Median gross rent by state from 2015 to 2023 American Community Survey estimates published by the U.S. Census Bureau.[1] States with median gross rents higher than the United States as a whole are in dark green.
The 20-story John F. Hylan Houses in the Bushwick neighborhood of Brooklyn, New York City.
Subsidized housing in the United States is administered by federal, state and local agencies to provide subsidized rental assistance for low-income households. Public housing is priced much below the market rate, allowing people to live in more convenient locations rather than move away from the city in search of lower rents. In most federally-funded rental assistance programs, the tenants’ monthly rent is set at 30% of their household income.[2] Now increasingly provided in a variety of settings and formats, originally public housing in the U.S. consisted primarily of one or more concentrated blocks of low-rise and/or high-rise apartment buildings. These complexes are operated by state and local housing authorities which are authorized and funded by the United States Department of Housing and Urban Development (HUD). In 2023, there were 1 million public housing units.[3]
Subsidized apartment buildings, often referred to as housing projects (or simply the projects),[4] have a complicated and often notorious history in the United States. While the first decades of projects were built with higher construction standards and a broader range of incomes and same applicants, over time, public housing increasingly became the housing of last resort in many cities. Several reasons have been cited for this negative trend including the failure of Congress to provide sufficient funding, a lowering of standards for occupancy, and mismanagement at the local level. In the United States, the federal government provides funding for public housing from two different sources: the Capital Fund and the Operating Fund. According to the HUD, the Capital Fund subsidizes housing authorities to renovate and refurbish public housing developments; meanwhile, the Operating Fund provides funds to housing authorities in order to assist in maintenance and operating costs of public housing.[5] Furthermore, housing projects have also been seen to greatly increase concentrated poverty in a community, leading to several negative externalities. Crime, drug usage, and educational under-performance are all widely associated with housing projects, particularly in urban areas.[6]
As a result of their various problems and diminished political support, many of the traditional low-income public housing properties constructed in the earlier years of the program have been demolished. Beginning primarily in the 1970s the federal government turned to other approaches including the Project-Based Section 8 program, Section 8 certificates, and the Housing Choice Voucher Program. In the 1990s the federal government accelerated the transformation of traditional public housing through HUD’s HOPE VI Program. Hope VI funds are used to tear down distressed public housing projects and replace them with mixed communities constructed in cooperation with private partners.[7] In 2012, Congress and HUD initiated a new program called the Rental Assistance Demonstration (RAD) program.[8] Under the demonstration program, eligible public housing properties are redeveloped in conjunction with private developers and investors.
The federal government, through its Low-Income Housing Tax Credit program (which in 2023 paid for construction of 90% of all subsidized rental housing in the US), spends $6 billion per year to finance 50,000 low-income rental units annually, with median costs per unit for new construction (2011-2023) ranging from $126,000 in Texas to $326,000 in California.[9][10][11]
Early efforts
In the 19th and early 20th centuries, government involvement in housing for the poor was chiefly in the area of building code enforcement, requiring new buildings to meet certain standards for decent livability (e.g. proper ventilation), and forcing landlords to make some modifications to existing building stock. Photojournalist Jacob Riis’ How the Other Half Lives (1890) brought considerable attention the conditions of the slums in New York City, sparking new attention to housing conditions around the country.
Early tenement reform was primarily a philanthropic venture, with Model Tenements built as early as the 1870s which attempted to use new architectural and management models to address the physical and social problems of the slums.[12] These attempts were limited by available resources, and early efforts were soon redirected towards building code reform. The New York Tenement Act of 1895 and Tenement Law of 1901 were early attempts to address building codes in New York City, which were then copied in Chicago, Philadelphia, and other American cities.
In 1910, the National Housing Association (NHA) was created to improve housing conditions in urban and suburban neighborhoods through the enactment of better regulation and increased awareness. The NHA was founded by Lawrence Veiller, author of Model Tenement House Law (1910), and consisted of delegates from dozens of cities.[12] Over time, the focus of the housing movement shifted from a focus on proper building typology to community development on a broader scale, and the NHA dissolved in 1936.
The City of Milwaukee, under mayor Daniel Hoan, implemented the country’s first public housing project, known as Garden Homes, in 1923. This experiment with a municipally-sponsored housing cooperative saw initial success, but was plagued by development and land acquisition problems, and the board overseeing the project dissolved the Gardens Home Corporation just two years after construction on the homes was completed.[13]
Public Works Administration (PWA) Housing Division
Permanent, federally funded housing came into being in the United States as a part of Franklin Roosevelt’s New Deal. Title II, Section 202 of the National Industrial Recovery Act, passed June 16, 1933, directed the Public Works Administration (PWA) to develop a program for the «construction, reconstruction, alteration, or repair under public regulation or control of low-cost housing and slum clearance projects …». Led by the Housing Division of the PWA and headed by architect Robert Kohn, the initial, Limited-Dividend Program aimed to provide low-interest loans to public or private groups to fund the construction of low-income housing.
Too few qualified applicants stepped forward, and the Limited-Dividend Program funded only seven housing projects nationally. In the spring of 1934, PWA Administrator Harold Ickes directed the Housing Division to undertake the direct construction of public housing, a decisive step that would serve as a precedent for the 1937 Wagner-Steagall Housing Act, and the permanent public housing program in the United States. Kohn stepped down during the reorganization, and between 1934 and 1937 the Housing Division, now headed by Colonel Horatio B. Hackett, constructed fifty-two housing projects across the United States, as well as Puerto Rico and the Virgin Islands. Atlanta’s Techwood Homesopened on 1 September 1936 and was the first of the fifty-two opened.
Based on the residential planning concepts of Clarence Stein and Henry Wright, these fifty-two projects are architecturally cohesive, with composed on one to four story row house and apartment buildings, arranged around open spaces, creating traffic-free play spaces that defined community lift. Many of these projects were built on slum land, but land acquisition proved difficult, so abandoned industrial sites and vacant land were also purchased. Lexington’s two early projects were constructed on an abandoned horse racing track. At Ickes’ direction, many of these projects were also segregated, designed and built for either whites or African-Americans. Race was largely determined by the neighborhood surrounding the site, as American residential patterns, in both the North and South, were highly segregated.
Coming out of the housing movement at the turn of the century, the 1930s also saw the creation of the Home Owners’ Loan Corporation (HOLC), which refinanced loans in order to keep the housing market afloat. The National Housing Act of 1934 created the Federal Housing Administration (FHA), which used only a small capital investment from the federal government to insure mortgages. Construction of public housing projects were therefore only one portion of the federal housing efforts during the Great Depression.[14]
What does economic evidence tell us about the effects of rent control?
Steadily rising housing rents in many of the US’s large, productive cities have reignited the discussion whether to expand or enact rent control provisions. Under pressure to fight rising rents, state lawmakers in Illinois, Oregon, and California are considering repealing laws that limit cities’ abilities to pass or expand rent control. While rules and regulations of rent control vary from place to place, most rent control consists of caps on price increases within the duration of a tenancy, and sometimes beyond the duration of a tenancy, as well as restrictions on eviction.
New research examining how rent control affects tenants and housing markets offers insight into how rent control affects markets. While rent control appears to help current tenants in the short run, in the long run it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood.
A substantial body of economic research has used theoretical arguments to highlight the potential negative efficiency consequences to keeping rents below market rates, going back to Friedman and Stigler (1946). They argued that a cap on rents would lead landlords to sell their rental properties to owner occupants so that landlords could still earn the market price for their real estate. Rent control can also lead to “mis-match” between tenants and rental units. Once a tenant has secured a rent-controlled apartment, he may not choose to move in the future and give up his rent control, even if his housing needs change (Suen 1980, Glaeser and Luttmer 2003, Sims 2011, Bulow and Klemperer 2023). This mis-allocation can lead to empty-nest households living in family-sized apartments and young families crammed into small studios, clearly an inefficient allocation. Similarly, if rental rates are below market rates, renters may choose to consume excessive quantities of housing (Olsen 1972, Gyourko and Linneman 1989). Rent control can also lead to decay of the rental housing stock; landlords may not invest in maintenance because they can’t recoup these investment by raising rents. (Downs 1988, Sims 2007).
Of course, rent control also offered potential benefits for tenants. For example, rent control provides insurance against rent increases, potentially limiting displacement. Affordable housing advocates argue that these insurance benefits are valuable to tenants. For instance, if long-term tenants have developed neighborhood-specific capital, such as a network of friends and family, proximity to a job, or children enrolled in local schools, then tenants face large risks from rent appreciation. In contrast, individuals who have little connection to any specific area can easily insure themselves against local rental price appreciation by moving to a cheaper location. Those invested in the local community are not able to use this type of “self-insurance” as easily, since they must give up some or all of their neighborhood specific capital. Rent control can provide these tenants with this type of insurance.
Until recently, there was little data or natural experiments with which to assess the importance of these competing arguments, and to assess how rent controls affects tenants, landlords, or the broader housing market. But newly-available housing-market data spanning periods of dramatic change in rent control laws in Cambridge, MA and in San Francisco, CA have allowed economists to examine these questions empirically. While these studies do find support for the idea that existing tenants benefit from the insurance provided by rent control, they also find the overall cost of providing that insurance is very large.
From December 1970 through 1994, all rental units in Cambridge built prior to 1969 were regulated by a rent control ordinance that placed strict caps on rent increases and tightly restricted the removal of units from the rental stock. The legislative intent of the rent control ordinance was to provide affordable rental housing, and at the eve of rent control’s elimination in 1994, controlled units typically rented at 40-plus percent below the price of nearby non-controlled properties. In November 1994, the Massachusetts electorate passed a referendum to eliminate rent control by a narrow 51–49 percent margin, with nearly 60 percent of Cambridge residents voting to retain the rent control ordinance. This law change directly impacted properties previously subject to rent control, enabling landlords to begin to charge market rents.