Promoting Homeownership among Low-Income Households

Brief

Promoting Homeownership among Low-Income Households

August 20, 2007

Abstract

The United States current system of low-income housing assistance is biased against homeownership. This paper documents the bias and suggests reforms to eliminate it. The new policies would allow more low-income families to become homeowners by providing similar subsidies for renters and owners under the two largest programs for low-income housing, Section 8 and the Low-Income Housing Tax Credit. The reforms would not require additional spending, would improve the cost-effectiveness of the system of low-income housing assistance, and would avoid the two biggest mistakes in past attempts to subsidize homeownership: subsidizing the construction of new units and requiring intended beneficiaries to buy from selected sellers.

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