Cover: Price Effects of a Housing Allowance Program

Price Effects of a Housing Allowance Program

Published 1982

by C. Peter Rydell, Kevin Neels, C. Lance Barnett

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The Housing Assistance Supply Experiment (HASE) was undertaken primarily to demonstrate how a full-scale housing allowance program would affect local housing markets; in particular, how it would affect the price of housing services. If program-induced price increases were large, they would disrupt the housing market and divert program subsidies from their intended recipients. In the outcome, however, price effects caused by the experimental program were so small as to be negligible. Section II examines the changes in the price of rental housing services that occurred in the experimental sites during the first three years of the allowance program. Section III determines that the allowance program had such a small effect on housing prices because it caused only a modest increase in housing demand and because housing supply responds to demand shifts with surprising ease. Section IV assesses the generalizability of the price effects found in the HASE sites, and discusses ways in which the results improve the understanding of housing-market behavior.

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