The Benefits of Rental Housing

Another principle most participants in the “Future of Housing Finance” Treasury Department conference agreed on: The country needs more, better rental housing. But what kind of rental housing? In Newsweek, Alyssa Katz writes about a federal voucher program for low-income families. The families can use the vouchers in any rental apartment or house, keeping them from being clustered in public housing and giving them access to better schools and services. Moreover, voucher recipients do not need to use the voucher in the state they receive it. They can take it anywhere, meaning better labor mobility.

But the recession has forced cuts to the program, meaning it serves far fewer families than need it. Katz writes about the panic the shortage has created:

[I]n a suburb of Atlanta last week, the near-riot took place in a very, very long line, estimated at 30,000 people or more, for a government rent-aid program. … The applicants converged at a shopping plaza in East Point, just south of Atlanta, in the hope of obtaining a copy of the coveted form. East Point is a quick train ride from Atlanta, where voucher waiting lists have been closed for years. Wednesday’s release of applications for East Point’s 455 available vouchers drew a crowd from all over the region and even out of state, a mass of people almost the size of the entire population of East Point itself. Those at the head of the line had begun to gather days earlier.

But it’s not just low-income families that benefit from the program. More vouchers might improve housing market overall, making them an even better public subsidy:

Neighborhoods south of downtown Atlanta have been decimated by foreclosures, with abandoned houses sprouting kudzu on virtually every block. Real-estate investors are buying these homes in bulk from lenders or at courthouse auctions for pennies on the dollar and fixing them up, hoping to rent them out to Section 8 voucher families. …

In Atlanta, investors can potentially get an annual Section 8 income of $10,000 or $15,000 a year for houses that currently sell for little more than that. Voucher holders can browse on gosection8.com to look at current listings, like an attractively renovated two-bedroom house that an investor bought at a foreclosure auction for $17,000 in May and is now trying to rent at $895 a month. These real-estate investors are counting on a steady supply of customers.