It may also go to replacing critical systems in existing low-income housing . It can even go to tenant-based rental assistance or down payment assistance , in which individual low-income families use it to offset the cost of their rent or down payment on a home .
Interdependence Between Affordable and Subsidized Housing
Subsidized housing is meant to correct for market inefficiencies in the housing market . For individuals , it helps address the gap between their income and a fair market rent ; for neighborhoods , it can counter the effects of disinvestment to revive a functioning market . Nevertheless , subsidized housing has shortcomings as a policy tool . The goals of individual assistance and neighborhood revitalization can work at cross-purposes .
If the goal is to provide families with safe , decent , and affordable housing , at best those resources will be focused on where individual families choose to live and have little concentrated impact on any given neighborhood .
At the same time , resources invested in creating a robust housing market could result in the displacement of other families if rents accelerate past an individual family ’ s ability to pay ( a process commonly referred to as gentrification ). 7
Because these tools are tied to national politics and the national economy , they can be subject to cuts by Congress , often at a time when they may be most needed . During recessions , when people are most likely in need of housing assistance and local governments are most likely in need of financial support , Congress may be motivated to reduce spending on these programs to reduce its deficit .
From the perspective of generally addressing affordability issues within regions , housing subsidies are simply inadequate to widely impacting the regional housing market . There is not , and is unlikely to ever be , enough housing subsidy to make meaningful amounts of affordable housing available to all low- and moderate-income families .
Even if there were enough subsidies to achieve that goal , there may be powerful reasons not to do so . A considerable amount of wealth in a region is reflected in real estate . Reducing the value of residential real estate throughout the area would substantially reduce its wealth ( as households ’ most valuable assets erode ), and a majority of homeowners would have mortgages for homes that were suddenly worth less than the amount they owed .
While housing subsidies are not a useful tool for broadly addressing supply or demand issues in a way that impacts a region ’ s affordability , subsidies may make a
7
In existing research , there is no commonly recognized definition or threshold for gentrification , and there is disagreement about how acute of an issue gentrification is .
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