Riffing on yesterday evening’s post …
… here’s a detailed examination of housing vouchers, upon which Team Gahan and David the Wonder Bureaucrat are pinning their affordable housing hopes, insofar as they have a plan at all. I’ll highlight a few sections, but for the full impact, go to Strong Towns — and while you’re there, browse around.
Shouldn’t every elected official in Floyd County be reading Strong Towns on a daily basis?
WHAT HOUSING VOUCHERS CAN AND CAN’T DO, by Daniel Herriges (Strong Towns)
The headlines about (Your Place Name Here)’s housing affordability crisis are numbing these days. It doesn’t seem to matter where you live: Nationwide, only 21 units affordable to extremely low-income renter households are available per 100 such households, and every county has a shortfall. Last year, eleven million low income households paid more than half their income in rent, a 20% increase since 2007.
There’s a common misconception that if developers would just settle for a little less profit, they could build working-class housing without subsidy. This is almost never true. The reality is that, much as lower-income people usually buy used cars, lower-income people usually do not live in newly-constructed homes. This was true in 1920, it was true in 1950, it was true in 1980, and it is true today. The primary source of affordable housing is older housing that has “filtered” down from a higher price point.
The difference today is that in much of America — especially wealthy coastal America — even the middle class can no longer afford a new market-rate home or apartment. Over at Shelterforce, Rick Jacobus extends the car analogy to make this point: the problem isn’t that we’re building new Lexus housing, it’s that we no longer build very much Ford Focus or Toyota Camry housing at all.
The middle classes find ways to make it work. They sacrifice location or amenities or square footage, they double up with roommates, they live with their parents for longer in their twenties, but they make it work.
The poor aren’t so lucky.
1. Public housing directly owned and operated by government entities.
(A lot of the stigma that still follows public housing today, for the record, is based on outdated stereotypes, and there’s evidence that most of it actually works quite well.)
2. Project-based housing subsidies, which entails paying a developer (often a nonprofit organization) to build housing and rent it out to income-screened tenants at a reduced rate. This is the premise of the Low-Income Housing Tax Credit (LIHTC) program …
3. Local rent regulation, including inclusionary zoning (requiring developers to include a share of affordable units in their projects) and rent control (capping allowable rents or rent increases). These are ultimately indirect subsidies, paid not out of a governmental budget, but out of the profit margins of land owners and developers and the rents of market-rate tenants …
4. Housing vouchers — a direct subsidy which follows the tenant/household, rather than the housing unit itself.
Today I’ll give an overview of housing voucher programs, their history in the United States, what they do well, and what they don’t do well. This is not to say that the other options don’t have their place in providing affordable housing, just that they’ll have to be a topic for another essay and another day.
Ultimately, (these affordable housing issues) have to do with the contradictory expectation that housing will be both broadly affordable and a good investment vehicle. Daniel Hertz nailed this paradox a couple years ago in The Atlantic:
These two ideas are almost entirely mutually exclusive. The first essentially says, “Use housing policy to keep home prices down”; the second says, “Use housing policy to keep home prices up.”
Until we address this root contradiction, treating housing unaffordability one tenant at a time, or one unit at a time, is always going to be inadequate.