Types of Housing Subsidies for Low-Income People
Finding housing is one of the essential needs of life, but too often housing prices outgrow a person's wages. The government calculates that a person cannot afford to pay more than 30 percent of their income on housing. In order to help low income individuals and families pay for this critical need, United States society institutes a housing safety net in the form on subsidies.
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History
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Up until the Great Depression, the government removed itself from involvement in public housing assistance. During the Great Depression, Franklin Roosevelt stimulated the economy with assistance to citizens on their mortgages and housing projects to keep the construction sector from imploding. Finding residences for the homeless was just an added benefit.
Private Housing
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Instead of the government having to maintain and oversee the construction of new housing units, they often provide incentives for private housing to take in disadvantaged residents. An apartment or housing complex that accepts federal subsidies sets aside a certain amount of affordable housing for low-income residents.
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Public Housing
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When the government can not find suitable private affordable housing, or housing unit owners in a particular city refuse to accept subsidies, the government builds it's own housing units. The requirements for receiving public housing are a bit stricter than private housing subsidies. You cannot make above a certain income level and must prove prior experience as a good tenant.
Section 8 Vouchers
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The Department of Housing and Urban Development instituted a third housing subsidy for families who claimed that "housing projects" merely kept people in a cycle of poverty and were far too dangerous for families. As long as the housing follows health and building codes, a family may use section 8 vouchers for any unit that agrees to honor them. Unlike private housing subsidies, section 8 housing does not need to be considered affordable housing.
Future
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The outlook for affordable housing concerns the use of the Low Income Housing Tax Credit rather than government-commissioned affordable housing units. Developers receive a real amount of tax deductions for construction costs of their affordable housing, instead of a reduction in taxable earnings. A Brookings Institution study on affordable housing trends showed that this works better than more direct subsidies. Almost half of all LIHTC developments occurred in suburbs, reduced poverty levels and reversed the trend of urbanization of poor families.
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