The Government Is Quietly Giving Way More Housing Aid To Rich People Than Poor People

The Center for Budget Policy Priorities released a number of charts today that shows how much the federal government favours high-income households over low-income ones in housing benefits.

This largely results from the fact that homeowners receive significantly more aid than renters and high-income Americans are much more likely to be homeowners.

In 2012, the federal government gave out $US240 billion in housing aid. Income data is not available for all of it, but of what is available, more than half went to those with incomes greater than $US100,000 ($81.6 billion). Only $US40 billion went to those with incomes less than $US50,000.

Overall, high income households receive four times in much in housing aid as low-income ones.

The main reason for this is the majority of federal housing aid flows to homeowners, not renters. The mortgage interest deduction is the most well known program that subsidizes homeownership. That deduction alone is larger than all federal rental aid combined.

The federal government gave out about $US60 billion in housing benefits to renters in 2012. It gave out more than three times that much to homeowners. Low-income households receive the vast majority of that rental aid, but the opposite is true of aid to homeowners. That flows primarily to high-income households.

This comes at a time when renters are struggling to keep pace with rising housing costs. 50 per cent of renters now spend more than 30% of their income on housing. This has forced renters to cut back on other household necessities or live in inadequate units.

Renters are more likely to face a severe cost burden (defined as spending at least 50% of income on housing) than homeowners are. This is a result of rising median gross rent and falling media income over the past 15 years.

For both renters and homeowners, the percentage of households that have a severe affordability problem with their housing has increased since 2001.

These problems are only going to get worse as millions of seniors find themselves in need of rental housing in the coming decades.

Yet, while this silent crisis continues, the majority of the money that the federal government spends on housing flows to homeowners, not renters.

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