Targeting Housing Production Subsidies (December
2003, 109p.)
Literature Review
This report examines the current literature on rental housing
markets and on housing policies for low-income renters in
an attempt to answer a fundamental question. The question
is what constitutes the most effective use of government subsidies
that are made available for the production
of rental housing. This discussion is not intended to be a
continuation of the debate over whether demand or supply-side
subsidies generally represent a better policy. Rather it starts
from the premise that production subsidies are relatively
better used in some circumstances than in others. Our objective
is to identify those circumstances more precisely, so that
government policy-makers and others can make good decisions
about how to use the resources of housing production programs
for low-income renters.
To sharpen the question, the sponsor of this research, the
Office of Policy Development and Research at HUD, has asked
us to imagine that a new housing production program has just
been created. How would we allocate that program’s resources:
spatially (to types of housing markets or neighborhoods) or
by types housing needed by different types of households?
This literature review will stop short of suggesting an allocation
formula or a list of eligible uses of funds. A subsequent
report will suggest such elements of the design of a hypothetical
program. The purpose of this review of the literature is to
take a first step in that direction—to cull through
the existing theory and empirical studies for the principles
that would guide the decisions on the design of a program.
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