Striking a Balance on Housing Policy

The United States needs a balanced, comprehensive housing policy that not only protects low-income families from predatory lenders but offers them access to credit and loans with favorable terms. The “American Dream” of homeownership may not sound so joyous now with record numbers of foreclosures. Yet homeownership is still a vital institution for promoting healthy families and communities. Numerous studies show that homeownership promotes financial stability and upward mobility in low-income households.¹

Increasing Share of Income Goes to Housing

Homeownership provides financial stability to families while their home grows in value; later, they can use their home equity to get credit for other productive investments, like sending a child to college, starting a business, or establishing an adequate retirement fund. For minority groups, who have more wealth tied up in their homes than in other assets, homeownership has been the main way for older generations to pass wealth on to children and grandchildren. Rich or poor, people who own their homes want their communities to be good places to live and raise children. Homeowners are more inclined to be involved in actively maintaining the quality of their community. They are more likely to vote, participate in local government and community groups, and play leadership roles.

It is also essential to help more low-income families secure affordable rental housing. Not all families want or need to be homeowners, and no one is well served by being steered toward homeownership before he or she is ready for the financial commitment that homeownership brings. But there is simply not enough public rental housing assistance. The supply doesn’t come close to meeting the demand, so families who qualify for assistance put their names on waiting lists and end up languishing there for years.

Public rental housing assistance takes two forms: unit-based and voucher-based. The difference is that families who receive vouchers can move anywhere that a landlord accepts vouchers, while families who have unit-based assistance are assigned their housing by their local government housing authority. Families use vouchers to escape dangerous neighborhoods, move their children into better schools, move parents closer to jobs, or be closer to vital services like transportation, health care, and supermarkets. Relocating to a less oppressive neighborhood has been shown to lead to lower rates of depression and anxiety, lower rates of obesity and food insecurity, and broad improvements in children’s well-being.² Moreover, vouchers are more cost effective than unit-based housing, according to comparison studies, yet 70 percent of housing assistance is unit-based.³ In strictly economic terms, it makes sense to shift to using more vouchers.

Half of all low-income households, homeowners and renters alike, face a “severe housing cost burden,” meaning that they spend 50 percent or more of their income on housing.⁴ You can’t ordinarily haggle with a landlord over the cost of rent from month to month. What you can do is cut back on food, walk to work instead of taking the bus, turn down the heat in winter, and/or leave a child to be watched by an older sibling instead of at a childcare center. Housing cost burdens force families to make difficult decisions about cutting back on necessities. In a comparison study by the Center on Budget and Policy Priorities, housing assistance was found to be more successful than other kinds of government assistance in helping families escape poverty.⁵ The importance of housing policy in reducing poverty, promoting family stability, and increasing intergenerational economic mobility is very hard to overstate.

Issues