Housing Allowance Program Research Articles

Rent Subsidies

Several studies have evaluated the experimental housing allowance program authorized by Congress in 1970 and implemented by the Department of Housing and Urban Development. The studies that are relied upon most have nevertheless been considered inadequate because they were essentially case studies. An evaluation design has recently been suggested, the random-comparison-group design, that makes the data from the Administrative Agency Experiment useful for evaluation. The outcomes in the AAE program sites are compared here to projected outcomes based on an analysis of Annual Housing Survey data. The evaluation finds that rent burdens were reduced and housing quality was improved jor many who lived in substandard units. These impacts were achieved without producing inflation. Substantial confidence in the findings is permitted not only by the logic of the method itself, but by corroboration from other research. The design employed is found to be practical and powerful for certain evaluations, and its use in connection with other public programs can be recommended. The random- comparison-group design could substitute for randomized experiments in situations in which such controlled experimentation is not possible or was not carried out.

Neighborhood revitalization's effects on tenants and the benefit-cost analysis of government neighborhood programs

This paper analyzes the potential effects of neighborhood improvements on low-income tenants. The theoretical model shows that tenants with strong psychological ties to their current neighborhood may suffer significant losses due to rent increases caused by neighborhood improvement, even if no displacement occurs. These tenant effects bias property value measures of the benefits of government neighborhood programs. The model is tested using data from the Experimental Housing Allowance Program, and modest but important tenant effects are found.

Rent Paying Ability and Racial Settlement Patterns

Abstract. Based on the belief that the major remaining hurdle to integration is economic, the proposition has frequently been advanced that if minority households could afford decent housing outside their current communities, many would move from their ghettoes into society at large. Evidence from two housing allowance demonstration projects and the recently completed Experimental Housing Allowance Program raises doubts as to the validity of this contention. While recipients of housing allowances frequently moved to better neighborhoods, only rarely were they able to break free of traditional settlement patterns. Findings suggest that while it may be necessary to increase the rent paying abilities of low‐income minority households as a precondition of integration, that segregation is not likely to be eliminated until the social, psychological, and remaining legal issues associated with it are addressed as well.

Low-Income Housing Assistance Switches from Production to Vouchers

Abstract The traditional federal approach to housing assistance from the Depression through the 1970s was to subsidize the construction of new units for occupancy by low-income families. A competing approach, however, had been advocated by some since the 1930s and had gathered considerable support by the time HUD was created: Consumer vouchers could enable low-income families to afford housing selected from among dwellings provided by the private market. HUD's Rent Supplement Program and the Section 23 leased housing program under the Housing and Urban Development Act of 1965 set partial precedents for the voucher approach. The idea was extensively tested in the HUD-sponsored Experimental Housing Allowance Program (Bendick 1982; Struyk and Bendick 1981) and became operational in 1974 as the Existing Housing component of the Section 8 program.

Rent Subsidies and the Elderly

This paper brings together the relatively meager and widely dispersed findings that apply to how the elderly would fair if a rent voucher program were to become the single government housing subsidy to households of low and moderate income. The paper begins by reviewing the findings that apply to the elderly from the recent Experimental Housing Allowance Program (EHAP), and then relates these EHAP fingings to findings on housing needs of various types of elderly such as low income elderly, racial minority elderly and elderly with functional impairments. In theory, the great benefit of the rent vouchers to the elderly is the unique freedom in housing choice and location inherent in the program. However, the EHAP findings suggest that the more unique one's housing needs the less likely one will successfully negotiate the voucher process. This process requires the voucher recipient to find program eligible (minimum standard) housing. The very poor elderly, those susceptible to minority discrimination in the private market, and those in need of barrier free, security protected and support serviced housing, will have the hardest time searching for and findings housing toward which they can apply a rent voucher. At best the housing voucher concept would make sense as one among several housing subsidy options open to elderly recipients. If it became the only option many of the poorest, most disenfranchised elderly would find themselves without a housing subsidy.

Effects of habitability and anti-speedy eviction laws on black and aged indigent tenant groups: An economic analysis

‘A decent home and suitable environment for every American family’ was a caU raised by Congress about 33 years ago.’ Many initiatives have been taken in the United States to make this goal a reality. They include such Federal efforts as public housing, urbah renewal, model eitics programs and housing allowance programs. In addition, state legislatures and the courts have redefined the retationship between landlords and tenants, by specifying requirements and providing remedies. Among the most potent of these are habitability. laws, often taking.the form of housing codes, and anti-speedy eviction laws. These legal requirements are of recent vintage and can be of particular importance to two major groups of indigent tenants-black tenants and aged tenants. On this subject, relatively little economic analysis has so far been undertaken. While an earlier paper examined certain welfare effects habitability laws have on indigent tenants. this paper focuses on the effects of habitability and anti-speedy eviction laws on the welfare of black and aged indigent tenants.2 Our concern with *these two kinds of laws and their effect on the welfare of black arid aged indigent tenants, should not imply that these arc the only remedial instruments made available to such tenants by legislatures and the courts. Other instruments include rent control ordinances, sometimes in association with just-cause eviction laws. anticonversion laws (which prohibit the conversion of apartments to condominiums or cooperatives), and anti-demolition ‘measures (which prohibit landlords rrom demolishing apartment buildings). However, most of these instruments are local and, therefore, empirical analyses are very difficuIt. Another class of instruments relates tothc broad subject of discrimination. Whi!c the United States Supreme Court has dcemcd the categories of race, national origin and alienage criteria by -which landlords are not pcrmittcd to discriminate, some states and local govcmmcnts also have passed age discrimination laws. An analysis of their wclfarc effects on indigent, black and aged tenants must await a separate paper.

Housing Allowances: A Critical Look

The Reagan Administration would like to introduce housing allowances as the federal government's principal low-income housing program. The results of HUD's 10-year Experimental Housing Allowance Program suggest important structural limitations to this approach. Only a small portion of the housing allowance is spent on housing. An allowance is likely to least serve those who most need housing assistance. The stock of vacant units is inadequate to meet the demands of voucher recipients. Landlords are not likely to repair substandard units to meet this limited added buying power. And housing market discrimination inhibits mobility that might capture existing standard units. Additional evidence from the Section 8 existing housing and the public assistance programs suggest the limitations of the housing allowance approach. The true motivation for introducing housing allowances would appear to be a desire to withdraw the federal government from its traditional rote as housing provider.

Another Look at Housing Allowances: A Response to Chester Hartman

Program experience with the Section 8 Existing Housing program and final research findings from the Experimental Housing Allowance Program have shown that, contrary lo Chester Hartman's conclusions in his recent Journal article, housing allowance programs similar to HUD's proposed Housing Payment Certificate program are an effective way to provide housing subsidies for families in need of assistance. Comparisons with public housing and unrestricted cash grants show that allowances produce the largest increase in housing consumption per subsidy dollar, and the design of the Housing Payment Certificate program will assure that those subsidies go to families most in need. Criticisms suggesting an inadequate supply of affordable, standard housing are refuted by the Section 8 Existing record of 750,000 families now renting units on the private market. Finally, discrimination has not prevented these families from finding standard housing or moving to different neighborhoods. The Housing Payment Certificate program is proposed not as a substitute for the Department's current commitment to a range of housing programs, but rather as the vehicle for new assistance.

Estimation of Dynamic Linear Expenditure Functions for Housing

THE effectiveness of programs designed to improve the housing of low-income renter households by increasing their demand for housing through income supplements or price discounts has recently been questioned, based largely on the results of the Experimental Housing Allowance Program (EHAP). The results from EHAP generally indicate small consumption responses on the part of low-income households (i.e., inelastic price and income elasticities of demand for housing; see Friedman and Weinberg (1978), Mulford (1979), and Hanushek and Quigley (1979)). However, using a cross section of households sampled before the experiment began and a static linear expenditure specification, Cronin (1979) obtains static price elasticity estimates substantially exceeding in absolute value those estimated with experimental data (i. e., 0.53 to 1.00 for the former versus -0. 16 to -0.21 for the latter). The estimates of static current income elasticities (about 0.2 to 0.3) were similar to those found in EHAP. This paper extends the previous analysis by obtaining dynamic estimates of housing income and price elasticities from the linear expenditure system. Results indicate that the responsiveness of households may be greater than previously indicated. Short-run elasticities are found to be highly inelastic. However, when households are stratified by the time period since their move to allow for varying adjustment toward equilibrium, long-run elasticities are often found to approach unity. The conceptual framework for the analysis is presented in section II. Data, samples of households and definitions of variables are discussed in the first part of section III; results are presented and discussed in the second part.

Supply Response to the Housing Allowance Program

If there were no supply response to the housing allowance program, the demand shift caused by the program would be large enough to cause a serious increase in the price of standard housing services. How-ever, three supply responses prevent the potential price increase from occurring: repair of substandard housing, supply adjustment, and occupancy rate adjustment. The first supply response reduces the potential price increase by two-thirds, the first and second together reduce it by four-fifths, and all three together reduce it by 97 percent.

What have we learned from the housing allowance experiment?∗

One of the biggest social experiments ever undertaken, the Department of Housing and Urban Development’s experimental housing allowance programme, began with great fanfare in 1973 and is ending quietly in 197940. It has involved more than 25,000 families in twelve metropolitan areas, at a cost that is expected to add up to US$170 million.’ Like most ambitious programmes, it owes its origin to the convergence of several different lines of thought about how government should cope with a problem. The problem in this case was how to improve housing conditions for low-income people. Two key ideas prompted the experiment. One was that the best way to help families who needed better housing was to give them money that they could use on their own, instead of building subsidised housing for them. The other was that the best way to learn how a new approach would work in practice was to conduct a large-scale social experiment, following a systematic design and using control groups to check the validity of the results.

HOUSING ALLOWANCES AND DEMAND ORIENTED HOUSING SUBSIDIES

ABSTRACTIt is estimated that the Federal government will spend more than $170 million on the Experimental Housing Allowance Program (EHAP). So far more then $50 million has been spent on EHAP research alone. This paper indicates some of the analytical issues in evaluation and suggests that housing allowance policies have ample historical precedent.

Expected and Actual Effects of Housing Allowances on Housing Prices

Most analysts and policy makers expected fullscale housing allowance programs to substantially disturb local housing markets, causing housing prices tb increase sharply. This paper reviews conjectures about expected price effects, summarizes evidence from the Housing Assistance Supply Experiment, and explains why the program did not engender the expected price inflation.

Participation Rates in Government Transfer Programs: Application to Housing Allowances

A general model of participation in a transfer program is developed and applied to data obtained from housing allowance programs in Brown County, Wisconsin and St. Joseph County, Indiana. Estimates of the parameters of the model are obtained from pooled data for the two sites, and the fitted model is used to estimate the equilibrium level of participation and the time required to reach it. The model predicts that the participation rate three years after the housing allowance program's start-40 percent-will rise to a maximum of 51 percent when equilibrium is reached. The model also predicts that 95 percent of the equilibrium level will be reached 5.5 years after the program's start. Although below expectations, the 51 percent equilibrium participation rate is not low compared with other government transfer programs; it is about the same as New York City's welfare and food stamp programs, for example. The model provides valuable insights into the dynamics of government transfer programs. In particular, it shows that the equilibrium participation rate equals the ratio of the rate at which eligible nonparticipants enroll in the program (enrollment rate) to the sum of the enrollment rate and the rate at which participants leave the program (termination rate). If the enrollment and termination rates are equal to each other, as they tend to be in the transfer programs studied, then in equilibrium at a given time only 50 percent of the eligible households will be program participants. The analysis suggests that the most practical way to increase participation is to increase the enrollment rate.

Working for the Man: The Anthropologist in Policy Relevant Research

Erve Chambers is Assistant Professor of Anthropology at the University of South Florida, Tampa. The article is based on work done with the U.S. Department of Housing and Urban Development's Experimental Housing Allowance Program, while employed as an on-site observer by Ab t Associates, Inc., Cambridge, Massachusetts. The writer is indebted t o Dr. Harry Wolcott and Chris Gaffney, University o f Oregon, and t o Dr. Ev Glatt, Program Development and Research, U.S. Department of Housing and Urban Development, Washington, D. C. D URING THE LAST few years the U.S. Department of Housing and Urban Development (HUD) has sponsored major research on a new housing allowance program. One aspect of the research was the experimental operation of eight administrative agencies, located in various communities across the country.' These were fully operative housing agencies, each funded to enroll and provide financial assistance to several hundred low and middle income families. The program offered a unique opportunity to follow a social innovation from its beginning. There have been few previous opportunities to design and initiate comparative research on the activities of public service agencies, their impact on the populations they serve, and their impact on the comnlunity at large. Most research on similar organizations has been formulated around a set of preexisting administrative conditions. In this case, service agencies were created around an experimental design. It was as close as one might expect to come to creating a laboratory in the field. One feature of the research design for HUD's experimental housing allowance program which should be of particular interest to anthropologists was the use of experienced fieldworkers in on-site observation. Each administrative agency was assigned a full-time observer who would live in the community, visit the agency daily, work with a limited number of program participants, and perform specified data collection and reporting duties. In six of the eight sites, the individuals contracted to do this work had extensive training in anthropology. This was a unique form of employment, not only for the anthropologists actually on site with the experiment, but for anthropology in general. The following report will provide a brief discussion of the work, for the most part derived from personal experience.* There also will be an attempt to place the work in the larger context of current anthropological research, particularly as regards areas of policy relevant and urban studies.

Selecting subsidy strategies for housing allowance programs

The market effects of alternative housing payment formulas are analyzed and compared for a metropolitan housing market using measures of efficiency and distributional equity. The effects of “earmarking” allowance payments are considered. Estimated market effects are based on a model of housing market behavior over a 10-year period. The results differ significantly from what one might anticipate based on demand analyses of individual behavior. “Housing gap” formulas perform better than percent-of-rent formulas. Certain characteristics of the housing market together with particular income redistribution effects of the allowances appear to explain the market behavior.

Review of the Housing Allowance Program

Housing allowances are being touted as the popular solution to the low‐income housing problem. This article briefly examines the historical background, past research, factors, and issues which must be considered in designing an effective program. Major household concerns considered are: equity, eligibility and allowance formulas. Attention is given to program goals and their influence on the amount and kind of subsidy, definition of income and allowance formula selected. The response of the housing market to the new demand created is examined along with related factors such as requirements that recipients live in standard dwelling units and collusion opportunities for landlords and recipients. Based on research conducted on the food stamp program, household expenditure change is projected. Finally the impact of a housing allowance on other support programs and the need for program integration and administrative simplicity is considered.