Housing bust opens doors for subsidized tenants (© Bloomberg/Getty Images)

In neighborhoods such as this one in Henderson, Nev., landlords are turning to Section 8 recipients to fill vacant homes. // © Bloomberg/Getty Images

HENDERSON, Nev. — When Shawnetta Newburn left her drug-infested St. Louis neighborhood in search of a better life for her family in Las Vegas, she didn’t expect to live in a house with frills worthy of a McMansion.

But Paradise awaited.

That’s the name of the gated community where Newburn, a single mother who makes $10.50 an hour as a pawn-shop cashier, rents a three-bedroom townhouse with soaring ceilings, a gas-fueled fireplace and an oversize walk-in closet in the largest bedroom. The master bath even includes an enclosed toilet room, a feature popular in mini-mansions.

“The only time I ever saw that was on TV or something,” she says during a tour of the approximately 2,000-square-foot home. “I never thought I’d have anything like this.”

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Her previous apartment in St. Louis resembled public housing, she says, and her three sons were crammed into one bedroom. After her refrigerator caught fire, her landlord replaced it with an outdated brown model. She now has gleaming, white appliances.

The houses in Paradise, a community in Henderson, are typical of the upgraded homes some tenants rent using a government subsidy.

Newburn can thank the housing bust. She participates in a government program for low-income families that subsidizes about half of her $1,400 monthly rent. The program, known as Section 8, has for decades put families in functional but basic homes and apartments, sometimes in less-than-desirable communities.

But overbuilding during the housing boom has left so many homes available that landlords, desperate for renters, are wooing Section 8 recipients. These renters’ government subsidies, delivered electronically, guarantee the landlord gets paid. As a result, Section 8 recipients suddenly have a housing smorgasbord.

Plenty of average housing stock remains in many places. But in certain markets, there are also more upscale selections. On GoSection8.com, landlords nationwide tout boom-era showpieces — replete with “great rooms,” backyard swimming pools and built-in stainless-steel barbecue grills — that once sold for hundreds of thousands of dollars. Las Vegas has been one of the nation’s hardest-hit real-estate markets.

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Some renters are getting pickier.

“More and more, I’m seeing tenants turn down places,” says Arman Davtyan, owner of seven Las Vegas properties rented to Section 8 tenants.

Instead, they’re going for “another property that’s either bigger or in a better area or has more bedrooms,” he says. “Before, they tended to take whatever they could get.”

Although some neighbors have long contended that government-subsidized tenants increase crime and depress property values, some now say that having a house occupied is better than leaving it vacant, which attracts vandalism and other problems.

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In Antioch, Calif., a San Francisco bedroom community where the number of Section 8 listings has skyrocketed in recent years, residents have mixed emotions about the new tenants.

“I would concede, I wouldn’t be happy with an empty house,” says Walter Ruehlig, a longtime Antioch resident. “It’s kind of like, ‘What poison do you choose?’”

But resident Natalie Wilson says Section 8 tenants brought big changes to Antioch, including fights, loud parties and litter. She helped launch a neighborhood-watch program.

“If a block has five Section 8 homes, are you going to want to move into that neighborhood? No,” says Wilson, who works as a middle-school registrar. “You don’t want to live next to a Section 8 house.”

Tensions have run high in Antioch. Section 8 tenants complained they were harassed by police and filed a federal lawsuit in 2008, which is still winding through the courts.

In Paradise, officially known as Paradise Court, relations between neighbors are more peaceful, Newburn says. Kye Jensen, owner of a townhome behind Newburn, says a concern is how any renters will affect property values.