Do subsidized housing units depreciate faster than unsubsidized ones?

• Published in: Journal of housing economics Vol. 18; no. 1; pp. 49 - 58
• Main Author: Walters, Christopher R.
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.03.2009; Elsevier
• Series: Journal of Housing Economics
• Subjects: Empirical research; Housing depreciation; Housing market; Housing supply and markets; Low income; Panel data; Public housing; Public housing Housing depreciation Housing supply and markets; Social housing; Supply; U.S.A; R31; Public housing; Housing depreciation; Housing supply and markets
• ISSN: 1051-1377; 1096-0791
• DOI: 10.1016/j.jhe.2009.02.004

The economics literature provides considerable evidence on the performance of low-income housing programs. One issue that has not been adequately addressed by previous studies is the relative depreciation rates of subsidized and unsubsidized housing units. Simple economic theory suggests that subsidized projects should depreciate more quickly than unsubsidized units, as the rents received by owners of these projects do not depend directly on the condition of their units provided that they meet minimum housing standards. However, many government programs aimed at modernizing subsidized housing projects exist. Whether there is a difference between the depreciation rates of subsidized and unsubsidized housing units is therefore an empirical question. Using panel data from the American Housing Survey, I find that there is no significant difference in the depreciation rates of subsidized and unsubsidized housing units over the period from 1985 to 2005.