In lieu of an abstract, here is a brief excerpt of the content:

| 171 10 Recasting Housing Subsidies Being able to afford a safe, clean place to live has always been central to escaping poverty. President Franklin Roosevelt’s famous description of hardship in America was of one-third of a nation “ill-fed, ill-housed, and ill-clothed.” When a National Academy of Sciences panel came out with its definition of poverty, it viewed food, housing, and clothing as “essentials.”1 Homelessness is the most severe manifestation of what happens when people cannot obtain adequate housing. Many face other hardships, such as having to live in substandard or overcrowded conditions or in crime-ridden neighborhoods or having to spend so much on housing that they deprive themselves and their families of other essentials. The housing crisis engulfing the country since 2007 has put the problem into sharp relief as many families have lost their homes to foreclosure. The scale of the displacement is enormous. By the end of 2009, more than 4 million families were subject to foreclosure or were more than ninety days late on their mortgage payments. The size of the debacle is so great that it has stimulated a worldwide economic crisis. For the first time, we are hearing loud, critical voices questioning whether low-income families should become homeowners—perhaps owning a home should not be viewed as critical to the American dream. Government policies aimed at helping low-income and middle-income families to buy homes have come under withering attacks. Since the 1930s, the U.S. government and other governments have intervened extensively in the housing market with the goal of helping people find and afford adequate shelter. The federal government has provided tax subsidies to families buying homes. To help low-income families, the federal government has funded local housing authorities to build and manage public housing, as well as tax credits for building private-sector units that low-income families can afford and housing vouchers directly to families, enabling them to reduce their rental costs to 30 percent of their income. Currently about 28 percent of renters with incomes low enough to qualify for government support are lucky enough to benefit from one of these 172 | Recasting Housing Subsidies housing programs. But many of these programs are ill conceived, wasteful, and inequitable. They often discourage work by low-income recipients, and obtaining assistance is too much like a lottery—some win a big subsidy while other equally deserving families receive nothing. Before turning to analysis of government programs, however, let us examine the key patterns and trends in the nation’s housing conditions. Most remarkable is the long-term increase in the quantity and quality of housing, even among low-income families. Today, low-income families in the United States live in units that average about 1,400 square feet; amazingly, these homes are about 40 percent bigger than the homes lived in by the average family in France, Germany, and the United Kingdom.2 Moreover, since the 1950s the United States has witnessed large reductions in overcrowding, in units without full plumbing facilities, and in homes in dilapidated condition. Homeownership rates rose as well, from about 55 percent in 1950 to 66 percent in 2000. By 2007, about 40 percent of low-income families had become homeowners. Although the national homeownership rate rose further during the housing bubble, the figure fell back to about 66 percent as of 2009. Alongside these marked improvements in housing have come worries over the affordability of adequate shelter. As of 2005, only 3 percent of renters lived in severely inadequate housing, but 45 percent had rent burdens that exceeded 30 percent of their incomes. A large share of the poorest families spent more than half of their incomes on housing: 54 percent among those with income less than 30 percent of the area median income; and 20 percent among those with incomes between 30 and 50 percent of the area median income.3 These figures would be worse if not for the government housing programs that limit what recipients pay to 30 percent of their incomes. But how well are these housing programs working for low-income families? Many recipients of housing assistance live in place-based subsidized housing, including public housing blocks, that have bad reputations and are often located in segregated , poor neighborhoods. Others are in private units built by contractors who received large tax credits in return for renting some of their units to low-income households. Beneficiaries of these below-market rentals may...

Share