NCPA - National Center for Policy Analysis

HOUSING FOR HURRICANE VICTIMS

October 7, 2005

Many people displaced by Hurricanes Katrina and Rita are faced with the challenge of finding new housing with few resources and a lack of steady income, at least for now. The federal government spends billions of dollars a year on housing assistance and programs to provide low-cost housing for the poor, however, attempts to house homeless evacuees by expanding these programs would be a big mistake. Specifically, it would drive up demand for all low-income housing without increasing supply. The result: a large government expense with no reduction in need, say Joe Barnett, director of publications and Pamela Villarreal, a research associate with the National Center for Policy Analysis.

A better approach is the NCPA's concept of "enterprise" programs, say Barnett and Villarreal:

  • The idea is similar to "enterprise zones," where economically distressed areas are exempted from uneconomic regulations; enterprise programs, however, would not be confined to a geographical area.
  • On the supply side, a producer/seller/entrepreneur qualifies to participate in an enterprise program by providing housing opportunities to poor and distressed families.
  • On the demand side, the program would give low-income families access to non-traditional housing markets with funds currently tied up in government provision.

The private sector has been a powerful and effective provider of affordable housing, and Katrina evacuees would likely benefit from a market-driven approach with a wider variety of choices, including non-traditional housing, sweat equity programs and enterprise programs, says Barnett and Villarreal.

Housing considerations for hurricane evacuees should take into account long-term prospects for housing, not just government-dependent quick fixes. Manufactured homes, sweat equity mortgages, and SROs can increase the housing supply, but local zoning laws often restrict non-traditional housing. The federal government could require states to accommodate enterprise programs in return for reimbursement of hurricane-related expenditures, say Barnett and Villarreal.

Source: Joe Barnett and Pamela Villarreal, "Housing for Hurricane Victims," National Center for Policy Analysis, Brief Analysis No. 533, October 6, 2005.

For text:

http://www.ncpa.org/pub/ba533/

 

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