Early studies show that providing permanent housing actually reduces public costs associated with meeting the needs of the homeless. We estimate that providing Housing Choice Vouchers for the 3.1 million extremely low-income households in need would save approximately $44 billion per year.
This blog post is part of the series “Closing the Racial Gaps: Together We Can,” which highlights efforts across the United States that show promise for closing racial opportunity gaps and creating a more equitable future.
It is accepted wisdom, supported by loads of research, that stable, affordable housing is a platform for attaining better health, accessing education, and finding good jobs—in other words, for leading a better life. Some, not all, federal housing programs have successfully provided decent housing to very low-income households. Quite possibly the most successful programs are “project-” and “tenant-” based Section 8 assistance. Although effective at meeting housing needs, we will see how insufficient federal budget allocations on Section 8 have led to housing and racial injustice.
At the National Housing Trust, we have used project-based Section 8 assistance to help preserve affordable rental housing for over 25 years. Project-based Section 8 has been a successful public-private partnership that helps provide affordable housing to very low-income households. Today, however, I want to talk about tenant-based Section 8 assistance. Tenant-based Section 8 vouchers, commonly known as Housing Choice Vouchers, are provided directly to very low-income residents to find an affordable home in the private market.
Over 3 million extremely low-income senior, disabled, and family households reside in project- or tenant-based Section 8-assisted housing in every nook and cranny in the U.S.
The public policy lesson: With public support, the private market is an excellent vehicle for the delivery of affordable housing.
You might presume that such a successful, market-based program would deliver basic housing affordability for eligible households. But you should always check your assumptions. Being eligible for Section 8 does not guarantee that a poor household receives Section 8 assistance. Securing Section 8 assistance is more akin to winning a lottery. The odds are definitely against you. Less than one in four households actually receives Section 8 assistance. Put another way, 74 percent of U.S. households who are eligible do not receive Section 8 assistance. More likely, the household is placed on a very long Godot-like “wait list.” And the household waits. And waits. And waits. The average wait time on such a list is years. Not months. Years.
According to HUD’s Picture of Subsidized Households, a renter household that used a voucher in 2015 had waited more than two years on average to move into a unit, with the wait time in the San Diego metro area as long as seven years! Waiting lists in Cleveland, Detroit, and the Washington, D.C. metropolitan area are about two years, while the wait in Los Angeles is four years.
This lack of universal application of Section 8 is obviously a housing injustice. According to the U.S. Census Bureau’s American Community Survey (ACS), 20.7 million U.S. renter households are cost-burdened, spending more than 30 percent of their income on housing. This number represents slightly more than half of all renter households. But there is another pernicious outcome of the lack of Section 8 resources for every eligible household. Lack of Section 8 fuels inequality and works a racial injustice. In 2014, one out of every 3.6 black households in metropolitan areas was extremely low income, a rate 2.2 times higher than white households. (Source: 2010-2014 ACS 5-Year Public Use Microdata Sample)
The Bipartisan Policy Commission (BPC) has recommended making federal rental assistance available to all eligible extremely-low-income households (with incomes at or below 30 percent of Area Median Income) who apply.
According to the BPC, the cost of making vouchers an entitlement, like food stamps or Social Security, is approximately $22.5 billion, to serve 3.1 million additional extremely low-income households.
However, the BPC cost estimate for universal vouchers did not take into account the savings that accrue from a universal voucher approach. More research is needed, but early studies show that providing permanent housing actually reduces public costs associated with meeting the needs of the homeless. For example, researchers in Los Angeles found that providing permanent supportive housing to homeless individuals produced net monthly savings of public costs at $1,190 per resident per month, or $14,280 annually. Three-quarters of the cost savings was attributed to a reduction in the use of health services.
Based on these findings, we estimate that providing Housing Choice Vouchers for the 3.1 million extremely-low-income households in need would save approximately $44 billion per year. The nation would reap tremendous benefits. Not only would we be housing our lowest income citizens, but we’d be providing stable housing for millions of minority households opening the door for them to access education, steady jobs, healthcare, and opportunities for a brighter future. Seems like a pretty good idea.