Governmental Housing Politicies

Federal Policies: Homeowners Homeowner mortgage interest deduction –First and second homes –Interest on up to $1million principal –Federal Government cost: $62.6 Billion –Homeowner benefits: Income:Average Annual Benefit: 180,000+$4,000 $20-40,000 $110

Federal Policies: Income Tax Expenditures Exclusion of capital gains: (increased value of house on sale) –Up to $500,000 exclusion –Federal Government cost: $21 Billion Deduction of property taxes (On principal residence only) –Federal Government cost: $21 Billion

Federal Policies - other Federal home loan benefits FHA and VA loans (federally insured, lower down payment, set uniform standards for home construction) effect: reduced mortgage interest rate 2-3 percentage points

Housing Policies for the Poor Public Housing (the projects) –Owned and managed by local housing authorities –Local government decides location –Low income families and elderly –1.2 million units (declining) –Federal government cost: $5.2 Billion

Housing Policies for the Poor Section 8: privately owned projects –1.3 million units –Federal cost: $5.3 Billion –Government subsidizes rental payments, sets some rules

Housing Policies for the Poor Housing Vouchers (also section 8) –2.1 million authorized vouchers –40% of low income units (growing) –Federal cost: $14.8 Billion –Tenant chooses where to live –Landlord decides whether to accept voucher

Housing Policies for the Poor Low income housing tax credit (for developers, investors) –Federal Government cost $6 Billion –Funded 1.2 million units since 1986.

Local Policies Local municipal control of zoning and property tax rates: –Keep low income housing wealthy suburbs and poor kids out of suburban schools. –Assure neighborhood not disrupted by non- conforming construction –Keeps suburban tax rates lower Decides whether or not to approve public housing construction

Building codes Provide for safety and common construction standards. Examples: –Don’t vent plumbing into attic –Spacing of porch railings –Number of electrical outlets –Cast iron vs. PVC plumbing –Mandatory fire sprinklers –Fireproof shingles –Hurricane clips

Liberal policies Rent Control Urban growth boundaries Energy efficiency standards Public housing Environmental protection (wetlands) Require developments to offer some low income housing Anti-snob zoning regulation

Liberal Housing Policies Urban growth boundaries Replace property tax school funding Require landlords accept housing vouchers Anti- redlining policies (insurance and mortgages) Protections for the homeless

Libertarian Relax zoning restrictions Eliminate environmental set asides Eliminate rent control Relax building codes Housing vouchers / not public housing Housing voucher limitations Eliminate housing vouchers “Tough-love” homeless policies