Atrómitos Consulting Done Fearlessly
CAREERS

Menu

Money for Buildings, Money for People

Michealle Gady

·

Paying for the Last Link: A Six-Part Series on Housing Finance in Washington, Part 2 of 6

In the first article in this series, I described a homelessness system in Washington that can identify people who need housing but too often cannot place them in a home. That home is the last link in the chain of care I described in July, and a major reason it is missing is the way public funding for housing is structured.

Two Ways to Pay for Housing

Public money for housing comes in two basic forms: money for buildings and money for people. Each does something the other cannot.

Money for buildings pays to build new housing or to buy and repair existing housing. Either way, the public money comes with a requirement that the units stay affordable. In Washington, much of the state’s own capital funding flows through the Housing Trust Fund, often alongside federal tax credits and local dollars. The state can grant that money, which is spent once, or lend it, and a revolving fund lends the repaid money again.

The strength of capital funding is its durability. A one-time expenditure produces a building that lasts for decades, with a recorded covenant that keeps the units affordable. The investment adds to the housing supply, which helps the broader market, and the state can target it to specific needs such as permanent supportive housing or farmworker housing.

However, capital has three weaknesses. It is slow; projects take years to move from award to occupancy. Grant dollars do not come back, so every unit depends on the next appropriation. Finally, capital can pay for a building, but it cannot pay the rent. Even a building with no mortgage has monthly costs for maintenance, utilities, insurance, and staff, and the lowest-income households cannot pay enough rent to cover those costs. Housing those households takes an ongoing subsidy on top of the capital.

Money for people helps households pay rent. It takes three main forms:

  • Tenant-based vouchers, such as federal Housing Choice Vouchers, let a household rent a unit on the private market. The household generally puts about 30% of its income toward rent and utilities, or pays a minimum rent of up to $50 when that amount is higher. The voucher pays the remaining cost, within a limit the housing agency sets, for as long as the household qualifies, even if it moves.
  • Project-based assistance works the same way, but the subsidy attaches to specific units and stays with the building when a tenant leaves.
  • Short-term help, such as back rent, eviction prevention, or rapid re-housing, covers a crisis or a limited period of rent, from a few months to as long as two years, and then ends.

The strengths of rent assistance mirror the weaknesses of capital. It pays the rent, and it can start right away in existing housing. The strongest evidence is for long-term vouchers, and it still comes from the Family Options Study by the U.S. Department of Housing and Urban Development (HUD), which began in 2010 with families staying in shelters in 12 communities, each assigned at random to one of several kinds of help. About three years after enrolling, families offered a voucher were less than half as likely to have spent a night homeless or doubled up in the previous six months as families who received only the usual help available in their communities, and they reported less psychological distress and food insecurity. The department estimated that a voucher added about $4,000 per family over three years compared with that usual help, and it described the extra cost as “a modest investment to achieve substantially better outcomes for both parents and children.” As far as I can find, no newer randomized study has measured how vouchers affect homelessness, and HUD has designed a 12-year follow-up of the same families.

The Family Options Study found little effect from short-term subsidies, but newer research suggests short-term help can matter too. A 2026 California Policy Lab study, which was not a randomized trial, found that people in Los Angeles County who leased a unit through rapid re-housing were 28% less likely to enroll in shelter or other interim housing, or in a street outreach program, over the next four years than similar enrollees who did not find a unit.

The weakness of long-term rent assistance is that its cost never ends and rises with rents. Massachusetts, which created its current state voucher program in 1992, now warns that “voucher costs continue to rise at a rate that is unsustainable” and has paused issuing new mobile vouchers. Vouchers also do not add housing. Washington has barred landlords from turning away tenants because they pay with a voucher since 2018, but in a tight market like ours, households with vouchers can still struggle to find a unit that fits the program’s rent limits before the voucher expires.

When governments cut funding, households can lose their housing directly. That came close to happening on a large scale this year. Federal funding for the pandemic-era Emergency Housing Voucher program ran short in 2026, years ahead of its original 2030 timeline. More than 47,000 households nationwide were still using these vouchers in April 2026, when officials at New York City’s housing authority said they could not guarantee those households placement in another program or apartment. Then Congress, in a stopgap funding law, extended tenant protection voucher eligibility to every household still leasing with one of these vouchers on September 30 and required those vouchers to be provided before the year ends. The administration’s fiscal year 2027 budget request would go further, proposing five-year time limits and work requirements for many households receiving HUD rental assistance.

Washington does not have to choose between building housing and helping people pay for it. The question is which households need which kind of help.

  • Households earning less than 30% of the area median income need both. Capital builds or preserves the unit, and rent or operating assistance covers the gap between what the renter can pay and what it costs to run the building.
  • Households earning 30% to 60% of the area median income rely mainly on capital grants and tax credits, with short-term help to keep a crisis from becoming an eviction.
  • Households earning 60% to 80% of the area median income can often pay enough rent to let a building owner repay a low-cost public loan. Lending to those projects instead of giving grants saves grant money for housing that serves people with the lowest incomes.

Thirty Percent Is the Wrong Yardstick for the Lowest Incomes

Most of the programs described above rest on one number. Since 1981, when Congress raised the public housing rent cap to 30% of income, policymakers have considered housing affordable when it costs no more than 30% of household income. Most federal rental assistance programs have set the tenant’s share at about that level since the early 1980s. Its simplicity is the standard’s strength, but it is also a blunt instrument. The research suggests it misses many of the households these programs serve.

Some researchers use an alternative standard called residual income. Instead of asking what share of income goes to rent, it asks whether a household has enough left after rent to cover food, transportation, child care, health care, and taxes. Using that measure, a 2025 Harvard Joint Center for Housing Studies analysis of 2023 Census Bureau data found that about two-thirds of working-age renter households cannot afford both rent and a modest standard of living, compared with half under the 30% standard. About 5.3 million of these renter households fall short under the residual-income measure but do not count as burdened under the conventional one.

A percentage means very different things at different incomes. What matters is how much money a household has left after paying rent:

  • A household earning $250,000 before taxes that spends 35% of its income on rent still has about $162,500 a year for everything else. By the 30% standard, it counts as burdened.
  • A household earning $20,000 before taxes that spends exactly 30% of its income on rent has about $1,170 a month left, before taxes, for food, transportation, health care, and everything else. By the 30% standard, it counts as not burdened.

The standard raises an alarm for the household that is doing fine and misses the one that is struggling. A 2018 Joint Center analysis of Los Angeles, Phoenix, and Cleveland found that the 30% standard understated the burden for the lowest-income households. Among extremely low-income renters in those metro areas, the share who could not afford both rent and basic necessities was 10 to 19 percentage points higher than the 30% standard showed. The Joint Center’s 2025 national analysis found a similar gap: every working-age renter household earning less than $30,000 a year fell short under the residual-income measure, while the 30% standard counted 85% to 88% of them as burdened.

What the lowest-income renters have left after rent has also been shrinking. Nationally, the median renter household earning less than $30,000 had only $210 a month left after rent and utilities in 2024, 60% less than in 2001 after adjusting for inflation.

Geography matters as well. The Joint Center’s 2025 analysis found that residual-income burdens are highest outside metropolitan areas, where incomes often fall short of basic living costs even though rents are lower (73%, compared with 59% in urban counties of large metro areas). Washington shows a similar pattern. The University of Washington’s Self-Sufficiency Standard measures how much income a household needs to cover basic costs where it lives. The most recent statewide analysis, a 2023 University of Washington report using the Standard, found that 28% of the state’s working-age households could not afford basic needs in 2021, up from 22% in 2019. The highest rates were in eastern Washington and on the Olympic Peninsula. In Ferry, Okanogan, Stevens, and Pend Oreille counties in the northeast corner of the state, 40% of working-age households could not cover basic needs.

In fairness, the 2018 Joint Center analysis concluded that the 30% standard still works for comparing affordability across years and places, a point the Congressional Research Service repeated in 2025. The problem comes from relying on it alone, especially when the state designs help for households with the lowest incomes.

Washington should measure affordability with residual income alongside the 30% standard, and it has a ready tool in the Self-Sufficiency Standard, which the University of Washington calculates for every county in the state. The state already relies on the Standard elsewhere: the Department of Social and Health Services uses it to set the need standards for cash assistance and updates them every year. The state should also reconsider the state-funded programs that set a tenant’s share of rent at 30% of income, a share that the lowest-income households often cannot afford. A sliding scale, where households with the lowest incomes pay a smaller percentage of their income toward rent, would leave them more for food, transportation, and other basic needs.

Next in this series: why Washington’s own financing leans so heavily toward buildings, and what that means for the people waiting in shelters.

Sources