The Federal Government’s Support for Low-Income Housing Expanded During the Pandemic
The federal government spent $67 billion on housing assistance in 2023, representing just over 1 percent of total federal outlays. About 80 percent ($53 billion) of the federal government’s support for housing is through three programs that provide rental assistance to low-income households:
- Tenant-based rental assistance ($30 billion). Low-income households receive a voucher that allows them to choose housing in the private market while paying 30 percent of their income toward rent. The voucher, administered by local public housing authorities (PHAs), covers the remainder of the rent.
- Project-based rental assistance ($15 billion). The Department of Housing and Urban Development (HUD) enters into contracts with property owners who have agreed to rent their units to low-income households. The households pay 30 percent of their income toward the rent and HUD makes up the difference. HUD has allowed such contracts to expire gradually over time and has been switching households to tenant-based assistance.
- Public housing ($8 billion). In this arrangement, PHAs own and operate housing units and rent them directly to low-income households, who pay 30 percent of their income. HUD provides regulatory oversight and allocates funding to PHAs to support operating costs and capital improvements.
Aside from the three programs above, the federal government spent an additional $14 billion in 2023 on other programs including those targeted to the elderly, people with disabilities, and rural renters. That includes the Emergency Rental Assistance (ERA) Program, which is a short-term program established in 2021 as a response to the COVID-19 pandemic.
Who Is Eligible for Rental Assistance?
Households must have incomes below certain levels — 50 percent of the local median income for tenant-based assistance and 80 percent of the local median income for project-based assistance and public housing. Under all three programs, a certain amount of support is reserved for extremely low-income households, which are defined as those earning less than 30 percent of the local median income. However, rental assistance is not an entitlement program, meaning that meeting the eligibility requirements does not guarantee that a household will receive benefits.
Who Receives Rental Assistance From the Federal Government?
A total of 4.4 million eligible households received support through the three main rental assistance programs in 2023:
- Tenant-based assistance served 2.4 million
- Project-based assistance served 1.2 million
- Public housing served 790,000
The demographic profile of those households differs from that of the U.S. population as a whole. For example, while almost 60 percent of U.S. households are categorized as “White, not Hispanic”, only one-third of rental assistance households (excluding ERA) fall into that category. In addition, while only 10 percent of U.S. households are composed of a single father or mother, almost one-third of rental assistance households (excluding ERA) have only children living with one adult.
How Robust Are Housing Benefits?
The rental assistance programs provide much-needed benefits to low-income families. For example, the average household that receives tenant-based assistance pays $450 per month toward a total rent of $1,518. However, that assistance does not necessarily solve housing-related difficulties. The total income for those families is about $1,500 per month, on average, which leaves them with just $1,050 for all other expenses each month. Moreover, those households spent an average of over two years on a waiting list before receiving any benefits and often live in a housing unit with no bedrooms or one bedroom.
Rental Assistance Is a Key Part of the Safety Net
The three largest rental assistance programs help to ensure that millions of households can afford adequate housing rather than face homelessness due to paying rent that exceeds their income. Tenant-based assistance delivered 95 percent of its assistance to very low-income households earning 50 percent of area median income or below.
Funding for housing represents a relatively small part of the annual budget and serves some of the most economically vulnerable Americans. Unlike other parts of the safety net, funding for these major housing programs is not set in permanent law and is therefore subject to the annual appropriation process. That fact requires lawmakers to make a continual commitment and annual judgement about the appropriate level of funding by weighing the merits of the programs against other budgetary priorities, as well as our growing national debt.
Image credit: Photo by Getty Images
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