Why Free-Market Housing Solutions Beat Government Vouchers
~4 min read
In a recent BiggerPockets article, “DOGE Takes Aim at Section 8—Will Vouchers Lose Funding?” author Jeff Vasishta raises alarms about potential cuts to Section 8 housing vouchers. The Department of Government Efficiency (nicknamed “DOGE”) has been slicing through federal budgets “like a chainsaw,” even identifying $260 million to cut at HUD. Reports indicate HUD could lose up to 50% of its 9,600 employees under this initiative – a drastic “streamlining” that understandably worries those who rely on housing assistance. If vouchers are reduced or funding slashed, what happens to the low-income families and landlords who count on them? From a conservative perspective, these cuts, while jarring, underscore a crucial point: we shouldn’t pin our housing hopes on government programs in the first place. Instead, strengthening private-market solutions – unleashing investors, developers, and deregulation – is a more efficient, sustainable path to affordable housing.
Government Vouchers Under the Knife
Section 8 housing vouchers (now called the Housing Choice Voucher program) help around 2.3 million U.S. households afford rent by bridging the gap between what they can pay and market rents. The program has always been oversubscribed; only about one in four eligible families actually receives a voucher, due to funding limits. In other words, even in good times the majority of low-income renters get no help from Section 8’s “patchy safety net.” So what happens if Washington tightens the purse strings further? We’re already seeing early signs: For example, the Burlington Housing Authority in Vermont suspended vouchers for 70 low-income households this January, anticipating federal budget cuts. Families who had waited months for assistance suddenly “lost the subsidy” before they could even use it. Others on the waitlist now have little hope of getting a voucher anytime soon.
Such scenarios may well play out nationwide if DOGE-driven cuts materialize. Fewer HUD staff and smaller budgets could mean fewer vouchers issued, delayed payments, or lower subsidies. In a worst case, some vouchers might be phased out entirely – a budget outline circulating among House Republicans even calls for phasing out the Housing Choice Voucher program over time. This would be a seismic shift after decades of housing policy. It’s no wonder advocates are anxious; even before any cuts, affordable housing resources are far below what’s needed.
From a conservative vantage, however, this moment invites reflection. Is an ever-expanding federal voucher program truly the best way to assist low-income renters? Section 8 began as a Republican-endorsed, market-friendly alternative to public housing projects in the Nixon era. But over time it has ballooned into a costly entitlement. It now consumes roughly $30 billion a year – the largest piece of HUD’s budget – yet still reaches only a fraction of needy families. And like other welfare programs, it has pitfalls: housing vouchers carry disincentives that can trap recipients in dependency, undermining the very self-sufficiency conservatives champion. For instance, rules often require voucher holders to pay around 30% of their income in rent. If their income rises, their rent share rises too – effectively a hefty marginal “tax” on any extra earnings. It’s been argued that this design discourages voucher tenants from seeking better-paying work, since earning more can drastically increase their out-of-pocket rent. Decades ago, one policy analyst dubbed Section 8 “a last redoubt of the entitlement culture,” noting it had no time limits and no expectations, mirroring the flaws of pre-reform welfare. In short, the program may inadvertently foster long-term dependence on government aid rather than empowering upward mobility.
The Limits of Section 8 – And Government Dependence
The potential Section 8 cuts shine a light on a fundamental issue: relying on the federal government to solve housing affordability is a risky bet. Politics shift, budgets get slashed, and those most vulnerable are left in limbo whenever fiscal winds change. A family that pins its hopes on a voucher might wait years, only to see the program yanked away or downsized. Even landlords and investors who built strategies around guaranteed Section 8 rent could find themselves scrambling if payments shrink or stall during bureaucratic upheaval. Simply put, government programs are at the mercy of politics and deficits. Today it’s DOGE and a “chainsaw” approach to HUD; tomorrow it could be another crisis forcing cutbacks.
Beyond unpredictability, there’s inefficiency. Federal housing assistance is a bureaucratic pipeline: Congress appropriates funds to HUD, HUD allocates to local Public Housing Agencies (PHAs), PHAs administer vouchers to tenants, who then pay landlords. Each step has overhead. HUD’s workforce administers multiple layers of compliance, inspections, and paperwork – all increasing costs and slowing processes. If HUD’s workforce is indeed slashed by half, it suggests perhaps it was bloated to begin with. Do we need an army of federal employees and complex regulations to mediate every rental subsidy? Conservatives often argue that markets allocate resources more nimbly than government bureaucracies. Housing is no exception.
Invest in Free-Market Housing, Not Government Dependency?
The looming cuts to Section 8 may sound like doom and gloom to some, but they reinforce a powerful lesson. We cannot depend on Uncle Sam to solve our housing woes. Fortunately, we don’t have to. An alternative vision is one where the free enterprise system provides abundant, affordable housing because it is allowed to do what it does best: respond to demand, allocate resources efficiently, and innovate. Rather than fighting tooth and nail to protect (or expand) a government program that only ever helped a subset of people, let’s channel that energy into advocating for freer markets and private investment in housing.
For real estate investors and entrepreneurs, this is a moment to step up. Instead of relying on guaranteed government rent checks, look to the opportunities that a market-oriented approach creates. Focus on “workforce housing” investments like PADSPLIT and developments that serve middle- and low-income renters through efficiency and scale, not handouts. That could mean acquiring land to build inexpensive modular homes, converting under-utilized commercial buildings into apartments, or partnering with community groups to rehabilitate housing stock without heavy subsidies.
The prospect of Section 8 voucher cuts is a wake-up call. Housing assistance doesn’t have to mean government assistance. The private sector, when unhindered, can provide better, more adaptable aid by simply doing business: building homes, renting them out, and competing to offer the best value. It’s time to shift our mindset from subsidizing demand to unleashing supply. Let’s encourage our leaders to prune back the regulations and programs that have kept the housing market on a leash. And let’s encourage investors to seize the initiative in providing housing solutions, confident that free-market strategies will do far more good in the long run than any government voucher ever could.