Public Perception of Affordable Housing with Dustin Reed

(music)

Travis

Affordable housing seems to be one of those things most people want. In fact, can't remember ever meeting a person who told me they wanted unaffordable housing. But like countless other topics, just because people agree on what they want doesn't mean they agree necessarily on how to go about achieving it. So I was really excited when I learned that Virginia Tech's Dustin Reed has done some research into how people think and feel about different affordable housing options specifically in terms of whether or not those houses come from for-profit or non-profit providers. And Dustin was kind enough to join me to explain his research and answer some other questions that I have just about housing in general. Dustin is the head of the Blackwood Department of Real Estate in the Pamlin College of Business at Virginia Tech. His teaching and research interests include property and asset management, well as affordable housing, land use policy, and real estate development.

Dustin and I chatted a little about the current state of affordable housing in the United States, what some of the challenges are there, and what some of the perceptions are. He also broke down to me what some of the differences and more likely similarities are between non-profit and for-profit providers in that sector, and the importance of accurately communicating that to the general public, as well as what some of the benefits of having affordable housing can be to neighboring properties. So unless you are that lone person who does in fact want unaffordable housing, think this podcast will have a lot that interests you. I'm Travis Williams and this is Virginia Tech's Curious Conversations.

(music)

Travis

I know you've done a lot of research when it comes to for-profit housing and non-profit housing and how that fits into this whole picture of affordable housing that we have in the United States. So I'm curious, maybe right off the bat, what is the current state of affordable housing?

Dustin

Sure, well in the United States, like many other countries, the development management ownership of affordable housing has largely been outsourced to the private sector. So a combination of non-profit and for-profit companies deliver the vast majority of the affordable running. rental housing stock in the US.

Travis

What's actually considered affordable housing?

Dustin

Look, what are what's the markers that say like this is what affordable housing actually is? Sure. By conventional measures, we consider housing affordable if the occupants aren't spending more than about 30 % of their gross income on housing related costs. So once you get above that threshold, housing people are starting to become considered housing burdened. And do we know much affordable housing folks have right now? Is there a general shortage of it? Are we great there? How are we doing there? Yeah, the figures, as you would expect, vary from market to market with less affordable housing available in high-cost markets and more in low-cost markets. But the big story is across the entire country, there's an affordable housing crisis. There is far too few subsidized units available to satisfy the demand that exists for them.

Travis

Okay. And so your work is looking, I guess, at how for-profit and non-profit housing or housing companies fit into this equation, kind of from the big picture. So I'm curious, besides the obvious, this company is making a profit. This company is on paper not making a profit or they're supposed to not be making a profit. What are some of the other differences between how maybe a for-profit or a non-profit company, when it comes to managing properties or owning properties, works?

Dustin

Yeah, so maybe I'll take a step back just a second so I can answer your question that, as I mentioned earlier, in the United States, the private sector is the predominant provider of affordable housing and affordable rental housing. For-profits and nonprofits both participate in that industry and both play really important roles and for the most part do a very good job of meeting the needs of their residents and the stakeholders they work with. So my research, most of the things I do, focuses on thinking about how do we help affordable housing providers, be them in the for-profit sector or the nonprofit sector? How do we help them do their work better? How do we make them more responsive to the residents they serve? How do we make them better equipped to advance their financial and social missions? How do we make them more impactful for the communities in which their housing is located? So I do spend a lot of time doing what we call best practices studies, really trying to advise affordable housing companies on how they can approach their work to most effectively advance their goals. So part of that work is taking into consideration that maybe affordable housing providers that are for profit versus those that are nonprofit, maybe they have different motives that influence the way they approach their work. And how can we think about those motives and think about how they might actually influence the type of affordable housing that plays out on the ground and how that housing is managed.

Travis

Okay, so. What are some of the differences, I guess, when it comes to for-profit and non-profit affordable housing? Like, I'm not sure if the businesses or sectors, I'm not sure exactly even what the right term is for that.

Dustin

you're right. When an organization doesn't have a profit motive, there's a question as to whether we should call them businesses or not. So a lot of times that will fall to the term non-profit affordable, or excuse me, affordable housing providers or affordable housing organizations. But the obvious one that jumps out is people have a perception that if you're a for-profit entity, that you're going to be heavily motivated by your financial interests and potentially to the detriment of the social goals that affordable housing providers are typically thought to advance. So that really becomes the tension that, affordable housing providers with this profit motive, are they going to go about their business in fundamentally different ways than those that don't have a profit motive? And what we find in a lot of our research that focuses on this topic, that there are some differences in the way these types of organizations operate, but they're still both beholden to kind of a diverse group of stakeholders that compel them to think about their social impact as well as their financial impact. So because of the institutional pressures that affordable housing organizations face, as well as legal pressures, their activities tend to coalesce in a lot of ways even though one type of organization has a profit motive and the other doesn't. Okay, so maybe more similar than different. Yeah, perhaps. A lot of research would take us down that path that the day-to-day operating procedures start to look quite similar across both types of organizations. that's fascinating to know. Well, I know some of the most recent research that you have done deals with public perception, though, of these two entities or organizations, providers, as the term that I think we kind of decided on earlier.

Travis

When you looked at how public perception of these two providers is, what did you find from your research there?

Dustin

Yeah, it's pretty interesting that, as I mentioned, in many ways, for-profits and non-profits that participate in affordable housing provision, they approach their work in many similar ways. But members of the public don't necessarily see that right, because they don't really know what's behind the curtain. They don't know how an affordable housing company is going about its day-to-day activities. So what we did, we did a large internet survey where we asked thousands of US members of the US population, a diverse representative sample. We basically asked them a series of questions about affordable housing. And part of those questions, we presented them with what we call experiments where different groups of respondents to the survey were presented with different scenarios that described affordable housing providers. And the scenarios were exactly the same, except for in one group, the party involved in the provision of affordable housing was described as a non-profit, and the other, they were described as a for-profit. And then we basically asked the survey respondents their perceptions of that organization and the work they do. And what we found is, even though the...the experimental setup was exactly the same for both groups, save for how the affordable housing provider was described. The groups that were presented with the nonprofit scenario had much more favorable attitudes about the work that organization was doing. So simply including the one word nonprofit into the experiment sends a very different signal to the market about how an organization is going to go about its work. And that's important because affordable housing providers, often need to garner public support for their work to get it through regulatory entitlement processes, to gain subsidies, to gain community acceptance. So our research kind of takes you down this path that if you're a for-profit, you really need to downplay that aspect of your work because it has a negative connotation with the general public. Whereas if you're a for-profit, or excuse me, a nonprofit, you really want to play up that nonprofit status because it tends to resonate with members of the public in positive ways.

Travis

Did your research reveal any specifics as to why people felt one way or the other about nonprofits or for-profit providers?

Dustin

No, it's interesting. We can't get to the why, but all we can get to is just observing the difference, right? That small signals about profit status have large implications for how people view affordable housing providers in their work.

Travis

Hey, what is, do you know the breakdown of for-profit versus non-profit affordable housing providers in the country right now, roughly?

Dustin

Yeah, you know what, I don't. And again, it varies market to market, but actually a majority of the affordable housing that's being produced today is being, I shouldn't say the majority, but the large, some of the largest affordable housing providers in the country are actually for-profit entities.

Travis

That's fascinating. Well, one of the things that I was looking at in your, in the paper that I think you shared, one of the things I noticed was that there was a little bit of a rural-urban divide in some of the data. It might have been a very small section, but I was curious maybe if you could talk a little bit about what you all found there.

Dustin

Yeah, you we did. We included variables or measures of the survey respondents' place of residence, whether they lived in an urban area, a rural area, or a suburban area. And we do find in some instances it does actually affect their perceptions about affordable housing.

So in some instances, you might find suburban residents more skeptical about the social benefits of affordable housing, whereas rural residents may have more favorable attitudes. And you can start to tease out how the demographic profiles of individuals influence the way they conceptualize affordable housing and those that build it and deliver it to the market. So the reason that's important is because if you're building a marketing campaign, right, if you're trying to build support for the work affordable housing providers do, you have to know how different members of the public with different characteristics, how they actually think about affordable housing and affordable housing providers. So hopefully you can tailor your marketing message or the information you're conveying to the public in ways that resonate with groups that you're speaking to.

Travis

Yeah. And I guess there was also a size component to how large the affordable housing unit might be. What impact did that have on people's responses?

Dustin

Yeah, there's a big body of literature that suggests that people's attitudes about affordable housing tend to become less favorable as the size and scale of that affordable housing increases. So there's kind of this negative perceptions about housing density and the densification of affordable housing near lower density neighborhoods. In our research, we don't really find a strong density effect, but there is a body of work out there that suggests you might want to downplay the scale of affordable housing because the bigger it gets, the more negative perceptions tend to become.

Travis

I'm curious when it comes to public perception, how you think for-profit, non-profit affordable housing providers being able to, I don't want to use the word leverage because sometimes that sounds bad, but maybe benefit from public perception better. How could that maybe help the overall housing market?

Dustin

Yeah, well, absolutely. So the whole impetus for this research is kind of grounded in the idea that oftentimes affordable housing providers face scrutiny and opposition from members of the public that have negative perceptions about affordable housing. So we know that affordable housing is valuable. We know that it has positive societal impacts, but we also know that many times when affordable housing development is proposed or put forth for construction in a given neighborhood, people in that area rise up in opposition to it because they fear it might change the composition of their neighborhood or have negative effects on their property values or have other negative ripple effects once that housing is delivered to the market. So a big part of affordable housing providers work is thinking through ways to garner public support for what they want to do. So our research is really trying to provide them with those tools so they can speak to the public in ways that elicit positive responses as best they can.

Travis

Do we know if affordable housing units, do they do some of the negative things that people are afraid of or is that just like, like un-garnered fears?

Dustin

Yeah. So, you know, I don't want to speak for the entire body of research because I don't know every paper that's been written on the topic and you can assuredly find studies that show different kinds of effects of affordable housing in different market environments. But a lot of research that has come out in the last decade or two, is actually showing the opposite effect that affordable housing development often has no effect on surrounding property values or may even actually have a positive effect because it often comes in and replaces things that have a greater blighting influence than affordable housing might have. So for example, you might have an undeveloped lot or a rundown housing complex that needs to be redeveloped or some blighting commercial use that actually is getting replaced by a new residential structure that's quite nice. So the integration of affordable housing development into a neighborhood can actually generate a lot of positive economic and social effects as opposed to negative ones.

Travis

that's really fascinating. Well, what do you hope that people do with your research moving forward?

Dustin

Yes, hopefully it's just part of another arrow in the quiver of affordable housing providers that can help them build support for the work they do. you know, working in this space, I interact with a whole lot of people in this industry that are very savvy business people, but also very socially conscious that have very good intentions about the work they go about on a day-to-day basis. So hopefully we can help them do their work better and increase the supply of affordable housing in cities and regions that really need it.

Travis

I'm curious when you work with some of those folks, what do they tell you are some of their greatest challenges to tackling this problem that we have?

Dustin

Yeah, and one of the big ones is public opposition, right? How do we build support for affordable housing and an affordable housing agenda because oftentimes there isn't that support out amongst the general public.

Travis

Well, that's awesome. Now you can say, here, here's, I fixed it, I've solved it.

Dustin

Yeah, it's not a panacea, but again, if it helps a little bit to allow affordable housing providers to frame the work they do in a more positive way, we certainly want to help them do that.

(music)

Travis

And thanks to Dustin for talking to us about his research related to affordable housing and the perceptions that people have about who provides them. If you or someone you know would make for a great curious conversation, email me at traviskw at vt.edu. I'm Travis Williams and this has been Virginia Tech's Curious Conversations.