“Housing is the largest single budget item for most low- and moderate-income families. Keeping a roof over one’s head is just as important as being able to buy food and receive health care. Yet, in contrast to food stamps and Medicaid, housing assistance for low-income households is not an entitlement. Rather, Congress allocates a pot of funds (really, several different pots) that can be distributed to households until the money runs out. About one in four eligible low-income households receives federal housing assistance at any given time. Many poor households who qualify for benefits will never receive them because the queue ahead of them is too long.”

Key takeaways are:

• Poor families face a gap between their incomes and housing costs.
• Renters spending a large share of their monthly income on housing are at high risk of housing instability and displacement.
• A common strategy to stretch a tight housing budget is to double-up, or share one house or apartment with multiple families.
• Another strategy is to live in unregulated informal housing.
• Many with limited housing budgets live in poor quality housing, sometimes below minimum housing standards.
• Lack of decent and stable housing doesn’t just harm poor families. Overcrowding can affect public health – perfectly illustrated during the COVID-19 pandemic. It also impedes childhood development.

Proposed Solutions:

• To address the problem of low incomes, give poor people more money. Questions that need to be answered: Which level of government should provide funding? How much money should each person or family receive? Can the program be designed to minimize unintended consequences, like reducing people’s incentive to work or encouraging landlords to raise rents?
  • Tax policies are one area the federal government already uses to supplement income, like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). A significant disadvantage of these is that they are an annual occurrence while rent is due on a monthly basis.
  • Raising the federal minimum wage would likely make it easier for some low-income families to pay for housing, but it would be a less precisely targeted mechanism, even if there were no off-setting job losses.
  • One approach that has been tested in some localities is universal basic income (UBI). There hasn’t been a large-scale UBI tested in the US, and one challenge would be incorporating geographic differences in the program.
• Better functioning, more flexible housing markets are necessary but not sufficient
  • Three types of regulatory reforms would be particularly helpful to low- and moderate-income households: Relax zoning restrictions on housing density; rethink building codes that require full kitchens and separate bathrooms for every household; remove regulatory barriers to manufactured and modular housing.
  • Fix the HUD’s housing voucher program. Recent research has indicated that a variety of technical fixes could increase landlords’ acceptance.
• Market-based approaches won’t solve housing problems for everyone.
  • Private LIHTC developments are popular with both Democrats and Republicans, but construction subsidies are more expensive than vouchers (in California developing new LIHTC projects costs $480,000 per unit), and thus the impact is limited.
  • The clearest case to be made for public or nonprofit ownership of subsidized properties is that some people require more than just an apartment and a voucher to remain safely housed. People with chronic mental or physical health problems need supportive services.
  • In addition to supportive housing some local housing markets will probably always require non-privately owned housing because of the deficit of available housing, and the privately-owned housing is prohibitively expensive. These are markets like New York and San Francisco.
• Vulnerable renters need consistent legal protection.
  • Landlord-tenant laws are adopted at the state level, so there is wide variation in legal protections. Most other developed countries regulate leases at the federal level, which provides greater consistency and transparency.
  • Laws that make it very difficult for landlords to remove problematic tenants have the potential to backfire, encouraging landlords to screen out perceived less desirable renters up front.
  • Overly strong tenant protections can deter property owners from becoming landlords, leading to a smaller rental housing stock.

I definitely recommend buying the book so you can get the full benefit of Schuetz’s full analysis of the challenge and detailed solution proposals. You can buy it here.

Link to Chapter 1 of Fixer-Upper post.

Link to Chapter 2 of Fixer-Upper post.

Link to Chapter 3 of Fixer-Upper post.

Link to Chapter 5 of Fixer-Upper post.

Link to main Fixer-Upper post.