High Opportunity Spectrum
Research suggests that where families are located can have meaningful impacts on the upward mobility and opportunity for residents later in life. This is especially true for rental households, which are typically more rent burdened than owners. With this in mind, intentionally supporting rental housing in targeted areas could provide the ability for households to build “opportunity capital”, providing economic and social mobility to the residents. However, defining these areas that provide higher opportunity can be challenging.
In this paper, we build from the foundation of the high opportunity areas determined by FHFA but also consider localized information to gain a deeper understanding. We explore alternate methods of identifying areas that could provide economic opportunity, with an explicit consideration of renters. The two additional measurements we identified of determining high opportunity status are the Opportunity Atlas Score, developed by Economist Raj Chetty, and Location Score, developed by Freddie Mac.
We found that while the current definition is binary — either it is high opportunity, or it is not — this need not be the case. Instead, high opportunity could be a spectrum, meaning areas could represent some form of opportunity to its residents even if the areas do not meet the exact definition.