Vouchers Versus Production Revisited
22 Pages Posted: 30 Mar 2000
Date Written: February 7, 2000
Policy makers who want to help house low-income families might either fund production of new units or supplement the payments families make for existing units. Conventional wisdom holds that production costs more, but McClure (1998) claimed long-term discounted costs of project-based and tenant-based housing assistance may not be very different.
Using large HUD data systems for assisted tenants, we find that 15-20 years after construction, Section 8 New Construction/Substantial Rehabilitation (NC/SR) projects remained considerably more expensive than Section 8 Certificates. The Federal government could not use construction guarantees to preempt rent inflation. Rents for units that developers wanted to build are higher than comparable certificate rents, even in the most inflated markets.
JEL Classification: H2, I3, R0
Suggested Citation: Suggested Citation