The Housing Lifeline: A Housing Affordability Policy

Abstract

Housing affordability, particularly for low-income households, is a major public policy concern. This paper considers the basis of the affordability problem and potential solutions. In contrast to other work, we distinguish between long-term and short-term affordability and focus on short-term income fluctuations that may create affordability problems for low-income households. Gans and Kings (2003) includes such a review. Instead we highlight the nature of short-term affordability problem and consider associated market failures. Our Lifeline - that uses an income contingent 'loan' to fund assistance for low-income households in overcoming problems associated with short-term housing affordability. We consider both the theoretical basis for the housing lifeline and a variety of issues relating to its practical implementation. In particular, we note that a housing lifeline many have a variety of economic benefits relative to existing housing policies.