Rebuilding the Intellectual Foundations of Housing Policy
What will it take to attract new attention and priority to low-income housing assistance? A necessary, although perhaps insufficient, condition for regaining forward motion and rebuilding support for housing assistance programs is the development of broad agreement about the aims of that policy. A second intellectual building block would be the identification of a set of cost-effective policies for achieving those aims. And finally, building on those new foundations, consensus would be needed on a clearly defined, achievable goal or goals commensurate with the likely availability of federal and other budgetary resources.
A Possible Model
In the midst of the current intellectual disarray, there is a promising, instructive example of how a rethinking of low-income housing policy might proceed and how it could attract new resources and energy. The model is the federal government's commitment to end chronic homelessness. What is distinctive about this policy? First, there is broad, if not universal, agreement on a national goal set by the federal government. Second, there is a sound research base and growing practical experience suggesting that it is cost-effective to invest public resources in the effort.
Why was it possible to get agreement on this goal? We can speculate on this. First, the target is of manageable proportions: a population estimated to be no more than 200,000 individuals. Second, there is a methodology – assisted housing linked to appropriate supportive services – for which there is reasonably strong research evidence showing that in most cases it gets people permanently off the streets. Moreover, there are studies indicating that it does so at a cost to the public sector hardly greater than that incurred by allowing them to remain on the streets or cycling through emergency rooms, jails, institutions, and shelters. Given this information, it is possible to calculate quickly the additional or redeployed resources needed to reduce or end chronic homelessness and to calculate the marginal public cost to do so. All in all, it seems the goal is not just meritorious but within reach.
What has been the result of setting this policy goal? New resources have been committed, not only in the federal budget – appropriations for HUD homeless assistance increased by 30 percent from FY2001 to FY2006, for example – but in the form of plans and matching commitments by mayors, governors, foundations, and others. The goal has focused energy and mobilized political support sufficient to sustain the initial effort for five years so far. And, preliminary evidence suggests it is producing, in many places, measurable reductions in the numbers remaining homeless for long periods. Real success sustains and feeds the effort, resulting in continued progress toward the goal.
The central lesson? In one instance, many have come to believe that housing assistance can be used in a particular way to achieve an important outcome with a feasible investment of additional resources. Seeing this success, politicians have rallied to the effort. Budgets have increased.
Could this be the model for a general reshaping of low-income housing policies? What other desirable, achievable social goals can be identified for which there is or conceivably could be a demonstrated cost-effective link between provision of assistance and progress toward the goal? Before attempting to answer these questions, it will help to clear away some of the intellectual scrub brush that has grown up around low-income housing policy. We must adjust some of our standard ways of thinking about housing needs and housing assistance.
Gutting the Old Place and Getting False Ideas Out of the Way
What are low-income housing needs? For over twenty years, the federal government's standard measure of the need for low-income housing assistance has been HUD's estimate from census data of "worst-case needs.” By this conventional measure, over five million very low-income renter households have severe housing needs, that is, use over one-half of their income for rent and utilities or, in far fewer cases, occupy severely inadequate units. Contrary to repeated reporting of an “affordable housing crisis,” the estimated number of households in "worst-case need” has hardly moved over the last twenty years.
Is this a meaningful measure of need for housing aid? It is absolutely true that millions of households struggle to afford decent housing in a decent neighborhood. At the same time, it is absolutely wrong to infer that the current standard needs estimate – or any number like it – represents a shortfall in the number of government housing subsidies. Apart from methodological issues, the measure has three problems as an estimate of need:
• It is largely a count of those with excessively high rent burdens, which is not a measure of housing need – the housing may be quite adequate – but rather of the numbers who are required (or in some cases to some degree choose) to use most of their income for housing.
• Most people solve their housing cost problems without receiving a federal housing subsidy – within a year, roughly one-half of those using over one-half of their income for housing will no longer do so, usually because of a change in their income.
• Providing a subsidy to a household in this category may not solve its housing problem; that is, providing a subsidy in the wrong circumstances or in the wrong form may not solve a housing problem or convey any benefit at all. Many who receive assistance continue to live in dangerous housing or bad locations. In fact, some are induced to do so with aid.
A better way to estimate housing assistance needs would be to identify the group of households for whom housing assistance is likely to yield a benefit, for example, by improving opportunities and living conditions. This approach does not look at reduced housing cost burdens as a benefit in and of itself, although reduced housing costs will in many cases free income for other uses and may yield direct benefits if it supports a move to a superior location or unit.
A measure of housing need must identify the portion of the population at risk of having long-term severe housing needs without continuing housing assistance. Using the American Housing Survey or other census data, it is possible to estimate the number of households that currently experience the most severe housing needs and cannot afford housing that is not severely substandard and in a safe location.
• Those with the most severe housing needs are those who are either homeless, living in severely substandard housing, or living in an unhealthy location (e.g., high rate of violent crime; dangerous environmental exposures). Certainly, for families with children, the indicators of unhealthy location could include failing neighborhood schools.
• In determining whether a household can afford better housing, it is important to estimate all financial resources and needs, including wages and cash income from all sources, food stamps, and other major in-kind resources.
• To determine whether households with a given level of resources can afford adequate, safe housing, it is necessary to consider the availability of such housing in the local market that is affordable to them (e.g., costs no more than 30 percent of total resources or 50 percent of cash income). Some portion of this supply should be subtracted from the initial estimate of subsidy needs because it can be accessed by providing information and relocation aid rather than a continuing housing subsidy.
• Finally, within the group who have housing needs that cannot be met with their current resources from the local affordable stock, it is necessary to estimate the proportion in need who were in a similar situation for a long period, say two years prior. This is the approximate number of households likely to require
long-term rental assistance to meet their housing needs because they will not find the resources on their own.
Calculations using such information can produce a reasonable estimate of how many households may benefit from a long-term housing subsidy. This is not to say, necessarily, that a form of assistance other than a housing subsidy – perhaps a subsidy for child care or transportation – would not better serve the needs of many people in this group. And, there are some in this group for whom a housing subsidy will not provide a benefit; a subsidy may be a disincentive for work or other self- improvement, or it may be used in a dangerous location, for example.
Within the group who could benefit from a subsidy, there will be a high proportion whose incomes are limited by disability or lack of preparation for employment. For many people, help that directly addresses limits on their earning power, possibly offered in conjunction with a housing subsidy, may prove more cost effective than housing assistance alone.
Some households may face an immediate, severe housing problem – perhaps precipitated by a family crisis or disaster – that does not require long-term assistance but may require short-term housing assistance (or another form of aid). Correctly identifying the groups needing various kinds of help, including either long- or shortterm housing subsidy, will help us think about when and how housing subsidies should be offered and about which combinations or sequences of housing aid and services are appropriate to a given set of personal circumstances.
Current Programs Have Flaws in Their Design
Existing federal housing programs share common flaws that reduce their effectiveness and damage their chances for regaining broad political and budgetary support. For example,
• Who thinks that unconditional, open-ended housing subsidies encourage families to go to work or otherwise take new steps to improve their lives? Yet, that is the promise offered to virtually anyone who gets to the top of their local waiting list for housing assistance, regardless of their circumstances or desires.
• Who thinks it is a good idea to subsidize the poor to live in places where they are in physical danger, with bad schools and poor services, and isolated from the social mainstream? Yet, some recent research and a substantial body of anecdotal evidence suggests that these are the places where a great many, if not most, housing subsidies are used; and too often the subsidy is only offered on the condition it be used in such a place.
• Who thinks that the most cost-effective strategy to address shortages of affordable housing is to continuously build new subsidized housing in nearly every housing market in every state? Federal tax credits and grants add close to 100,000 new apartments to the affordable housing supply each year – approaching one-third of all U.S. multifamily production. Reason and research suggest that these increases are substantially offset by, and contribute to, continuing losses of marginal private affordable stock. In most markets, an oversupply of apartments for rent virtually guarantees that for every new subsidized unit built, an older unit will be abandoned. Generally, decisions about where to build new subsidized apartments are too often made without regard to an overall community development plan or strategy, where these exist.
• Who thinks that the terms and conditions for housing aid should be the same for the elderly or the severely disabled as for families with children? Yet, most analyses of housing needs don't recognize the varied ways that housing assistance can be used by people in different circumstances and at different stages of life.
• Who believes that it is wise policy to separate the administration of low-income housing assistance – at all levels of government – from the administration of other benefit programs for low-income households and individuals and from the administration of programs for the development of low-income communities? It is reasonable to ask whether progress in addressing poverty depends first on reorganizing delivery so that it is possible to provide integrated packages of assistance under unified supervision and with clear accountability at each level for their effective use to achieve locally established public policy objectives.
Rebuilding with Ideas That Could Shape a New Low-Income Housing Policy
A new, stronger intellectual base for low-income housing policy will require a lot of learning, both through more systematic testing and evaluation of new approaches and by designing programs in such a way that they promote and reward local success and facilitate replication of successful models.
Housing assistance is not, as those who talk about a shortfall of subsidies often imply, an end in itself. It can only be justified if it improves lives for those who receive it and if dollars spent in this fashion provide greater social benefits than the same dollars spent for other forms of assistance (e.g., child care or health insurance for similar households).
Advocates of low-income housing must recognize the place that these programs hold in relation to major social goals such as improving economic opportunity and upward mobility; building safe, viable, socially diverse communities; and providing access to health and safety. By its nature, housing assistance is subordinate to and supportive of broader social strategies to achieve these social goals; it is part of the tool box and is not always the most appropriate or cost-effective tool to use to aid a given household at a particular time or over time. Moreover, it appears that, to be effective, bousing assistance often must be combined with other sources of support to families and those with special needs.
Recognizing that knowledge of when and how housing assistance is likely to be applicable is inadequate, we can nevertheless begin its reconsideration with certain premises:
• The benefits of housing assistance vary greatly in different circumstances and depend on the contractual terms on which it is offered.
• Using housing assistance to expand location choice and mobility can benefit some groups (e.g., by making them safer or improving their access to good schools), but more must be learned about the circumstances and conditions under which it yields such benefits.
• Given the physical nature of housing and its interaction with its surroundings, the rationale for housing assistance wifi be strengthened or weakened depending on whether a given approach supports other local community development goals, including providing affordable housing dose to employment centers, reducing concentrations of poverty that contribute to crime and inhibit neighborhood development, and building assets and homeownership opportunity for younger households.
Based on these very general insights and what we know to date about the conditions under which housing assistance is likely to be beneficial, here in outline is a multipart strategy for a new federal housing policy built on more solid foundations:
