How U.S. Housing Policy Leaves Low-Income Americans Behind

Smart Growth America released a new report yesterday — first picked up by Grist — that highlights the way federal housing policy is grossly tilted to the benefit of the well-off.

Between loans, tax expenditures, and subsidies, the federal government spent approximately $2.23 trillion on housing from 2007 to 2011. Most of that was in the form of loan programs for single-family homes and tax expenditures aimed at home ownership, even though low-income Americans are far more likely to live in small, multi-family buildings and to rent, and are far less able to take advantage of tax expenditures and a complex tax code. Adding up both direct spending and tax subsidies, Smart Growth America concluded that households making over $200,000 a year receive far more housing support from the federal government than any other income group:

This lines up with a similar study from the Center on Budget and Policy Priorities, which found that over half of all federal housing spending and tax expenditures benefited households making over $100,000 in 2010.

The study did not cover the involvement of GSEs Fannie Mae and Freddie Mack in the housing market, as these are quasi-government agencies taken into conservatorship by the federal government. But the loan support they provide is also skewed towards single-family properties.


The CBPP has also found that the number of low-income families paying over half their income in rent while receiving no rental assistance hit 7 million in 2011 — an increase of 42 percent since 2001. Low-income families are also far more likely to rent than to own a home, and 35 percent of all U.S. households are renters.

The programs most directly aimed at low-income Americans are the various rental assistance grants and credit subsidies run mainly the Department of Housing and Urban Development. These totaled a mere $187 billion over the 2007 to 2011 period covered by Smart Growth America’s study. And due to funding limitations, these programs have not kept up with the growth in families struggling to pay rent.