Housing subsidies 1 Flashcards
(10 cards)
What is the primary focus of U.S. housing assistance?
U.S. housing assistance helps people consume housing through programs and tax code features. The focus of these slides is on programs that subsidize rents for low-income households.
How does spending on rental assistance compare to homeownership-related spending?
Spending on rental assistance programs is sizable but dwarfed by spending through tax code provisions related to homeownership, such as mortgage interest deductions and capital gains exclusions.
What are the three main categories of federal rental assistance programs?
Public Housing (Supply-Side)
Tenant-Based Housing Vouchers (Demand-Side)
Privately-Owned, Subsidized Housing (Mostly Supply-Side)
What are the two main views on who should be served by public housing?
Targeting: Public housing should serve the most vulnerable households (e.g., lowest income, disabled, homeless, aged).
Mixed-Income: Public housing should contain a range of incomes to prevent contributing to concentrated poverty.
What are the challenges faced by public housing in the U.S.?
Public housing faces declining inventory and mismanagement. Public Housing Authorities (PHAs) are underfunded and unable to make regular capital improvements, leading to deteriorating conditions and examples of mismanagement.
What are the key components of public housing funding and its challenges?
PHAs receive funding from the HUD and tenant rent payments, but they are chronically underfunded. This results in poor maintenance and mismanagement, contributing to public housing being widely viewed as a failed experiment.
How is rent determined in public housing (Brooke Rent)?
Rent is based on 30% of the household’s adjusted income. If a household has zero income, they typically pay a PHA-determined minimum rent, usually around $50/month. This is known as ‘Brooke Rent.’
What are the benefits and drawbacks of the ‘Brooke Rent’ approach to rent determination in public housing?
Benefits: It provides a natural phase-out of assistance as income rises, reducing subsidies for higher-income households.
Drawback: It effectively taxes earnings at a rate of 30%, which could discourage work.
What does the table in the slides show about public housing rent based on income?
The table shows that as a household’s adjusted income increases, their implied monthly rent in public housing increases proportionally. For example, a household with an adjusted income of $5,000 pays $125/month, while a household with an adjusted income of $70,000 pays $1,750/month.
What does the diagram represent in terms of an in-kind transfer like public housing?
The diagram illustrates how public housing as an in-kind transfer affects household consumption of housing and other goods.
The blue line shows the initial budget constraint, while the orange curve shows the new budget constraint after receiving the in-kind transfer, reducing the effective price of housing.
c: Represents the new consumption of other goods after the transfer.
h: Represents the new quantity of housing consumed after the transfer.
The goal of the transfer is to shift the consumption toward more housing while maintaining a reasonable consumption of other goods.
