The U.S. Biden Administration has floated a Housing Supply Action Plan designed to create some 800,000 ‘affordable’ homes. It dips into an existing (and now profoundly out-of-date) toolbox that is being used by the Housing and Urban Development department (HUD). The Low Income Housing Tax Credit (LIHTC) allows housing investors to lower their taxes in return for limiting the rents they can charge for newly built housing units. The reduced rent applies for a limited time. When time is up, the investors can market that housing on the free market.
America is suffering an ever deeper housing affordability crisis. It needs permanently affordable housing, not temporary affordability that in the long term adds very few units to a much needed supply1.
Another tool in the HUD toolbox, Section 8 Vouchers, provide a financial incentive to private landlords of existing housing. A voucher fills the financial gap between the rent being charged and what a tenant can afford, based on their income.
This program is effectively dead in the water. Section 8 Vouchers support a very small number of the people who qualify based on their income. As well, it is not easy to find landlords who are prepared accept a tenant with a voucher.
What alternatives are there to warmed-over, out-of-date HUD initiatives? Read more in CityWatch: Only Radical Changes Will Make Rents Affordable
