Back in 2018, New York City consolidated several rental subsidy programs into one, in hopes that expanding on its efforts to provide vouchers to help pay rent would mean the city would need fewer shelters. 

After a hard look at the numbers a February Citizens Budget Commission  (CBC) report, has found that “Rental housing vouchers require substantial subsidy, and have not reduced the demand for shelter: the City cannot voucher its way out of the housing affordability crisis.”

Kudos to the CBC for digging behind the theory and looking at the numbers which found that some 52,000 city voucher holders will cost more than $1.1 billion in fiscal year 2025, double the cost from 2023. “While these vouchers may save money at the start,” it states, “their total cost far outpaces the cost of shelter over five years or longer. The fact is: Short-term savings are fleeting and vouchers cost more than shelter over time even after accounting for households that will cycle back into shelter if they exit without subsidy.”

Why is this?

The report cites two principal reasons why New York (and potentially other cities as well) may want to think twice before embarking on a major voucher program to reduce the epidemic of homelessness in the United States.

• Even though shelters are more expensive per night, most people who use them, are only doing so for an average of 15 months, while the vouchers, which cost an average of $20,000 per household per year, can extend for up to five years or longer.

• The money for the vouchers come entirely out of the city’s own revenues, while funding for shelters can be shared with both federal and state governments.

What’s more, contrary to hopes, “the number of voucher holders has increased significantly, reaching 52,000 households by the end of 2024. Despite this, the number of individuals in shelter, excluding asylum seekers has held steady.”

Finally, the CBC report complains about a lack of transparency about its voucher program indicating that the city does not report any performance data on its voucher program “such as renewal rates, how long it takes recipients to find an apartment or median days to move into a unit.”

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