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How Affordable is Affordable Housing?

Working paper #497
Witold Rybczynski

Affordable housing is a replacement for traditional public housing. Instead of isolating low-income families, affordable housing mixes them among various income groups. Low-income tax credits provide incentives to developers, while block grants assist state and local governments in subsidizing community development corporations and other non-profit housing organizations. Since affordable housing is built to be indistinguishable from private housing, it is not inexpensive. Recent research finds that subsidized housing crowds out equivalent-quality low-income housing that otherwise would have been provided by the private sector. The author questions this housing strategy and suggests that assisting low-income tenants directly through housing vouchers is both cheaper and more efficient than subsidizing bricks and mortar.

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