This is a very important shift the Obama administration had to make and given his choice for HUD secretary, almost inevitable. Bill Apgar, who is advising Donovan, has been really pushing for a rental-based housing policy for some time (http://www.jchs.harvard.edu/publications/markets/w04-11.pdf).
Something that Apgar suggests that really resonates with me and the research of my colleagues is the idea of the government securing multi-year leases of rental housing in low-poverty neighborhoods. By not building new, permanent structures and retaining the option of relocation of units, the government can help curb the trend of solidifying poverty at the neighborhood level the way we know housing projects have done so in the past. The government leasing of pre-existing buildings would not alter the community in any noticeable way, but would ensure that low-income families would not need to navigate, as you said, a market of corrupt landlords who have shown a tendency towards treating low-income voucher holders with prejudice and neglect.
At any rate, Agbar's policies are innovative and he's someone whose opinion I highly respect with this issue. I really recommend some of the things he's been writing about.
I can't access this article as it's so recent, but hunch is we don't have the data to make any kind of generalizable statements about voucher-holders. I'm currently doing research on Section 8 problems in the Boston area and the available data on non-experimental voucher holders are considerably thin. Instead, a lot of researchers rely on the same few studies from Gautreaux, MTO, etc which measured the effects of pre-screened low-income families who met the eligibility criteria to tell us how voucher-holders fare.
But anyway, you're absolutely right that the residents using vouchers are really suffering on other levels. There's no special office at the BHA helping mothers, for example, who have never lived outside of housing projects in their entire lives transition to a private market unit or how to deal with a school which is supposedly "better" than the last one but has tracked their kid in the vocational program. Evidence from the experimental programs showed us that there are huge obstacles to such a move and there's no one helping them overcome them.
Ugh, I have so much to say about the problems of Section 8, especially here in Boston, but we focus so much on the sketchy results of these experimental programs (which are not all rosy themselves) we haven't really focused on how the vast majority of voucher-holders in America are doing.
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