The real problem with American housing policy.
The United States spends more than four times as much on homeowner subsidies as it does on affordable housing for those most in need.
That stat comes courtesy a detailed NBER working paper by Robert Collinsonand Ingrid Gould Ellen, my colleagues at NYU, and Jens Ludwig of the University of Chicago. The U.S. shells out roughly $46 billion a year on affordable housing—$40 billion on means-tested programs and another $6 billion in tax expenditures through the Low Income Housing Tax Credit (LIHTC) program, which supports affordable housing investments for low-income Americans. Compare that to $195 billion in subsidies that flow largely to wealthy and middle class homeowners via tax deductions for mortgage interest. And the study itself notes, the actual subsidy to homeowners may run as high as $600 billion based on the non-taxation of imputed rent, as estimated by Wharton real estate economists Todd Sinai and Joseph Gyourko.