The Affordable-Housing Industrial Complex


Since 1932, Congress has passed dozens of laws aimed at making rental housing and homeownership more affordable. Many of these laws created new programs while few of the older programs were abolished. As a result, more than two dozen programs remain active today, including programs targeted for specific groups such as seniors, people with disabilities, Native Americans, veterans, and people with HIV.

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These programs fall into two broad categories: programs aimed at assisting low-income people to pay for rental housing and programs aimed at assisting middle-income people to become homeowners. Little effort has been made to assess whether the various programs are cost-effective in what they do. As a result, relative to what they produce, some are far more costly than others.

In 1965, Congress created the Department of Housing and Urban Development (HUD) to oversee federal housing programs. However, not all housing programs are contained within this department. The Department of Agriculture, Veterans Administration, Treasury Department, and at least two independent agencies administer their own housing programs.

Rental Assistance Programs

Congress has created two kinds of rental assistance programs: programs that directly assist renters through vouchers or subsidies and programs that only indirectly assist renters by subsidizing development of public or private housing. The direct-assistance programs appear to be much more effective than the indirect programs.

The biggest direct assistance program is known as Section 8 vouchers, named for the section of the 1974 housing act that led to it. Initially, that 1974 law subsidized private property owners who agreed to rent to low-income families. In 1983, however, this was amended to give the subsidies directly to low-income tenants. According to HUD’s budget, the program cost about $23.9 billion in 2020 (2020 budget numbers don’t include CARES Act funding) and assisted 2.3 million families, for an annual cost of $10,400 per family.

A major advantage of Section 8 is that recipients get to choose where they live rather than being assigned to housing in a location that might not be convenient for their work or other activities. The program is also effectively means tested, as households are expected to contribute 30 percent of their incomes towards rent, so the subsidy any household receives declines as its income rises.

Not all landlords are willing to accept Section 8 vouchers, and the supply of such housing may be less than available vouchers. A 2001 study found that the share of people who received vouchers who were actually able to use them had declined from 81 percent in 1993 to 69 percent in 2000. Unfortunately, no more recent data are available, but it is likely with higher housing prices today that success rates are no higher and may be lower than in 2000.

Read the rest of this piece at The Antiplanner.

Randal O’Toole, the Antiplanner, is a policy analyst with nearly 50 years of experience reviewing transportation and land-use plans and the author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future.

Image courtesy of Integrated Community Development.