Housing lottery winners have been announced in the past week from New Orleans to New York, meaning a small number of lucky people are snagging sweet apartments at below-market rates.
What’s a housing lottery? In major cities that have large income disparities and limited desirable neighborhoods, the government has set aside a small number of affordable housing options for people who fit strict eligibility requirements (often prioritizing disabled, elderly, or low-income residents). Apartment dwellers pay rent based on a sliding scale — usually one-third of their income — and the housing authority picks up the rest. But because demand far exceeds supply, you can only get in on this deal through a lottery.
The result is known as an economic shortage.
In New Orleans, for example, 4,000 vouchers were awarded among 28,865 applicants, so lots of people walked away empty-handed based on nothing more than bad luck. And in New York, city workers are also included in that priority pool, leading to accusations of nepotism (a common side effect of shortages).
The smart economic solution would be to do away with housing lotteries and let rent prices achieve an equilibrium where the number of willing buyers equals the number of coveted apartments available. It may not be the feel-good solution, but why should getting the apartment of your dreams be a matter of having your name picked out of a hat?
