Friday, September 23, 2005

Ed Olsen, housing, and New Orleans

In several recent posts, the Marginal Revolution weblog emphasizes the advantages of Virginia economist Edgar Olsen's housing voucher plan for hurricane victims over the trailer ghettoes being planned by the Administration. Olsen writes:

What the people displaced by Hurricane Katrina need most now is housing. Hundreds of thousands of families are now living in temporary housing and shelters, sometimes little more than tents, throughout the south central region. These families cannot wait for new housing to be built.

Fortunately, new construction is not necessary to solve the immediate problem. Enormous numbers of vacant units in the region are available for immediate occupancy by families with the ability to pay rent — and a simple expansion of HUD’s largest housing program would provide even the poorest families with the means to rent these units.

The rental vacancy rate in the United States is at a historically high level. For all metropolitan areas as a group, it is over 10 percent. The largest metropolitan areas in the south central region have some of the highest vacancy rates – 15.6 percent in Houston, 14.4 percent in San Antonio, 12.8 percent in Dallas, 12.2 percent in Memphis, 13.1 percent in Birmingham and 18.5 percent in Atlanta. Vacancy rates for smaller metropolitan areas and non-metropolitan areas are also at historically high levels. In short, many rental units in the south central region and throughout the country are available for immediate occupancy by people with the ability to pay the rent.

Fortunately, no new federal program is required to match families suddenly needing housing with an existing stock of vacant apartments. The United States government already operates a program that would enable low-income families to pay the rent for these units. The Section 8 Housing Choice Voucher Program currently serves about two million families throughout the country. It enables participants to occupy privately owned units renting for up to, and somewhat above, the local median rent. Enormous numbers of vacant units could be occupied immediately by families with these housing vouchers.

Coincidentally, my one visit ever to New Orleans was at Prof. Olsen's invitation, to serve as discussant in a session Olsen organized on food assistance and welfare policy at the annual meeting last November of the Southern Economic Association. The session included, for example, Chris Swann's interesting paper on WIC participation dynamics, which found that policies to encourage participation by women who have never participated previously may be particularly beneficial.

In addition to being a leading (and frequently conservative) federal housing policy expert, Olsen is an astute observer of food assistance policy. He and I both think that the Food Stamp Program provides one of the nation's most important housing subsidies, because shelter expenses within a certain range are deducted from the "net income" that is used for computing the food stamp benefit amount. In contrast with food stamps, there is no federal entitlement for housing.

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