Showing papers by "Edgar O. Olsen published in 2019"

Racial rent differences in U.S. housing markets: Evidence from the housing voucher program

Abstract: This paper exploits an unusually rich data set to estimate racial differences in the rents paid for identical housing in the same neighborhood in U.S. housing markets and to show how they vary with neighborhood racial composition. Results suggest that black households pay more for identical housing in identical neighborhoods than their white counterparts and that this rent gap increases with the fraction of the neighborhood white. In neighborhoods with the smallest fraction white, the premium is about 0.6%. In neighborhoods with the largest fraction white, it is about 2.4%. This pattern holds across different types of areas.

Does HUD Overpay for Voucher Units, and Will SAFMRs Reduce the Overpayment?

Abstract: Small Area Fair Market Rents is an important reform of HUD's Housing Choice Voucher Program. One argument for them is that they would reduce overpayment for voucher units in low-rent neighborhoods. This leads to the belief that the benefits of SAFMRs can be funded largely by reductions in landlord profits rather than by losses to voucher recipients who remain in low-rent areas. The usual theoretical argument that has led many to believe that voucher units are overpriced focuses on one implication of one feature of the Housing Choice Voucher program. This article provides a more comprehensive theoretical analysis that leads to the conclusion that the worst voucher units and those in the worst neighborhoods will usually rent for more than the mean market rent of identical units, and the best units in the best neighborhoods will rent for less than this amount. The debate over this matter has ignored the bulk of the available evidence. This article summarizes and assesses the data, methods, and results of the major studies. The evidence is consistent with the general pattern predicted by the comprehensive theoretical analysis but also with an alternative explanation that challenges its interpretation as overpayments and underpayments for voucher units. The mix of units with estimated overpayments and underpayments varies across studies, but the weight of the evidence is that the aggregate differences are modest. Finally, the evidence available indicates that SAFMRs will decrease the rents paid for voucher units with any specified set of characteristics in the worst neighborhoods and will increase the rents of such units in the best neighborhoods.

The Role of Government in the Housing Sector

Abstract: This chapter presents the arguments for government involvement in the housing sector, summarizes what is known about the effects of several major government housing programs in the United States, and develops the implications of the preceding for housing policy. Rent control has been a major type of government regulation of housing throughout the world for many years. Housing economists have made few attempts to calculate rates of return on rental housing and to compare them with returns on other types of investment, but they have provided indirect evidence in support of their views by deriving and testing other implications of competitive models of housing markets. One indication of the distortion in consumption patterns of occupants of controlled housing is the divergence between the benefit to tenants and the cost to landlords. Federal housing programs for low-income families have emphasized the construction of new units beginning in the 1930's with the public housing program.