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Eh. Why should the jump from Section 8 (subsidized rent) be straight to home ownership (and not renting with your own income)? Section 8 might have some ineffi

Eh. Why should the jump from Section 8 (subsidized rent) be straight to home ownership (and not renting with your own income)? Section 8 might have some inefficient cliffs. But not allowing savings for a mortgage doesn’t strike me as one of them.

bsedlm 4y ago
why should you be forced to rent for a place to sleep?
praxulus 4y ago
I agree that not allowing savings for a mortgage probably isn't a huge issue in practice, but discouraging saving in general is completely bonkers policy.
- alistairSH 4y ago
  Oh, I agree. Savings of some form should be encouraged. Various cliffs are bad policy. I’d rather some form of UBI-like assistance. Single program, means tested but no cliffs(just a gradual phase out of some sort), and no limits on what the assistance is spent on.
_jal 4y ago
What's this business with "should"? A big reason why we have these perverse rules in the first place is that people are absurdly concerned with controlling people who accept (certain types of) public money. If someone can find a path to jump from dependency to ownership, why "should" aid programs be structured to prevent that? I, for one, would be a fan of imposing similar restrictions on other aid recipients, like mortgage-interest deduction-takers and enthanol producers. I suspect many folks would abruptly notice the absurdities with such rules.
- PragmaticPulp 4y ago
  > If someone can find a path to jump from dependency to ownership, why "should" aid programs be structured to prevent that? Because the next step from subsidized housing is to renting. If we structured subsidizing housing programs such that they enabled people to save up for down payments, this creates a perverse incentive for normal renters to get into subsidized housing to accelerate their transition to home ownership. Any time you introduce a perverse incentive like this, you overwhelm the system as people who don’t need it start crowding out people who actually do need it. Going straight from subsidized rental housing to home ownership doesn’t make sense. Going from subsidized rentals to non-subsidized rentals is the obvious next step.
  - _jal 4y ago
    > Going straight from subsidized rental housing to home ownership doesn’t make sense Nice bald assertion. It doesn't make sense to trap people in dependency, but I take it you're more comfortable with these programs failing in that direction...? > this creates a perverse incentive Which we already have, just with the reverse valence. This is why I said I support means-testing the mortgage-interest deduction. People don't really understand things until they've been through them, and there's no good reason wealthier people shouldn't have to put up with similar paternalist nonsense for their handout.
    - diob 4y ago
      Right? We never means test anything when it comes to wealthy incentives / programs.
  - diob 4y ago
    Believe me, folks don't want to live in subsidized housing, it generally sucks.
  - erik_seaberg 4y ago
    Renting is supposed to be a much shorter commitment that lets people move around. It shouldn’t be cheaper in a market that’s allowed to function. If anything, the optionality and added risk should have a cost, which is also why a hotel room costs more per day or week than renting.
    - chii 4y ago
      > It shouldn’t be cheaper in a market that’s allowed to function. in a perfectly efficient market, renting and home ownership costs exactly the same - not cheaper nor more expensive. However, most home owners living in their home pay a premium for it, because they both want to secure their bid when they buy, and they are likely buying on more than just financial implications (like the location is great for their kids, etc). Therefore, a home owner is actually more likely to have a higher cost of capital over all - both the deposit and the mortgage added together, even if the mortgage interest by itself may be lower than renting. Think of it this way - if renting was more expensive than the total cost of ownership, then an investor would borrow the capital needed for buying, and then rent it out and arbitrage the difference risk free. It is this mechanism that keeps the rent and the price of ownership at approx. equal. In recent times, the price of ownership has grown due to the pandemic, and high availability of credit. Rent will follow, if it hasn't already, as landlords will not just eat the loss.
- alistairSH 4y ago
  I agree, however, there needs to be some sort of means test and phase-out. It’s equally absurd that somebody receiving Section 8 benefits should be able to save at a higher rate than somebody just outside the benefit range (and saving at a rate that buys a house above and beyond a reasonable emergency fund likely does that).
  - mortenjorck 4y ago
    Phase-out is the key that's missing from so many assistance programs. It's the same with Medicaid, which really discourages you from taking that next step up to a slightly better-paying job, especially if you have a chronic health condition. Advancing your career in a way that should gradually decrease your dependance on government assistance instead cuts it off all at once, turning a raise into a massive pay cut, thus ensuring you don't climb the ladder and stay dependent on aid indefinitely. It's utterly perverse.
    - paulmd 4y ago
      SSI already has an income phase-out (not a cliff), as discussed in the article. The problem is the phase-out starts at $85 (!) and benefits steeply decline once you are in the phase-out, not that there isn’t a phase-out at all. It also has a wealth cap, but that’s unrelated to the “make a dollar more and you’re done” idea that so many people hold, which is not how SSI income phaseouts work. The wealth cap is “you accumulate more than $2k at any one time, you’re done”, and that is different from making money resulting in a sudden loss. It probably is not a great idea to have a wealth cap at any sort of a level that might be relevant to a middle-class individual. Someone shouldn’t have to destroy their safety net in order to qualify for benefits in the event they become disabled, and disability holders should not be barred from having enough cash to operate and to access the financial tools that would allow them to build their way out of poverty. Maybe we could set a cap at $50k wealth or something but in the end who cares, if a few people in the top 1% end up using it that’s probably less costly than administrative costs of peering at everyone’s bank statements monthly. Nor should there really be a wealth phase-out for benefits either imo. What is the benefit of making it harder for people who are just about to make the leap off welfare to actually take the leap?
- NovemberWhiskey 4y ago
  Isn't there just an element of basic fairness to this? The budget for Section 8 is only so much, and people who can afford market rent need to be moving out of the program to make way for others.
  - crooked-v 4y ago
    If you care about people not ending up on the same program again, shoving them out the door the second they can nominally pay full price themselves doesn't help,
- refurb 4y ago
  I mean it’s all about fairness. Even animals and babies understand the concept of unequal distribution of community resources.
diob 4y ago
This is such a strange take.
- alistairSH 4y ago
  How do? Allowing recipients of public assistance to accumulate more savings than those just outside the program would be a perverse incentive to join the program. I didn’t say they shouldn’t be allowed to save at all. Only that if they are capable of saving at the level required to buy a house and service a mortgage, they likely don’t actually need assistance.

bsedlm 4y ago

why should you be forced to rent for a place to sleep?

praxulus 4y ago

I agree that not allowing savings for a mortgage probably isn't a huge issue in practice, but discouraging saving in general is completely bonkers policy.

alistairSH 4y ago
Oh, I agree. Savings of some form should be encouraged. Various cliffs are bad policy. I’d rather some form of UBI-like assistance. Single program, means tested but no cliffs(just a gradual phase out of some sort), and no limits on what the assistance is spent on.

_jal 4y ago

What's this business with "should"? A big reason why we have these perverse rules in the first place is that people are absurdly concerned with controlling people who accept (certain types of) public money. If someone can find a path to jump from dependency to ownership, why "should" aid programs be structured to prevent that? I, for one, would be a fan of imposing similar restrictions on other aid recipients, like mortgage-interest deduction-takers and enthanol producers. I suspect many folks would abruptly notice the absurdities with such rules.

PragmaticPulp 4y ago
> If someone can find a path to jump from dependency to ownership, why "should" aid programs be structured to prevent that? Because the next step from subsidized housing is to renting. If we structured subsidizing housing programs such that they enabled people to save up for down payments, this creates a perverse incentive for normal renters to get into subsidized housing to accelerate their transition to home ownership. Any time you introduce a perverse incentive like this, you overwhelm the system as people who don’t need it start crowding out people who actually do need it. Going straight from subsidized rental housing to home ownership doesn’t make sense. Going from subsidized rentals to non-subsidized rentals is the obvious next step.
- _jal 4y ago
  > Going straight from subsidized rental housing to home ownership doesn’t make sense Nice bald assertion. It doesn't make sense to trap people in dependency, but I take it you're more comfortable with these programs failing in that direction...? > this creates a perverse incentive Which we already have, just with the reverse valence. This is why I said I support means-testing the mortgage-interest deduction. People don't really understand things until they've been through them, and there's no good reason wealthier people shouldn't have to put up with similar paternalist nonsense for their handout.
  - diob 4y ago
    Right? We never means test anything when it comes to wealthy incentives / programs.
- diob 4y ago
  Believe me, folks don't want to live in subsidized housing, it generally sucks.
- erik_seaberg 4y ago
  Renting is supposed to be a much shorter commitment that lets people move around. It shouldn’t be cheaper in a market that’s allowed to function. If anything, the optionality and added risk should have a cost, which is also why a hotel room costs more per day or week than renting.
  - chii 4y ago
    > It shouldn’t be cheaper in a market that’s allowed to function. in a perfectly efficient market, renting and home ownership costs exactly the same - not cheaper nor more expensive. However, most home owners living in their home pay a premium for it, because they both want to secure their bid when they buy, and they are likely buying on more than just financial implications (like the location is great for their kids, etc). Therefore, a home owner is actually more likely to have a higher cost of capital over all - both the deposit and the mortgage added together, even if the mortgage interest by itself may be lower than renting. Think of it this way - if renting was more expensive than the total cost of ownership, then an investor would borrow the capital needed for buying, and then rent it out and arbitrage the difference risk free. It is this mechanism that keeps the rent and the price of ownership at approx. equal. In recent times, the price of ownership has grown due to the pandemic, and high availability of credit. Rent will follow, if it hasn't already, as landlords will not just eat the loss.
alistairSH 4y ago
I agree, however, there needs to be some sort of means test and phase-out. It’s equally absurd that somebody receiving Section 8 benefits should be able to save at a higher rate than somebody just outside the benefit range (and saving at a rate that buys a house above and beyond a reasonable emergency fund likely does that).
- mortenjorck 4y ago
  Phase-out is the key that's missing from so many assistance programs. It's the same with Medicaid, which really discourages you from taking that next step up to a slightly better-paying job, especially if you have a chronic health condition. Advancing your career in a way that should gradually decrease your dependance on government assistance instead cuts it off all at once, turning a raise into a massive pay cut, thus ensuring you don't climb the ladder and stay dependent on aid indefinitely. It's utterly perverse.
  - paulmd 4y ago
    SSI already has an income phase-out (not a cliff), as discussed in the article. The problem is the phase-out starts at $85 (!) and benefits steeply decline once you are in the phase-out, not that there isn’t a phase-out at all. It also has a wealth cap, but that’s unrelated to the “make a dollar more and you’re done” idea that so many people hold, which is not how SSI income phaseouts work. The wealth cap is “you accumulate more than $2k at any one time, you’re done”, and that is different from making money resulting in a sudden loss. It probably is not a great idea to have a wealth cap at any sort of a level that might be relevant to a middle-class individual. Someone shouldn’t have to destroy their safety net in order to qualify for benefits in the event they become disabled, and disability holders should not be barred from having enough cash to operate and to access the financial tools that would allow them to build their way out of poverty. Maybe we could set a cap at $50k wealth or something but in the end who cares, if a few people in the top 1% end up using it that’s probably less costly than administrative costs of peering at everyone’s bank statements monthly. Nor should there really be a wealth phase-out for benefits either imo. What is the benefit of making it harder for people who are just about to make the leap off welfare to actually take the leap?
NovemberWhiskey 4y ago
Isn't there just an element of basic fairness to this? The budget for Section 8 is only so much, and people who can afford market rent need to be moving out of the program to make way for others.
- crooked-v 4y ago
  If you care about people not ending up on the same program again, shoving them out the door the second they can nominally pay full price themselves doesn't help,
refurb 4y ago
I mean it’s all about fairness. Even animals and babies understand the concept of unequal distribution of community resources.

diob 4y ago

This is such a strange take.

alistairSH 4y ago
How do? Allowing recipients of public assistance to accumulate more savings than those just outside the program would be a perverse incentive to join the program. I didn’t say they shouldn’t be allowed to save at all. Only that if they are capable of saving at the level required to buy a house and service a mortgage, they likely don’t actually need assistance.