Social Housing Versus Housing Allowances: Choosing Between Two Forms of Housing Subsidy at the Local Level

Abstract

Analysis of the policy choice between social housing and housing allowances has been obscured by the older housing policy debate between proponents of supply subsidies and proponents of demand subsidies. Social housing uses capital grants both to reduce monthly housing costs to below-market rates and to take existing or newly constructed housing out of the market, so that ownership is nonprofit and use is allocated according to need rather than ability to pay. Housing allowances, on the other hand, enable poor tenants to pay market rents for housing. During the past 15 years, even as housing allowances became the dominant mode of Federal assistance, social housing programs grew at the local level. Comparison of model social housing and housing allowance programs by the number of people helped over time, effects on economic integration, and program stability suggests that the choice between these programs depends primarily on alternative expectations for the future. The most active local constituencies favoring housing programs for low-income people have pessimistic expectations about the national economy and the social safety net, as well as professional interests that are likely to favor social housing programs more than housing allowances.