The Mediocrity of Government Subsidies to Mixed-Income Housing Projects

Abstract

Since the 1970s a new vehicle for the provision of housing assistance - the mixed-income, or inclusionary, project - has flowered in the United States. In a community of this sort, the developer and its government benefactors designate a fraction of the dwelling units, typically between 10 and 25 percent, as targets for the delivery of aid. Eligible households who successively occupy these particular units pay below-market rents, while the occupants of the other units do not. This article situates this innovation within the broader history of U.S. housing assistance policy and evaluates its merits. The central conclusion is that the mixed-income project approach, while superior to the traditional public-housing model, is in almost all contexts distinctly inferior to the provision of portable housing vouchers to needy tenants. Although prior commentators have also touted the voucher approach, the article enriches their analyses by addressing more fully the social consequences of various housing policies that might be used to economically integrate neighborhoods and buildings.

Keywords: affordable housing, housing policy, inclusionary zoning, mixed-income housing, public housing, housing vouchers, Section 8, neighborhood integration

JEL Classification: H75, I38, J15, K11, L33, R14, R21, R52