I’m Not The Only One

In this new era in which our decades-long inflated economy is now deflating and abruptly readjusting to the realities of the free market, one bubble seems to be bursting after another.  The first bubble to burst was that of subprime mortgages with millions of Americans who couldn’t afford home loans were suddenly losing their homes after defaulting on said mortgages.

With more and more college graduates entering the work force deep in student loan debt and facing very limited job opportunities, some are speculating that Sallie Mae will be the next bubble to burst.  I used to agree with this prediction, but after learning that 2,600 families in New York City are losing their Section 8 vouchers, I’ve changed my mind.

For those unfamiliar with the term, Section 8 is a program funded by the U.S. Department of Housing and Urban Development (HUD) in which vouchers are granted to low-income households and pay up to $800 of rent a month in a privately-owned apartment building or house.  Section 8 recipients only have to pay rent equal to about 30 percent of their monthly income.  While their rent is subsidized, Section 8 recipients still have to pay full price for services like electricity, gas, land lines and anything else not included in the rent.  In New York, Section 8 provides low-income housing for 256,882 New Yorkers.

In New York City, Section 8 is overseen by the New York City Housing Authority (NYCHA), which oversees a variety of HUD-funded programs including a program which manages 178,407 apartments in 2,604 federally-owned buildings and houses 403,665 New Yorkers.  Tenants in these buildings abide by the same rules as Section 8 recipients, except that they do not have to pay for gas or electricity.  654,657 low-income New Yorkers rely on both of these programs for their housing needs, not including hundreds of thousands of estimated unauthorized tenants.  This amounts to roughly eight percent of New York City’s eight million residents.  NYCHA itself is funded through a combination of City and State funds.

The apartment buildings that are past of these programs are notorious for their excessive building violations. 

A few years ago, HUD was called the “worst landlord in New York City“, proving that when the government is your landlord, it doesn’t have to follow the same rules as owners of private property, no matter how many violations the inspectors find.  Even privately-owned buildings in the Section 8 program are often found with numerous building violations.

Just as homeownership  was inflated by government-sponsored enterprises Fannie Mae and Freddie Mac (ironically, also HUD programs), so was New York City residency inflated by NYCHA. Homeowners who can’t afford the mortgages they signed for is no different from tenants who reside in a city they can’t afford to live in.

Local columnists are calling on New York City and New York State, both of whom are broke, to step in and increase funding for the Section 8 program to keep lower-income New Yorkers out of the city’s overcrowded homeless shelters, or worse, the streets.  As costly to the taxpayers as “affordable housing” can be in the most expensive city in the U.S., the homeless shelters are far worse, as they inexplicably cost $3,000 per resident.

Of course, the local media and politicians have overlooked a more realistic third option: leaving New York City and moving to a more affordable area.  Perhaps the newly evicted New Yorkers could relocate to a state where the taxes are so low and the economic opportunities so plentiful that such welfare programs aren’t even needed. But then I started thinking: why would the government choose to subsidize a person’s more expensive option, living in new York City, and not letting them choose the less expensive alternative of not living in New York City?  Could subsidized housing be a scheme by the government to ensure that states with a higher tax burden maintain a larger population than states with a lower tax burden?  What would New York City look like if close to a million residents, with no options left, simply chose to leave?

The next few years are going to look very interesting for New York City and for places like Chicago and Los Angeles which also have identical HUD-funded programs.

This entry was posted on Sunday, June 13th, 2010 at 10:18 pm and is filed under Government Incompetence, New Yawk, Economics, Government Interference. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.