HUD Takes Aim at Racial Inequities in Housing With New Fair Housing Rules

During a comprehensive review of racial inequities in housing last year, Chandan Economics highlighted the decades-long lukewarm enforcement of the Fair Housing Act as an obstacle to dismantling longstanding racial disparities. Through an imminent rule change at HUD that amends enforcement guidelines, regulators have taken a significant step towards removing this obstacle.

On January 19th, The US Department of Housing and Urban Development (HUD) announced its new “Affirmatively Furthering Fair Housing” Rule (AFFH) aimed at promoting housing choice and fostering inclusive communities. The change comes amid a growing affordable housing quandary alongside increased attention toward the historic role between housing segregation and racial disparities.

Initially signed into law in 1968, the Fair Housing Act outlawed racial discriminatory practices at the State and local level while also requiring jurisdictions to take actions to undo historic patterns of segregation. HUD took initial steps at enforcing fair housing laws in the early 1970s under the leadership of then Secretary George Romney (yes, there’s a relation). However, politically controversial at the time, federal integration efforts were largely tabled for the better part of the next four decades while the federal guidelines that remained in place proved to be ineffective.

While much attention is often given to racial disparities in Homeownership, given its significant impediment to economic upward mobility, inadequate federal enforcement has been most consequential in rental housing. Tepid enforcement of fair housing rules inside of programs like Project-Based Affordable Housing, Housing Choice Vouchers, and LIHTC— the most significant sources of federal public housing, has disincentivized the rental sector from bucking longstanding disparities. According to the 2020 American Community Survey, 30% of Black renters and 25% of multiracial and other, non-Asian minority renters were at or below the poverty line. In contrast, just 19% of White renters and 18% of Asian renters fell into this threshold.

While pandemic-era growth has improved household wealth among all racial and ethnic groups, mounting inflation and affordability constraints risk reversing some of that progress. Following a critical review by the Government Accountability Office (GAO) in 2010, HUD enacted its first AFFH rules in 2015 but was subsequently suspended in early 2018 under a new administration. HUD’s new 2023 AFFH looks to build off its previous efforts by enhancing the agency’s mechanisms for assisting and evaluating state and local compliance. Specifically, HUD looks to simplify the fair housing analysis required from localities while emphasizing goal setting and transparency.