Regulations that limit development density may have the largest impact on racial segregation. Up-zoning (or increasing allowable development density) would reduce segregation naturally as individual choice improves. Up-zoning would support property rights and improve housing affordability as it increases housing supply.

If policy makers have decided that racial segregation rather than racial discrimination is the issue, a useful alternative to AFFH would require cities to identify neighborhoods that are currently zoned for low-density development and make plans to up-zone them. Cities have this information on-hand and wouldn’t have to expend enormous resources gathering it. This information would provide useful information about the origin of racial segregation.

Although collecting information on zoning would be more helpful, the Fair Housing Act doesn't call for it. That makes this suggestion similar to AFFH from a process standpoint.

As a result, HUD should do what they can to remove AFFH, and eliminate the up-to-$55 million/year price tag along with it. HUD monitoring racial and income segregation isn’t going to meaningfully reduce barriers to housing opportunity. Local and state government relaxing restrictive zoning will.