Type of Government Housing Subsidy
Why is this important?
Various housing assistance programs are available to households to ensure that the household can pay an affordable rent based upon their income. These programs can offer direct rental assistance to a household, subsidize the construction or operation of a privately-owned housing unit, or take the form of publicly-owned housing [i]. Understanding the utilization of these housing assistance programs is important as they are available to low-income to very-low income households, and are an indicator of poverty and incomes that are insufficient to pay the cost of housing [ii]. The utilization of housing assistance by certain races may therefore indicate higher rates of poverty and lower incomes.
The need for housing assistance generally outpaces availability of direct assistance and subsidized units, so many households may be paying more for housing than they can afford, living in tenuous situations, finding informal housing, living in undesirable locations, and sacrificing other necessities. Competition may be high for affordable units for those households without assistance, revealing additional need for affordable housing. Purchasing a home is out of reach for many of these families because they have insufficient cash for down payment and closing costs, cannot pay down debts, have low credit scores, and are subject to higher borrowing costs [iii].
[i] “Federal Housing Assistance for Low-Income Households.” Congressional Budget Office. (2015).
[ii] Measuring Poverty: A New Approach. Washington, D.C.: The National Academies Press, 1995.
[iii] Herbert, Christopher E., Eric S. Belsky, William C. Agpar. “Critical Housing Finance Challenges for Policymakers.” Joint Center for Housing Studies of Harvard University (2012).