ECO Government Intervention Analysis
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ECO535GovernmentInterventionshousingvouchers.pptx
Government Intervention Low-income rent controls and housing vouchers
Presented By:
Maria Williams
ECO/561 Economics
Kate Stowe
Government Intervention Low-income rent controls and housing vouchers
The US Department of Housing and Urban Development (HUD) recognized the Low-income Rent Controls and Housing Vouchers Program. The purpose of this program is to facilitate the old citizens, the very low earning households, and the disabled persons.
In this presentation, government intervention will be examined comparing Housing Choice Voucher Program with Market Based Solutions.
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Introduction
There are great programs for those who are going thru financial difficulty or other scenarios that keep them from having a roof over their head, the government asked HUD to intervene and create a system that would help those during their hard times. The questions is whether this system that was created is working or if it needs a little revision and evolving along with the evolvement in the economy. Section 8 along with the Housing Choice Voucher program are key factors into the aide of those requiring some assistance.
HUD ( Housing and Urban Development) helps low income households pay for the rent for housing. Although the Housing Act was created in 1937, it was revised in 1974 which is now HUD. It covers about 70% of the rent for low income families. The housing Choice Voucher Program helps with up to $2000 a month. HUD and the VA also created a program driven to help veterans, the Veterans Affairs Supportive Housing (VASH). The homes have to be in top shape, can be new homes or renovated (Hall, J. C., & Ryan, M. 2016, April 11).
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Low Income Housing Assistance
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Section 8
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Rent Control
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HUD created in 1974
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Homeless Veterans
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Government intervention
Aid with Rent money
Voucher can be used to purchase a home
Assistance can be move with the person thru Tenant Base Section 8
Section 8 can also be applied to a Home
Government can help those with low incomes afford a proper home to live. The Housing Choice Voucher program helps the tenant thru the Tenant Based Section 8, but the voucher can be attached to a property thru the Project Based Section 8 (Policy Basics: The Housing Choice Voucher Program. 2016, April 11).
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Market-based solutions
With the government intervention comes other possible issues. The program is meant to help those who are going thru bad patches in their lives and by providing this help, they will get back in their feet and continue a life without government aid. But it is argued that this program is full of scam artist just wanting free rent money. One problem is that it doesn’t require anyone to do any work or volunteer in exchange for the aid. Therefore, creating a bigger problem as they do not learn how to get this money by working. Although it is not true all times, it is thought that section 8 tenants bring in crime to the neighborhoods, making it worst for everyone that is trying to get ahead.
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Relocation Freedom
Opportunities for improvement
Improved living standards
Does Section 8 attract crime?
Receiving end of Help or Damage
Source: CBPP analysis of 2011-2015 American Community Survey data, 2016 Department of Housing and Urban Development administrative data, 2015 HUD LIHTC database, April 2017 Department of Agriculture Multi-Family Section 514 and 515 Active Projects, and the Housing Assistance Council’s Census tract designations.
It is argue that receiving the help of government such as section 8 is a great aid to those who really need it. Some people may find themselves needing such aid due to the loss of their job, some due to illness and unable to work and possibly some with disabilities. But within these groups, there are people that get used to the aide given and forget that there are jobs available to be fulfilled but the government doesn’t require them. That in turn can damage the economy because taxes are being used for this aide instead of creating jobs. . The households can take up the opportunities of these proposed limits to locate their desired housing unit on rent. The Market Based Solution, on the other hand, facilitates the families to avail an improved living standard
On the other hand landlords receive most 70% of the rent regardless if the tenant do not pay their part, but also assures them that the monies will always come.
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Low Income population
Homeless Veterans
Landlords
Federal Rental Programs in Michigan by Community Type
Urban
Housing Choice Voucher Households Public Housing Households Other HUD Multifamily households USDA Rural Rental Assistance Units Low Income Housing Tax Credit units 0.53 0.41 0.43 0.15 0.34 Suburban
Housing Choice Voucher Households Public Housing Households Other HUD Multifamily households USDA Rural Rental Assistance Units Low Income Housing Tax Credit units 0.33 0.31 0.42 0.15 0.43 Exurban
Housing Choice Voucher Households Public Housing Households Other HUD Multifamily households USDA Rural Rental Assistance Units Low Income Housing Tax Credit units 0.01 0 0.01 0.08 0.02 Small Town
Housing Choice Voucher Households Public Housing Households Other HUD Multifamily households USDA Rural Rental Assistance Units Low Income Housing Tax Credit units 0.12 0.26 0.13 0.72 0.21 Rural
Housing Choice Voucher Households Public Housing Households Other HUD Multifamily households USDA Rural Rental Assistance Units Low Income Housing Tax Credit units 0.01 0.02 0.01 0.05
Consequences of Intervention
The idea behind this government program is to help the needy, with that in mind, those that need a home are able to afford a lower rent home for a lower price. This also helps achieve lower homeless people in the neighborhood and overall (Poole, W. 2010, May/June).
However with those positive externalities, there are negative ones to follow. On many occasions, the areas where section 8 is available, the neighborhoods turn ugly due to crime and once crime takes over, the property lose value.
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Positive Externalities
Low Rent for those that are in need
Help the Homeless
Negative Externalities
Run down Neighborhoods
Lower Real Estate value
Government Intervention Success
Section 8 it’s a program to was meant to help needy people during hard times. Providing housing while they were going thru hard times, but also reinforcing the fact that it is necessary to get out and look for job and get back on our feet. But to do this, it’s important not to have such high strain of rent and other expenses. Lowering the amount of Homeless and helping them should they need medical help s lso been a strong point of HUD.
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Lowering Homeless Veterans
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Educating people for better jobs
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Housing providing while getting back on track
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Government Intervention Failures
Section 8 can be as helpful as it can be hurtful. People get used to receiving the aide from the government so there is no need to go out and get a job. This creates people who are not willing to go out and look for jobs and basically become lazy. With laziness, comes boredom and it can then turn into crime in order to get money they don’t want to work for ever. Neighborhoods fail and the program just became a tax payers loss.
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Easy money – idle people
Rising Crime
Loss of Tax Dollars
Modified Intervention
The intention of the program is to help people in need, but somewhere along the way, people have taken advantage of the program (Section 8 Program Background Information. 2016, April 11). There needs to be a time frame given to those receiving help before they have to find job or volunteer in a government area. These can help reroute taxes to other areas needed.
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Require people to work or volunteer in order to received the help
Busy people will make less crime
Taxes can be rerouted
Shorter Period time
Conclusion
Both sides have been reviewed, the bad and the good. Looking at this chart and realizing how many factors and lives Section 8 Vouchers can help is just an example that this is working by modifying the program just a bit to help those who need an extra push is crucial to the survival of he program.
References
Hall, J. C., & Ryan, M. (2016, April 11). Chapter 8: The Economics of Government Housing Assistance for the Poor. Retrieved from America's Housing Crisis: http://www.matteryan.com/pdf/the_economics_of_government_housing_assistance_for_the_poor.pdf
Policy Basics: The Housing Choice Voucher Program. (2016, April 11). Retrieved from Center on Budget and Policy Priorities : http://www.cbpp.org/research/housing/policy-basics-the-housing-choice-voucher-program
Poole, W. (2010, May/June). Ending Moral Hazard. Financial Analysis Journal, 66(3), 17-25.
Section 8 Program Background Information. (2016, April 11). Retrieved from US Department of Housing and Urban Development: http://portal.hud.gov/hudportal/HUD?src=/topics/housing_choice_voucher_program_section_
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