Wealthier Neighbors and Higher Rents
The Rental Assistance Demonstration and Gentrification
Warren Lowell (Duke University) and Imari Smith (Duke University)
When it comes to public housing in the United States, the Department of Housing and Urban Development (HUD) is in a bind. Public housing developments across the country are quite literally crumbling in the face of a $70 billion backlog of deferred maintenance and repairs, placing many of the 1.8 million low-income tenants in housing units that may be dysfunctional or unsafe. However, previous efforts to redevelop public housing—most notably, HOPE VI—forcibly displaced low-income renters from their homes, removed affordable housing from cities through demolition without replacement, and catalyzed the gentrification of majority-Black neighborhoods in cities across the country.
Enter the Rental Assistance Demonstration, also known as RAD, in 2012. In light of the harm to low-income renters caused by HOPE VI, HUD developed RAD to address the growing backlog of deferred maintenance while promoting the preservation of affordable rental units and establishing additional protections for current public housing tenants. Functionally, the local institutional bodies that oversee public housing developments (known as public housing authorities, or PHAs) apply to convert their developments from public housing to another federal program called Section 8; doing so allows PHAs to finance redevelopment by taking on debts, entering public-private partnerships, and even transferring ownership of the property to a private entity.
Crucially, RAD requires that affordable units are not lost in the conversion process, and that tenants are informed of conversion, included in the planning of the conversion process, and guaranteed the right to return to an affordable unit upon the completion of the conversion process. While converted units are no longer considered “public housing,” RAD requires units to remain affordable at the same level as they were before conversion (i.e., income-eligible tenants in affordable units will only be required to pay 30% of their monthly income on rental costs). By and large, RAD has been much more successful at retaining public housing tenants than previous programs like HOPE VI. While only 1 in 4 residents ever returned to properties redeveloped through HOPE VI, properties redeveloped through RAD retain 92% of their original tenants.
Though RAD-converted properties are much more successful at retaining tenants, we couldn’t help but wonder how conversions may affect the socioeconomic and racial-ethnic composition of neighborhoods or the affordability of private housing in these neighborhoods. In other words, our study asks, did RAD conversions gentrify neighborhoods?
To answer this question, we conducted an intensive geographic data-linking process, drawing from data on RAD conversions sourced directly by HUD and data on neighborhood composition and housing costs from the American Community Survey (ACS), an annual survey conducted by the American Census Bureau. After linking, we had a dataset containing information on 1,141 neighborhoods with public housing in cities across the United States—350 contained developments redeveloped through RAD and 791 contained public housing developments that remained not redeveloped.
To analyze this data, we use what social scientists call a “difference-in-differences” framework. Using this framework, we evaluate the differences in our outcomes of interest between two time periods (a “pre” condition and a “post” condition) for two different groups (a “treated” group and a “control” group). In our study, the “pre” period contains data collected from 2008-2012 (before RAD was implemented) and our “post” period contains data collected from 2014-2018 (during which public housing in our 350 neighborhoods underwent redevelopment spurred by RAD). Our “treated” group, as you may have guessed, is the group of neighborhoods containing redeveloped public housing, and our “control” group is the group of neighborhoods with public housing that were not redeveloped. Just to be sure the differences-in-differences we identify in our study are due to RAD and not some other factor, our sample only includes neighborhoods with public housing, which tend to have much higher proportions of Black residents and residents living below the poverty line than the typical U.S. neighborhood. We also only compare neighborhoods with RAD to other neighborhoods in the same city. We even tested a few different models using what we call “propensity scores,” in which we mathematically predict the probability that a given neighborhood would contain public housing redeveloped through RAD, and then we adjust our statistical models using these probabilities.
What we found was that RAD consistently led to larger declines over time in the proportion of residents with very low incomes (<50% poverty line) and very low educational attainment (< high school diploma) in comparison to neighborhoods without RAD. Neighborhoods with RAD also saw larger increases in the proportion of residents with middle class incomes or higher (>200% poverty line) and larger increases in median rental housing costs. While small—our best estimates place the differences in socioeconomic changes between RAD and non-RAD neighborhoods somewhere around two percentage points and average monthly rental cost increases between $30-$50—these declines were statistically significant, and they were especially meaningful because these changes happened over such a short time period (6 years, on average).
When we dug deeper into the data, we discovered that neighborhoods with redevelopment that was large (occurring at developments with 50 units or more) and extensive (costing over $60,000 per unit) were responsible for the driving our main findings. In the 91 neighborhoods with redevelopment meeting these criteria, we found that declines in the proportion of residents with very low incomes (<50% poverty) and low educational attainment (< high school diploma) were between 3-4 percentage points larger than the declines seen in the control neighborhoods. We also found that these neighborhoods saw increases in the proportion of residents with middle class incomes or higher (>200% poverty) were three percentage points larger than control neighborhoods, and median housing rents raised by an additional $75 per month, on average. We found no statistically significant changes between the neighborhoods with redevelopment that was small (<50 units) or cheap (<$60,000 per unit) and control neighborhoods without redevelopment.
We use these findings as evidence that, yes, RAD has led to the gentrification of neighborhoods with public housing, and, on average, this gentrification was concentrated in neighborhoods where public housing properties underwent big and extensive redevelopment. These findings suggest that, though RAD is much more responsible in ensuring the housing stability of public housing residents, neighbors of public housing may still be at risk of losing their homes when RAD comes to their neighborhood. We argue that additional protections and rights for neighbors of public housing, such as rental assistance and property tax relief, may be necessary to ensure that public housing’s neighbors are not displaced when properties are redeveloped.
Warren Lowell is a PhD candidate in the joint-degree program in sociology and public policy at Duke University. He studies how systems of social inequality are expressed and reproduced through gentrification, housing insecurity, and homelessness.
Imari Z. Smith is a PhD Candidate in the joint-degree program in sociology and public policy at Duke University. Her research prioritizes an intersectional approach for understanding relations between social position, social determinants of health, and policy.