Fundamental Housing Policy Reform

Abstract

This paper argues that the two most serious shortcomings of the current system of low-income housing assistance are its excessive reliance on project-based assistance and its failure to provide housing assistance to all of the poorest families who ask for help. Evidence on the performance of housing programs indicates that project-based assistance has enormously excessive cost for the housing provided. It also needlessly restricts recipient choice. The non-entitlement nature of the system is inconsistent with plausible assumptions about taxpayer preferences. The paper describes concrete actions that will eliminate the excessive cost of the system and achieve an entitlement housing assistance program for the poorest households without spending additional money, and it shows that the major objections to these proposals are inconsistent with evidence on program performance.

Keywords: Housing policy, Low-income housing assistance, Housing vouchers

JEL Classification: H, I3