History of Public Housing

In the United States, government-assisted affordable housing was first proposed in the first half of the 20th century to address concerns about the growth of slums in the nation's cities, where overcrowding and deterioration of properties were occurring. During the Great Depression, in the 1930s, the condition of the cities worsened. More and more families had to resort to living in makeshift shelters in slums.

The U.S. government response was the initiation of a public housing program to "alleviate unemployment and eliminate unsafe and unsanitary conditions." Construction of large-scale high-rise apartment buildings began in many cities, and soon public housing "cities within cities" were being created.
Unfortunately, the high concentration of very low-income families created subcultures. Some buildings were not well kept. They became known as "the projects."

Federally funded housing programs expanded in the late 1940s and 1950s in response to the needs of returning World War II and Korean War veterans. To help make homeownership affordable to them and other middle class Americans, the government initiated two revolutionary programs.

First, it created financing mechanisms, including government-backed mortgage insurance through FHA and secondary mortgage market that enabled families to purchase their homes over a 30-year period, making mortgage payments (and, therefore, the homes themselves) affordable to tens of thousands. Secondly, it created tax benefits for homebuyers in allowing mortgage interest deductions when filing federal personal income tax returns. (This initiative - actually a housing subsidy for the upper and middle class - currently costs the Federal Treasury $60 billion a year. It should be noted that this amount is more than twice HUD's entire budget.)

Housing assistance programs for lower income households (HUD's primary focus) changed dramatically again in the 1970s when then-President Nixon created a market-based program known as Section 8-Rental Assistance. . A rental assistance program would offer struggling families affordable housing in locations of their choice, thus increasing the prospect of deconcentrating poverty and reducing many problems associated with the large scale, high rise public housing in urban areas. Such a program would benefit the rental property market as well.