Public Housing Presents New Opportunities for Private Capital

Public housing is perhaps the most well-known type of affordable multifamily housing. It is rental housing that has traditionally been both publicly funded and publicly owned. Public housing provides the third-highest number of subsidized multifamily units, with the Low Income Housing Tax Credit (LIHTC) and the Project-Based Section 8 programs being first and second, respectively. Typically, most Public Housing Authorities (PHAs) receive ongoing subsidy funding directly from the federal government through the Public Housing Operating and/or Capital Funds, leaving no role for private financing firms.

However, in November 2011, Congress authorized the U.S. Department of Housing and Urban Development (HUD) to establish the Rental Assistance Demonstration program (RAD). RAD allows public housing to be converted to long-term Section 8 rental assistance contracts. This makes it possible for private capital to enter the market due to Section 8 subsidy providing a monthly stream of income available to repay debt.

The March 2014 Multifamily Market Commentary examines the current state of public housing and the potential impact of the RAD program.

Tanya Zahalak
Economist, Multifamily Economics and Market Research

March 24, 2014

Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Multifamily Economics and Market Research Group (MRG) included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the MRG bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts and other views published by the MRG represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.