Section 8 Housing Vouchers Spreading To Suburbia

Stephanie McCrummen’s report on people in unlikely places taking on Section 8 tenants mostly puts it in the context of the nationwide housing slump, but I’d say a relative shift in preferences about neighborhood locations is also a big part of the story:

It was clear that Liza Jackson’s luck had changed when she drove her pearl-white Dodge sedan, the one with the huge pink plastic eyelashes over the headlights, into Pinebrook, an eight-year-old subdivision where residents tend to notice cars with huge pink eyelashes.

“There goes the neighborhood,” one homeowner said when she heard that her potential new neighbor had a federal housing voucher known as a Section 8. [...] From Jackson’s point of view, the dismal housing market appeared as a glorious reversal of fortune: Fresh swaths of suburbia were opening up to the very people it has so often excluded.

I think this is an undersold point. There are two things that are bad about declining home sale prices. One is that the decline is associated with a decline in construction activity and construction employment. But over the long term, if the population rises the construction industry will exist. The other is that the decline has left many households unsustainably indebted. If you borrow $200,000 to buy what turns out to be only $100,000 worth of house, you have a real problem on your hands. But I think the right way to think of this problem is as a problem of debt—the price was too high in the past—rather than as a problem of current home values. In principle, an equilibrium where homes are cheap is preferable to ones where they’re expensive. Cheap homes mean that women like Liza Jackson can acquire higher living standards. And cheap homes mean that you wouldn’t need to take out giant loans to buy them in the first place, so the issue of debt-overhang would be moot.