Housing vouchers versus housing production: Assessing long‐term costs

Abstract

Possibly the single largest debate in the field of affordable rental housing concerns the use of tenant‐based assistance versus project‐based assistance. The accepted wisdom is that project‐based assistance costs anywhere from 50 to 100 percent more than tenant‐based assistance. This premium for project‐based housing is based on a comparison of subsidy costs at the start of a project's life rather than on a comparison of the discounted present value of the costs over the long term.

The subsidy costs of samples of Section 8 new construction projects have been compared to those of Section 8 certificates over a long period of time. The results indicate that the cost premium associated with project‐based assistance may be lower than conventionally believed, around 40 percent, and may get even lower if the cost comparison could extend to longer time periods and could control for the quality of the housing units.

Keywords:

• Rental housing
• Low‐income housing
• Programs