Last week I participated on a panel on federal rental housing policy, organized by Harvard’s Joint Center for Housing Studies in conjunction with the release of their new report on conditions in the rental market. In their defense, the report does attempt to avoid offering policy prescriptions. But the report does come pretty close to suggesting that we spend more on federal rental housing assistance. In the post‐​housing bubble environment, many, myself included, have dared suggest that there’s nothing wrong with someone being a renter, and that maybe we pushed too many into homeownership.


But saying we overdid homeowneship is not the same as saying we ignored rental. In fact the federal government has spent massive amounts on rental housing, yet according to the new Harvard report, rent burdens have gotten worse over the last 50 years not better. While the report doesn’t take this step, I think we have to ask: if you’ve spent hundresds of billions of dollars on an issue and it then gets worse, maybe there’s something wrong with what you are doing?


Perhaps my friends on the Left (and/​or in the real estate industry) don’t believe we’ve spend all that much on rental housing. Consider these facts: in nominal terms the sum of all money spent by HUD, which is almost exclusively rental or “community development,” has been close to a trillion dollars. By my estimate (based upon the American Housing Survey and the Residential Finance Survey) the current value of all rental housing in the US is about $3.6 trillion. So the federal taxpayer has paid enough to outright buy almost a third of all rental housing.


Also consider that if we took the approximately $50 billion we now annually spend on rental housing, we could pay 100% of the rent of the almost 4 million households currently paying the lowest rents. This translates to being able to pay all the rent for every family earning about $22,000 or less. If we choose to only pay 50% of their rent, we could serve another 2.5 million. 


My point here is not to say we should spend all this money, for I still don’t see this as the proper role of the federal government; the point is that we already spend a huge amount. Now why might all this money not have made a huge difference in helping renters? Maybe because most of it gets eaten up by the providers. For instance a recent paper in Real Estate Economics estimates that only a third of the value of the Low Income Housing Tax Credit actually makes it to the renter in the form of lower rents. The remaining two‐​thirds goes to benefit the developers, owners and others who live off the process. So before we even think about spending more on federal rental assistance, how about making sure what we do spend actually goes to help the poor and not the special interests?