Public investments can be the key to unlocking affordable homes

What is happening?

We need policy solutions to prevent people from falling through the cracks, giving everyone the opportunity to thrive in our society.

Unfortunately, the scarcity of affordable homes is a significant obstacle to our nation’s efforts to alleviate poverty. When children don’t have access to a quality home, transportation and education  and health care they lack the necessary foundations to develop. We all suffer when people in our society lack opportunity.

We need to do more to bring down the costs of housing – the single largest expense for low-income families.
By providing incentives to support the construction of affordable homes, while also helping struggling households pay market rents, public investment can be the key to more affordable homes for millions of Americans.

Why are public investments important?

For nearly three decades, federal tax credits have financed nearly 3 million affordable apartments, providing homes to roughly 6.5 million low-income households while transferring risk from the government to the private sector.  Tax credits have joined vouchers as one of the largest forms of rental assistance over the past 15 years.

US Department of Housing and Urban Development FYI1999-2014 Annual Performance Reports and LIHTC Database

Unfortunately, we’re not spending our money wisely:  While millions of low-income renters go unassisted, we’re spending tens of billions of dollars each year to subsidize the mortgages of high-income families who don’t need government support.

The government spends about $100 billion each year on the mortgage interest and property tax deductions, and more than three-quarters of those subsidies go to households making more than $100,000 per year, while more than a third goes to households making more than $200,000 per year.

Source: Brookings-Urban Tax Policy Center, Eliminate the Mortgage Interest and Property Tax Deduction, 2009


We need to rethink our priorities, which are out of balance, especially given the crisis renters face today. For example, the federal government spends more than $140 billion per year to help people buy homes, but only $55 billion annually to help people rent them.

Source: Enterprise Analysis of Data from the Office of Management and Budget’s FY 2016 Budget


There is a growing bipartisan recognition that persistent poverty is both destructive to families and a barrier to our nation’s economic growth.  Smart policies such as the Earned Income Tax Credit, which rewards hard work for low-income families, are critical to increasing the incomes of low-income families.

However, there are some problems. The existing tax credit has little benefit for childless adults, taxing them into or deeper into poverty, according to a paper by the Center on Budget and Policy Priorities.

Source: CBPP estimate based on IRS Data

Thoughtful public investments are smart policy not just for renters – but for the entire economy.

If we are able to bring down the number of families spending more than half their income on rent by half, that would free up $60 billion per year in purchasing power that they could put back into the American economy, which is good for everyone’s bottom line.

Public investments have the ability to transform lower-income neighborhoods that have suffered from disinvestment and crumbling infrastructure.

Public investments can catalyze better schools, attract businesses to a neighborhood, and make affordable areas better places to live. Policies like the Low Income Housing Tax Credit and New Markets Tax Credit help attract needed private investment to low-income neighborhoods.

Public investments can help kids improve their future  The federal housing voucher program serves more than 5 million people  – helping low-income children live in neighborhoods where they can have a real shot at long-term success.

Source: CBPP Analysis of 2014 Department of Housing and Urban Development administrative data and the Census Bureau’s 2010-2014 American Community Survey


recent study from the Department of Housing and Urban Development  found that families leaving homeless shelters with a Section 8 voucher were more than twice as likely to remain stably housed and avoid a foster care placement compared to families leaving shelter without a voucher.

Source: Department of Housing and Urban Development, Family Options Study: Short-Term Impacts of Housing and Services Interventions for Homeless Families, July 2015

Public investments can save money: Where people live and the affordability of their homes has a big impact on their lives and their health. A recent study found that after moving into affordable homes, renters were more likely to spend money on basic health care services — saving taxpayers money.

What can we do?

Even as the rental affordability crisis is getting worse, a difficult political climate has meant less support for important public investments that would help those who are struggling to afford their homes.

According to the National Bureau of Economic Research, after a series of federal budget cuts in recent years, only 23 percent of households who are eligible for federal rental assistance actually receive it, leading to decade-long waiting lists and lotteries for rare openings.

But there are commonsense, bipartisan steps we can take to restore public investment and help make our communities more affordable. Click here to find out more.

It takes a commitment from the public and private sector alike to make sure people with low and moderate incomes can have safe and affordable homes.

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