The allocation of rental assistance resources: the paradox of high housing costs and high vacancy rates

Abstract

ABSTRACT The United States follows a dual strategy to address housing affordability problems among low-income renter households. The dual strategy is premised on a demand-side programme for soft markets and a supply-side programme for tight markets. An examination of housing markets in the US shows that market conditions do not provide much justification for the supply-side approach. Most markets are simultaneously experiencing high rents with high vacancy rates suggesting that the demand-side, voucher approach is better suited to current needs in these markets. High rents drive affordability problems, but the high rent levels appear to be unrelated to market tightness. The implications are that, in most markets, supply-side programmes are not well suited to current market conditions, that expansion of the stock of housing through supply-side programmes will not bring down rents, and that ample units exist to facilitate the implementation of an expanded demand-side programme.