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Section 8 housing: Destroying home values and driving up rental prices?
ABC Action News ^ | 2-19 | Law.TV

Posted on 02/26/2013 6:52:56 AM PST by ExxonPatrolUs

The federal government helps low-income families in need of housing by way of a program named Section 8, which issues rental vouchers for qualifying recipients. The vouchers can be used to pay rent on any property that accepts Section 8 renters.

Many factors determine what a monthly stipend rate will be, but household income and headcount are the primary factors.

In general, to qualify for Section 8, the family's income may not exceed 50 percent of the median income for the county or metropolitan area in which the family chooses to live. Public housing agencies, or PHAs, collect information on income, assets and family composition.

Like many well-meaning programs, Section 8 comes with unintended consequences. Here are the winners and losers of the Section 8 program.

Winners

Winners: Real estate investors

It’s understood that landlords want tenants who pay at-market rent on time and in full each month. And finding renters who won’t destroy property is icing on the cake.

Section 8 is serving up such renters to real estate investors.

Backed with generous government housing vouchers, Section 8 renters are cash cows for their landlords. And Section 8’s ample waiting list means that recipients who aren’t playing by the rules and doing the bare minimum required for maintaining property can be replaced by other recipients who will comply. “If property is destroyed, the landlord can go to Section 8 and report that tenants are breaching the contract,” says Brian Korte, P.A., Partner at The Law Offices of Korte &Wortman, a foreclosure defense law firm in West Palm Beach, Fla.

Section 8 will come in for remediation, and tenants would have a set time to comply, and if they didn’t, Section 8 could put another renter in. Real estate investors have much more recourse with Section 8 renters than they would with regular renters, where they’d have market their properties on their own.

“Why is every house being gobbled up and rented out by investors with ridiculous rents? Because they can hand them to the Section 8 tenants,” says Korte.

Winners: Section 8 renters

The design of Section 8 is to provide extremely low-income families with decent, safe and sanitary housing in the private market.

But a handful of Section 8 renters are getting all that and then some.

Cash investors are buying up luxury bank-owned properties and flipping them into Section 8 rentals for the guaranteed, at- or above-market rent checks issued by the government.

It’s a boon to Section 8 renters who find themselves with amenities many working, middle-class Americans can’t afford, such as granite countertops, pools and community racquetball courts and fitness centers.

What’s more for Section 8 renters with a housing stipend, there are no lifetime limits on the benefits. “As long as you qualify, you qualify,” says Korte.

There are annual checks on recipients to ensure they still meet eligibility requirements as set forth by the program, and recipients are required to report changes such as a child moving out or an increase in income. Rental reimbursements would decline if headcount declines or income increases.

Losers

Losers: Regular renters

According to Korte, Section 8 rentals play a role in driving up prices in the rental market. Section 8 vouchers are not below market value. They pay market rates, and sometimes offer even more than rental asking prices. This puts upward pressure on rents.

“If you look at a two-bedroom, two-bath Section 8 rental reimbursement, it’s about $1,700 in Palm Beach County,” says Korte. “That’s more than the advertised price for some luxury apartment complexes in the area.” Regular renters who pay out of pocket for their place are getting priced out of the rental market, and Section 8 works to their disadvantage.

“The program’s desire to be at the equal playing field of all rentals creates a self-fulfilling prophecy of what rent is,” says Korte. “It’s going to continuously move up.”

Losers: Section 8 applicants on a waiting list

Section 8 has a finite budget. According to the 2013 proposed budget published by the U.S. Department of Housing and Urban Development, or HUD, $19.1 billion is slated for tenant-based rental assistance.

“This is not an entitlement program with an unlimited budget,” says Korte. “Once the money runs out, it’s out.” Also included in HUD’s proposed budget is a clause that families currently receiving rental assistance will see no reduction in payments.

The program could get more “bang for the buck” and help more people by paying lower rental reimbursements.

Losers: Neighbors of Section 8 tenants

Section 8 rentals have a direct impact on their surrounding communities.

“You’re seeing destruction of the underlying neighborhood because you’ve got rental communities in areas where they shouldn’t be,” says Korte.

In general, the average homeowner has an emotional and financial stake in their home. But the typical investor who buys and rents.


TOPICS: Chit/Chat
KEYWORDS: housing; rentals; section8; section8housing

1 posted on 02/26/2013 6:53:04 AM PST by ExxonPatrolUs
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To: ExxonPatrolUs

Section 8 is a slum lord’s dream come true. It artificially jacks up the market price for low end rentals, and pushes mid range rents up as well.


2 posted on 02/26/2013 6:57:47 AM PST by Above My Pay Grade (The people have the right to tell government what guns it may possess, not the other way around.)
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To: ExxonPatrolUs

This is news? To whom? This has been true for decades. Does ABC have a story on how welfare destroys the will to work for a living?


3 posted on 02/26/2013 7:09:48 AM PST by outpostinmass2
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To: ExxonPatrolUs
I have a true story from Section 8 land of Boston. Deadbeat woman with deadbeat kids and grandchildren all living on section 8 of $1500 a month. Police constantly called to the house because her son is a drug dealer. Police tell landlord to evict the deadbeat women and her awful children. Deadbeat goes to court and declares that yes her son is a drug dealer and she is gaining custody of her grandchildren. Housing authority rewards her with $2000 a month housing voucher and tells her to find a bigger place. Drug dealing son is still living with her in new more spacious place.
4 posted on 02/26/2013 7:17:07 AM PST by outpostinmass2
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To: ExxonPatrolUs

Yep, not news really; this program has destroyed suburban house values throughout the major metro area I live in. Forced us to sell our home, and of course, at a loss. The only buyers are investors looking to turn previously owned houses into Section 8. No one with a brain is “buying” a house in this county or any of the surrounding counties. Its a sure way to lose money.


5 posted on 02/26/2013 7:18:15 AM PST by Rich21IE
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To: ExxonPatrolUs

My elderly Dad is eligible for Section 8 housing. I REFUSE to let him live there. Total dumps in our area filled with slackers and druggies.

‘The People’s Republik of Madistan’ is the Poster Child for: “If you build it, they will come!”


6 posted on 02/26/2013 7:23:06 AM PST by Diana in Wisconsin (I don't have 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set...)
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To: ExxonPatrolUs

WARNING!!!!!

CONSPIRACY ALERT!!!

the reason for section 8 and low income housing is quite simple really...

when renters outnumber the homeowners, every property tax increase on the ballot will pass effortlessly...

if you do not own property, you should not be allowed to vote on property tax issues...


7 posted on 02/26/2013 7:24:17 AM PST by joe fonebone (The clueless... they walk among us, and they vote...)
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To: Rich21IE

No one with a brain is “buying” a house in this county or any of the surrounding counties. Its a sure way to lose money.


Unless you are a slumlord looking to rent to section 8. Donald Trump started out this way.


8 posted on 02/26/2013 7:24:17 AM PST by outpostinmass2
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To: ExxonPatrolUs

Across the street from a grade school, the government inspectors of public housing swab the walls for Meth smoke residue, and post florescent signs on the doors of the childrens families who have been evicted.


9 posted on 02/26/2013 7:26:03 AM PST by Uncle Miltie (Due Process 2013: "Burn the M*****-F***er Down!")
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To: joe fonebone

I can’t even vote on property tax increases since I don’t live in the City where I own the property. However I am able to pass on any property tax increase immediately onto the renters.


10 posted on 02/26/2013 7:28:07 AM PST by outpostinmass2
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To: ExxonPatrolUs

If you see a new apartment complex going up, no matter how high end, it will probably have section 8 in it. The reason is low interest HUD backed financing for the construction...available only if a certain percentage of the units will be section 8.


11 posted on 02/26/2013 7:31:06 AM PST by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
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To: ExxonPatrolUs

My experience with Section 8 renters is the opposite of what is described in this article. They were the worst of tenants, had little skin in the game, didn’t maintain anything, were destructive, and the government bureaucracy made it much more time consuming and difficult to get them out. Additionally, it becomes more and more difficult to find non Section 8 renters in the same areas.


12 posted on 02/26/2013 7:35:40 AM PST by Truth29
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To: ExxonPatrolUs

Income from selling drugs does not count.

I believe lots of foreclosures have been turned into rentals. Many of these properties are owned by banks that got TARP money. The “toxic” loans were paid off yet the banks kept the property. Then the government said “If you’ll rent them out the taxpayers will subsidize you.”


13 posted on 02/26/2013 7:40:32 AM PST by Terry Mross (How long before America is gone?)
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To: outpostinmass2

Didn’t you know that if there’s a tax increase you’re supposed to suck it up? Seriously, many college educated liberals, and even liberals who are actually somewhat intelligent, cannot understand how an increase in the landlord’s cost is passed on in higher rent. The REALLY don’t understand how it works. AND THEY VOTE! NOW THAT’S SCARY!


14 posted on 02/26/2013 7:46:21 AM PST by Terry Mross (How long before America is gone?)
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To: outpostinmass2

Here in Louisville, I have several friends who are making BIG MONEY buying SUPER CHEAP homes in the West End, and renting them to Section 8 tenants..

One guy bought a 75 yr old, 6 bedroom home for $30k. He’s renting it to an older woman for $1500 a month. He gets paid, BY THE GOVERNMENT, on time every month. He couldn’t care less if they trash the place.

But, they don’t... cause, the Lady is also renting out her rooms, for cash...

She’s making big money, My friend is making big money.... EVERYBODY is WINNING! Except.. me. :-(


15 posted on 02/26/2013 7:58:36 AM PST by SomeCallMeTim ( The best minds are not in government. If any were, business would hire them)
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To: ExxonPatrolUs

“section 8” crap drives up rental prices, so government pays the rent for more and more people which drives up rental prices, so government .....


16 posted on 02/26/2013 7:59:30 AM PST by I want the USA back (Liberalism comes from an incurable mental illness.)
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To: ExxonPatrolUs

Besides the obvious wealth transfer features Section 8 ensures each neighborhood will have their quota of blacks. Our neighborhood had a home buyer default, the house was turned into section 8, and voila’ we had a Crips and/or Blood as our new neighbor. We literally had the police parked outside their Section 8 house. Eventually by some machination unknown to the rest of us they were moved out.


17 posted on 02/26/2013 8:13:03 AM PST by AEMILIUS PAULUS (It is a shame that when these people give a riot)
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To: outpostinmass2

Yea, well I meant a buying a house to live in.


18 posted on 02/26/2013 8:17:46 AM PST by Rich21IE
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To: outpostinmass2

And you know what’s really just f...ing amazing is the unlimited, bottomless pool of people lined up for Section 8. One of the ways they destroy neighborhoods, (through the guise of “integration”) is to build huge Section 8 apt. complexes in exurban farm towns 60 to 80 miles from the central business district of any major urban area. Then they bus in their Section 8’ers, (we call them HUDdites) and next they’re seen wandering the roads and streets in their hoodies or driving their pimp mobiles to the local grocery store. Jobs are, of course out of the question and in some of these areas, they’ve yet to install any Metro Bus Lines so these people are, for all practical purposes, stranded. It’s absolutely amazing. Of course, the multi-family housing developers are loving it.


19 posted on 02/26/2013 8:25:41 AM PST by Rich21IE
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To: Truth29

My fear is that eventually, the government will force landlords to accept Section 8 tenants, or face discrimination lawsuits.


20 posted on 02/26/2013 8:27:54 AM PST by dfwgator
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To: I want the USA back

And they wonder why education costs are now so high.....rinse, lather, repeat.


21 posted on 02/26/2013 8:33:54 AM PST by dfwgator
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To: ExxonPatrolUs

Someone a few years did an article about the correlation of section 8 properties to crime. It was practically a 1:1 match. The author was that rarest of birds, an honest liberal who didn’t expect the results obtained, but published them anyway.


22 posted on 02/26/2013 8:57:20 AM PST by zeugma (Those of us who work for a living are outnumbered by those who vote for a living.)
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To: ExxonPatrolUs

Someone a few years did an article about the correlation of section 8 properties to crime. It was practically a 1:1 match. The author was that rarest of birds, an honest liberal who didn’t expect the results obtained, but published them anyway.


23 posted on 02/26/2013 8:57:39 AM PST by zeugma (Those of us who work for a living are outnumbered by those who vote for a living.)
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To: Terry Mross
It was written into Mass state law back in 1980 in the prop 2 1/2 law. One caviate however is that I can only rent at market rate. There were years when property taxes increased and market rates decreased. Liberals think property owners can absorb all cost increase without ever increasing rent.
24 posted on 02/26/2013 8:58:03 AM PST by outpostinmass2
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To: SomeCallMeTim

Two words, “rent control”. When that happens everyone loses and don’t think it can’t happen. Also when the place is filled up with drug dealers, which will happen, the property values will go down.


25 posted on 02/26/2013 9:01:26 AM PST by outpostinmass2
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To: Rich21IE
Why not. Section 8 destroyed the inner city neighborhoods. Another place where I have seen section 8 infestation are vacation areas. Cape Cod has essentially no year round jobs and a summer season that last three months. People who could not afford their second home but could not sell for a loss started renting to section 8. Now Cape Cod has all the same problems as the inner city, crime, poor schools, drug abuse.
26 posted on 02/26/2013 9:10:14 AM PST by outpostinmass2
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To: ExxonPatrolUs

My wife is on a temporary assignment in Minneapolis and rents an apartment in one of the nicer suburbs. For what she is paying in rent I was shocked when she moved in that the complex looks like a third world bus station and is filled with Section 8 people who are getting their apartment for free or very cheaply on the tax payers dime. My cousin advised that in the Twin Cities you have to look for apartments as far as possible from bus routes to have any chance of escaping the Section 8 crowd.


27 posted on 02/26/2013 9:40:06 AM PST by The Great RJ
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To: ExxonPatrolUs

It’s understood that landlords want tenants who pay at-market rent on time and in full each month. And finding renters who won’t destroy property is icing on the cake.

Section 8 is serving up such renters to real estate investors.


This guy is definitely smoking the wacky weed. From personal experience and from anecdotal evidence of friends who had rental property the odds of having your property un-destroyed are pretty darn slim. Approaching zero depending upon the ethnic group living in the unit.


28 posted on 02/26/2013 10:07:41 AM PST by The Working Man
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To: The Working Man

Like when the boyfriend is released from prison, moves in and starts having gang banging parties.


29 posted on 02/27/2013 7:37:36 AM PST by outpostinmass2
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To: Above My Pay Grade

this is a late reply, but.....
besides the rentals-does section 8 cover home purchase
for the low income ?


30 posted on 10/06/2013 9:16:07 AM PDT by urtax$@work (The only kind of memorial is a Burning memorial !)
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To: ExxonPatrolUs
“If property is destroyed, the landlord can go to Section 8 and report that tenants are breaching the contract,” says Brian Korte, P.A., Partner at The Law Offices of Korte &Wortman, a foreclosure defense law firm in West Palm Beach, Fla.

Apparently Mr. Korte hasn't read some of the property owner horror stories on the web. Report the property destroyers all you want, the Gummint isn't going to do anything about it until you have tens of thousands of $$ damage, which you will have to repair on your own dime before they'll get you another tenant.

31 posted on 10/06/2013 9:23:16 AM PDT by Cyber Liberty (It's hard to accept the truth when the lies were exactly what you wanted to hear.)
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To: urtax$@work

No. This is strictly rent-support.


32 posted on 10/06/2013 9:29:54 AM PDT by Cyber Liberty (It's hard to accept the truth when the lies were exactly what you wanted to hear.)
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To: ExxonPatrolUs

Let me tell you about a Section 8 person I know personally.

He is white, married for 15 years to the same woman, has 4 kids-one of whom is disabled. He has never done drugs or been arrested. Due to a very weird set of circumstances, he found himself enrolled in the Section 8 program, which allows him and his family to live in a 4-bedroom home. He makes just north of $30,000 a year. The wife can’t work because she has to take care of the disabled kid-and that’s a full-time job in itself.

The landlord is a black woman who owns several properties, most (if not all) of which are Section 8. This woman is also a real-estate lawyer and knows exactly what she can get away with. When she bought the house in which the man and his family are now living, she used inferior materials to refurbish it from the ‘party house’ it was used as before she bought it out of foreclosure. The workmanship of whoever refurbished the house was quite shoddy, and the man has had to do some repairs himself. When he brings it up to her, she threatens him with ending the contract and forcing the man and his family out.

Sadly, because housing in his area is frightfully expensive, he has found that...as much as he wants to move out into something that is NOT Section 8...he can’t. The rental houses that would accommodate his family would cost him over 2/3 of his monthly income. There wouldn’t be enough money left over to pay for food, utilities, gas to get to and from work, and the other bills he has to pay. His skillset, combined with his age (just turned 51), coupled with the bad economy preclude him from getting employment that pays more.

He didn’t vote for Obama, has never voted for any Democrat, and would love to be out from under the government program he finds himself in...but has no idea how without jeopardizing his family’s well-being. I would love to be able to give him an answer on how to proceed, but I can’t figure it out either.


33 posted on 10/06/2013 10:00:05 AM PDT by hoagy62 ("Tyranny, like hell, is not easily conquered..."-Thomas Paine. 1776)
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