Before the recent passage of the extended and expandedhomebuyer tax credit (see related article elsewhere in Memo),the federal government was spending more than $220 billion on homeownership subsidies, according to an analysis releasedby the Congressional Budget Office (CBO) on November 3. The study found that corresponding subsidies for rental housing amount to roughly $50 billion.
The report, An Overview of Federal Support for Housing, was produced as Congress considered renewing the homebuyer tax credit.
The mortgage interest deduction, at a cost of $80 billion, remains the single largest government housing subsidy. Two new spending programs aimed at homeowners, the Obama Administration’s foreclosure avoidance program, Making Home Affordable (nearly $50 billion), and the estimated subsidy to Freddie Mac and Fannie Mae (more than $40 billion), now rank as the second- and third-most costly.
CBO estimates that the initial homebuyer credit, which was to have expired on November 30, will cost $14 billion when all the credits are claimed, including $9.5 billion in tax expenditures and $4.5 billion in direct outlays for refundable credits. Any additional credits under the new program would add to this amount.
The report notes that rental housing subsidies fall into one of two categories: payments to households to rent housing in the private market, and payments to public housing agencies or private developers to build and operate rental housing. The highest-cost rental subsidy program is the Housing Choice Voucher program, costing just over $16 billion.
Link to the report and additional supporting materials at: www.cbo.gov/doc.cfm?index=10525