Simulations of Housing Allowance Policies for U.S. Cities: 1960-70

摘要

A simulation model of urban housing markets has been under development at the Urban Institute since 1971. Recently the model has been calibrated for six U.S. standard metropolitan statistical areas for the 1960 to 1970 decade. This paper reports on the results of simulating a set of housing allowance policies in the 'cities.' The allowance policies cluster around those currently receiving consideration by policymakers. A full - scale housing allowance program has a negligible effect on the price of housing marketwide in these simulations, but in some cities it does have a noticeable effect on prices at the bottom third of the market. Reducing the scale of the program reduces the inflationary impact, whether that reduction comes from an across the board lowering of average subsidies or from the categorical exclusion of certain household types from eligibility. The success with which allowance payments are earmarked to housing consumption under the housing gap formula depends critically on how close the cost of the imposed housing standard is to the payment standard in the formula. If the housing standard costs much more than the amount the formula is geared to subsidizing, very few eligible households participate in the program. Alternatively, if the allowance is geared to paying considerably more than it costs to meet the housing standard, most eligible households participate, but there is a sharp increase in the rate at which allowances 'leak' to nonhousing purchases. In the latter case, in which the allowance is geared to pay more than the cost of meeting the housing standard, the addition of a 'percent - of - rent' earmarking considerably reduces the leakage. However, addition of the 'percent - of - rent' earmarking does not achieve as high a rate of expenditure on housing as a careful matching of the cost of meeting the housing standard and the payment standard. Footnotes, graphs, and tabular data are provided.