Can universal housing vouchers ever come to the US?
Political momentum is building for the government to fully fund Section 8. Numerous obstacles remain
When then-presidential candidate Joe Biden pitched expanding the nation’s housing voucher program to 11 million people, the proposal garnered little attention. It still did not make waves when Congress proposed $90 billion toward that goal.
The proposal eventually did catch the eye of lawmakers in October — to the extent that it was considered an easy cut from a $3.5 trillion spending package to appease moderate Democrats demanding a less expensive bill.
Covering rental assistance for all tenants in need for the next year would cost the federal government approximately $100 billion, according to the National Low Income Housing Coalition. Congress is now on track to pass a measure that would provide a quarter of that, a far cry from the “universal” vouchers Biden promoted during his campaign.
Cost is just one reason the U.S. has not adopted a demand-led, or universal, voucher program. Acceptance of vouchers is not uniform throughout the country. Landlords have been known to reject voucher holders, even in areas that have explicitly barred income-based discrimination.
Another obstacle is a general lack of political will; some housing economists warn that a dramatic expansion of voucher funding would drive up rents, especially in constrained housing markets.
“The reason it isn’t a priority is the people who would get the housing are poor, and they are largely people of color,” said Texas Housers’ co-director John Henneberger. “This is a problem that has been put off in this country generation after generation.”
Section 8, also known as the Housing Choice Voucher program, serves 2.3 million households, but another 8 million families are eligible. Many sit on waiting lists for years. Others do not even get that far, waiting in some cases for more than a decade for their local housing agency to accept new applications.
Under the program, tenants typically pay 30 percent of their income on rent, and the federal government foots the rest, although there is a cap based on average market rent as determined by local housing agencies.
The program was launched in 1974, at a time when conditions in public housing units were already declining. By the 1990s, the federal government was actively turning resources away from creating new housing in favor of vouchers and other forms of funding.
Still, the federal government does not require landlords to accept tenants with vouchers. Texas and Indiana have even passed state laws prohibiting local measures that would bar landlords from rejecting such tenants.
Edward Glaeser, a Harvard University economics professor and senior fellow at the conservative-leaning Manhattan Institute, said that vouchers should be better targeted to those who need them the most, such as families with young children.
“If you throw a demand-side subsidy at a constrained market, the result will be rising prices,” he said. “If [subsidies] are large enough to make an impact on the market, they are large enough to raise prices and make the problem worse.”
Henneberger, whose organization advocates for low-income tenants in Texas, said concerns about supply “do not outweigh people’s problems of lack of money for being able to pay something close to market rate.”
Capping rent increases could perhaps address this problem, but it would be a tough sell.
“As a practical matter, if we move from serving one in four [eligible tenants] to effectively serving all of them, we are going to be channeling a lot of money into the pockets of landlords,” said Kirk McClure, an urban planning professor at the University of Kansas. He said he’s not a fan of rent stabilization, but he could support temporary implementation if vouchers were made universally available.
“It has to be on an emergency basis until we get a market under control,” he said. “It needs to be done with surgical care, not with brute force.”
“Most advanced economies” have income-related housing voucher programs, according to Peter Kemp, a professor of public policy at Oxford University and editor of the book “Housing Allowances in Comparative Perspective.” Most allowances are “universal,” in the sense that they are available nationally and to all renters, he said. Canada is an outlier in that the programs are employed on a province-by-province basis. To the extent that they exist, they largely target specific populations, such as the elderly, Kemp said.
Even in demand-led programs, renters who qualify do not necessarily seek assistance.
“All means-tested programs have ‘take-up rates’ that are well below 100 percent, and housing vouchers are not an exception,” Kemp explained, noting such reasons as a stigma attached to accepting assistance, ignorance of the program and the fact that some tenants feel the effort isn’t worth the amount of available relief.
Another major difference in the U.S. involves annual inspections required by the Department of Housing and Urban Development to ensure Section 8 housing is safe and sanitary. These standards are stricter than in other countries, according to a 2016 study by the Harvard Joint Center for Housing Studies.
The result, according to the study, is that some landlords decide accepting vouchers is not worth the headache. According to the report, some renters lose their vouchers because they are unable to find suitable housing or are forced to select housing that’s more expensive than they would prefer.
The path forward
If the spending bill approved by the House of Representatives is left intact, $25 billion will be appropriated for housing choice vouchers and $1 billion for project-based funding, down from the respective $75 and $15 billion originally proposed. Essentially, the conversation began with universal vouchers and ended with a level of funding commensurate with recent years. The Senate may still make additional cuts before passing the package.
If the federal government adopts a universal program, the Center on Budget and Policy Priorities recommends a phase-in period, dedicating mandatory levels of funding for five to 10 years. Such a program would ultimately expand based on the number of people who qualify rather than being subject to political wranglings over discretionary funding.
As it stands, the program has other problems. Tenant advocates have argued that the structure of the housing voucher program, in some cases, sustains racial segregation. Because local housing agencies determine the amounts covered by vouchers based on the average market rent, tenants are incentivized to remain in low-income areas. Landlords in these areas also tend to be more willing to accept vouchers.
Eva Rosen, an assistant public policy professor at Georgetown University and author of “The Voucher Promise,” said reforming how average market rates are calculated is key to eliminating the voucher “premium,” or the incentive for landlords to accept vouchers in extremely low-income areas. In some cities, HUD has rolled out a new way of calculating rent ceilings based on individual ZIP codes. Some jurisdictions have also eased up on inspection requirements for landlords with good track records, which Rosen said could help make the program more palatable to building owners.
Of course, a universal housing voucher program is not the only plausible solution to housing instability. The National Low Income Housing Coalition’s Sarah Saadian pointed to the possibility of providing tax credits to renters, akin to the child tax credit program that Congress is poised to extend. That program could lay the groundwork for providing housing assistance through a similar mechanism, she said.
Many tenant advocates saw the Biden administration’s Build Back Better plan as a rare chance to get close to universal housing assistance — an opportunity that seems to have slipped away. McClure said he doesn’t have much hope that the country will adopt a universal voucher program. Still, five years ago, he didn’t think the subject would even be up for debate.
“How often do you see major outcries on housing issues?” McClure said. “What the heck, it is good that we’re even thinking about this possibility.”