Today, federal rental assistance enables five million low-income households to afford modest homes. Three major programs, the largest of which is Housing Choice Vouchers (HCV), assist about 90% of these households. HCV requires that a share of new households admitted into the program include "extremely low-income," (although recent budgets have either cut or eliminated most programs assisting this group of people), meaning that their income may not exceed 30% of the local median. HCV grew from its inception in 1974 until 2002. There were no new vouchers until 2008 when about 15,000 new vouchers were established to compensate for 150,000 lost. Another 13,000 new vouchers were funded in 2009. This change helped and encouraged state and local housing agencies that administer the program to assist more needy families, an important improvement at a time of rising poverty and homelessness.
Studies have shown that vouchers are highly effective in reducing homelessness and housing instability (both of which have been linked to a range of developmental problems among children) and help families move to lower-poverty neighborhoods with better schools and less exposure to crime. Unfortunately, one major aspect of the 2009 legislation included a deleterious provision that sharply expanded a demonstration which exempted state and local housing agencies from many federal rules. This included exposing close to 750,000 low-income households to policies such as rent increases, and this situation has not yet been rectified.
Funding limitations have always bedeviled the HCV program, but especially during the recent economic downturn. Only one out of four low-income renter households receives federal rental assistance, and the number of unassisted renter households with "worst case" housing needs rose by more than 40% between 2007 and 2011. In many localities the waiting lists for vouchers may be thousands of families long; a wait of three to six years to access vouchers is common; and many lists are closed to new applicants.
Some localities use a "lottery" approach where there can be as many as 100,000 applicants for 10,000 spots on the waiting list, with priority sometimes given to local residents, the disabled, the elderly and veterans. The funding limitations for HCV contrasts sharply wi