News and Commentary
The Trump administration is looking to update the Community Reinvestment Act. Meant to undo the history of redlining, the act incentives banks to lend to any low-income borrowers or to anyone living in a low-income census tract. Tying these subsidies to tract census often means that loans go to relatively well off people moving into less well-off areas, with predictable effects for the pace of gentrification. However, Joseph Otting, Comptroller of the Currency, seems mostly interested in giving bank’s increased regulatory clarity and increasing the size of small business loans that qualify for CRA points. Some worry that this increase would divert capital away from those who need it most.
Citylab estimates cities’ average effective salary by accounting for different housing costs. They use salary data from Indeed job postings and cost of living estimates from the BEA to conclude that Brownsville, Texas is the most affordable locality in America. That is unless you work in Tech in which case you should look into Boston.
California is now considering rent control. The governor announced that he will push for an even more restrictive version of AB 1482. The pressure to do something on housing may be high since Gavin Newsom’s progressive agenda has largely failed to materialize. Nevertheless, pursuing rent control would be an interesting strategy given voter’s rejection of the policy in a referendum last year.
A NBER paper estimates the considerable effects of racial discrimination in housing markets. Looking at pre-WWII Chicago, Philadelphia, and Detriot, they examine blocks before and after transition from all-white to majority black. They find an amazing perversity: average rents increased 40% while average home values fell 10%. You can find a summary here.