Fair Market Rents Research Articles

Housing Choice Vouchers (HCVs) on the Geographic, Socio-economic, and Public Policy Periphery: A Critical Case Study of Blocked Mobility in the City of San Diego, California

This article examines the geographic and socio-economic distribution of housing choice vouchers (HCVs) in the city of San Diego, California. It focuses on how the concentration of HCVs on geographic, socio-economic, and public policy peripheries forms a nexus that limits housing options for low-income residents. The analysis is based on a unique database that combines three datasets. One includes data for 13,973 individual HCV recipients measuring head of household characteristics (race, Hispanic ethnicity, gender, and age) and housing unit characteristics (unit size, rents, public subsidy levels). Another data set includes population and housing characteristics at the ZIP code level from the American Community Survey (ACS). The third data set includes small area fair market rents (SAFMRs) for ZIP codes and fair market rents (FMRs) for metropolitan San Diego. Data are displayed using GIS and analyzed using logistic hierarchical regression models. The results indicated that the public housing authority (PHA) that administers HCVs in the city of San Diego implemented the HCV program in a manner that reinforced the concentration of program participants in low-income areas and impeded moves to higher opportunity areas. The results expand our understanding of how geography, socio-economics, and public policy shape the production and reproduction of the periphery.

It Is Not Always Sunny in San Diego for Housing Choice Voucher (HCV) Holders: The Reproduction of Racial and Socioeconomic Segregation under the Choice Communities Initiative

This article examines residential mobility patterns of housing choice voucher (HCV) holders in San Diego, CA. It focuses on whether HCV holders moved to higher opportunity ZIP codes following the adoption of the Choice Communities Initiative by the San Diego Housing Commission (SDHC) in 2018. This initiative was designed to incentivize moves to high opportunity ZIP codes using tiered rent subsidies. The analysis is based on a dataset that combines two sources. One includes data obtained from the SDHC measuring: race, ethnicity, gender, household characteristics, rent subsidy levels, and residential mobility for 11,126 HCV recipients. The other includes small area fair market rents (SAFMRs) for ZIP codes in San Diego. Data were analyzed using GIS maps and logistic regression. The results indicate that patterns of racial and socioeconomic segregation have been reinforced in San Diego. Most HCV moves happened within the lowest opportunity ZIP codes, regardless of races. Moves to higher opportunity ZIP codes were impeded due to the inversion of rent subsidies. Rent subsidies were set relatively higher in low opportunity ZIP codes when compared with high opportunity ZIP codes. The findings identify areas where specific policies related to the setting of rent subsidies can be strengthened in order to promote opportunity moves. In a broader context, they highlight the importance of fidelity to programmatic goals in the policy implementation process.

Alternative methods—Calculating fair market rents in markets with rapidly rising rents (HUD)

Federal Grants & ContractsVolume 44, Issue 15 p. 7-7 Grant Alerts Alternative methods—Calculating fair market rents in markets with rapidly rising rents (HUD) First published: 27 June 2020 https://doi.org/10.1002/fgc.31174Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat No abstract is available for this article. Volume44, Issue152 July 2020Pages 7-7 RelatedInformation

Do Small Area Fair Market Rents Reduce Racial Disparities in the Voucher Program?

ABSTRACTA lawsuit that argued that the method used to calculate rent limits in the Housing Choice Voucher Program promoted racial segregation in Dallas, Texas, resulted in the U.S. Department of Housing and Urban Development developing zip code-based voucher rent limits in Dallas in 2011. This rent calculation approach was then expanded to five other demonstration sites in 2012. This article analyzes whether adjusting voucher rent limits reduces a minority household’s likelihood of living in a high-minority neighborhood, improves their likelihood of living in a higher opportunity neighborhood, and reduces the disparity in location outcomes between minority and White households in the voucher program. This article finds evidence of improvements in the location outcomes of Black and Hispanic voucher households because of the use of zip code-based rent limits, but that these results are only marginal with respect to the persistent disparities in outcomes based on race within the voucher program.

Neighborhoods and National Housing Policy: Toward Circumscribed, Neighborhood-Sensitive Reforms

This article provides a holistic analysis of why and how federal assisted housing policy (specifically, public housing, Low-Income Housing Tax Credit [LIHTC], and voucher programs) should be reformed in ways that would be more conducive to socially desirable outcomes at the neighborhood level. First, I argue that past research has documented mutually causal interrelationships between assisted housing policy and neighborhoods that have been couched as having negative connotations for both. Second, I argue that there is there a rationale on grounds of both efficiency and equity for altering assisted housing policy so it would encourage the creation and preservation of neighborhoods that are physically of good quality and economically diverse. Third, I advocate a circumspect menu of programmatic reforms that would be gradualist, option enhancing, and relatively budget neutral, yet would garner these positive impacts. As overarching reforms, I propose regional housing institution-building, fair housing law revisions, impaction standards, and diversity incentives built into Affirmatively Furthering Fair Housing. As reforms to site-based assistance programs, I propose: a new formula for disbursing LIHTC, to repeal and replace the Qualified Census Tract bonus, diversification/preservation incentives for existing assisted private developments, and preserving assisted housing in revitalizing neighborhoods. As reforms to tenant-based assistance programs, I propose: Small Area Fair Market Rents, premove and postmove mobility counseling, ancillary family supports postmove, reducing barriers to lease-up, and diversification incentives in U.S. Department of Housing and Urban Development regulations.

Landlord Participation Study

The Housing Choice Voucher (HCV) Program is the largest rental housing subsidy program in the United States and has the potential to increase housing options for low-income families. In order to realize this potential, however, the program must attract landlords who accept housing choice vouchers. The primary objectives of this study are: 1) to provide insights from Public Housing Authority (PHA) staff on the factors associated with landlord decisions about whether to participate in the program; and 2) to identify a collection of promising and innovative practices that PHAs have used to increase landlord participation. The study provides key insights into landlord participation in the HCV program and the perspectives of PHA staff on factors influencing landlord decisions on whether to participate. The study also identifies a diverse collection of innovative activities adopted by PHAs to mitigate financial concerns among landlords, make the HCV program simpler, and alleviate landlord concerns about HCV tenants. The study finds that a majority of PHA staff interviewed identified financial reasons as the most important factor affecting landlord participation - with payment standards and fair market rents, damage costs and security deposits, and profit motivations cited as key determining factors.

Revisiting the Costs of Developing New Subsidized Housing: The Relative Import of Construction Wage Standards and Nonprofit Development

Author(s): Littlehale, Scott | Abstract: Previous research into the costs of publicly subsidized new housing developments has found that nonprofit developers and program requirements to pay construction workers prevailing wages significantly raise project costs. An extended ordinary least squares (OLS) model is specified that aims to better capture the influence of project-specific variable costs and geographically correlated fixed costs. The model is tested with data from a 2014 State of California-sponsored affordable housing cost study. The OLS models’ estimates indicate that prevailing wages are associated with between 5 to 7% higher project costs. The cost effect associated with a developer’s tax exempt status is half as large as estimated in prior studies and is not consistently a statistically significant driver of costs. The model revisions help to identify other more important sources of cost variation, including large business cycle effects, fair market rents, average county construction wages, local government impact fees, and above-average architecture and engineering costs.

Consolidating ZIP Codes for Small Area Fair Market Rents: A Method for Implementing the New Rule

Fair Market Rents (FMRs), calculated for an entire metropolitan region, are used to establish payment standards for the Housing Choice Voucher (HCV) program. In response to recent criticism that FMRs do not represent rent disparity and restrict households from moving to high-opportunity areas, a new rule introducing Small Area Fair Market Rents (SAFMRs) has been issued. SAFMRs are based on ZIP codes to reflect local market rents and increase the number of payment standards used to administer the HCV program. The purpose of this research is to determine whether the number of payment standards can be reduced by consolidating ZIP codes, while adhering to the primary objectives of the SAFMR rule. The ZIP code grouping process conducted offers one method for reducing the number of payment standards needed to implement the new rule; however, the rent analysis reveals the over- and underestimation of SAFMRs for some ZIP codes.

Small Area Fair Market Rent Demonstration Evaluation: Final Report

This groundbreaking report evaluates the impact of implementing Small Area Fair Market Rents (SAFMRs) in seven Public Housing Agencies (PHAs) in a variety of geographic and market types. This report examines whether and to what extent the shift from metropolitan-wide Fair Market Rents (FMRs) to ZIP Code-based SAFMRs provides better access to areas of higher opportunity for Housing Choice Voucher (HCV) families. The report also examines how the use of SAFMRs affects HCV families and landlords, as well as the impact of SAFMRS on Housing Assistance Payments (HAP) paid by HUD and the tenant portion of rent paid by SAFMR families. This report also reviews the PHA administrative procedures imposed and costs incurred in implementing SAFMRs.

A new method for measuring historical poverty trends: Incorporating geographic differences in the cost of living using the Supplemental Poverty Measure

The U.S. Census Bureau and the Bureau of Labor Statistics recently developed a substantially improved measure of poverty, the Supplemental Poverty Measure (SPM). The SPM has only been released since 2009, and prior efforts by researchers to construct a historical SPM time series have not taken into account an essential element of the new measure - geographical differences in the cost of living - which is necessary for accurately describing poverty trends in important demographic and regional subgroups. We build the first historical SPM time series from 1967-2014 that adjusts poverty thresholds for cost of living. We do so bringing together a constellation of data sources - the Current Population Survey, the Decennial Census, the Department of Housing and Urban Development's Fair Market Rents, and others. We find that geographically adjusting thresholds increases poverty rates in metro areas, the Western states, and among Latinos, but decreases poverty rates in non-metro areas and in the South. The geographic adjustment of poverty thresholds is an impactful component of the SPM.

Testing Estimates of Housing Cost Differences among US Metropolitan Areas

This paper investigates the accuracy of six measures of housing cost differences among US metropolitan areas. Using Census data from 177 metropolitan areas, it tests the measures in two ways. First, it tests the ability of changes in the measures to predict changes in the shelter component of the metropolitan CPI from 1990 to 2000. Second, it tests the ability of the measures themselves to predict a proxy in 2000. A measure based on Fair Market Rents calculated by HUD placed second on the first test but did badly on the second. The housing component of the ACCRA index, a living cost measure frequently used by researchers, performed poorly on both tests. The top performer on both tests was a measure based on the average rent per room for a metropolitan area’s dwellings. Researchers wishing to control for living cost differences among places should consider including it in their living cost index.

Testing Estimates of Housing Cost Differences Among US Metropolitan Areas

This paper investigates the accuracy of six measures of housing cost differences among US metropolitan areas. Using Census data from 177 metropolitan areas, it tests the measures in two ways. First, it tests the ability of changes in the measures to predict changes in the shelter component of the metropolitan CPI from 1990 to 2000. Second, it tests the ability of the measures themselves to predict a proxy in 2000. A measure based on Fair Market Rents calculated by HUD placed second on the first test, but did badly on the second. The housing component of the ACCRA index, a living cost measure frequently used by researchers, performed poorly on both tests. The top performer on both tests was a measure based on the average rent per room for a metropolitan area’s dwellings. Researchers wishing to control for living cost differences among places should consider including it in their living cost index.

OPTIMAL HOUSING COST ESTIMATES FOR 177 U.S. METROPOLITAN AREAS

ABSTRACT This research tests the ability of six metropolitan‐level measures of housing costs to predict a benchmark housing cost measure based on Aten's area price level index. The first four measures are calculated with U.S. Census Data, the fifth is based on HUD Fair Market Rents, and the sixth is the housing portion of the ACCRA Index. In 25 large metropolitan areas, the fourth measure predicts 86 percent of the variation in the benchmark index in 1990 and 85 percent in 2000. The fifth measure performs nearly as well. The paper concludes both are promising measures of living costs.

The impact of housing costs on the living arrangements of single mothers

This paper investigates the impact of housing costs on a single mother's living arrangement decision, whether to head her own household or live in the household of other adults. The empirical analysis is conducted using individual-level data from the 1986 Current Population Survey and MSA-level housing cost data based on HUD's Fair Market Rents. Consistent with a priori expectations, the major finding is that increased housing costs significantly reduce a single mother's probability of household headship. This result is especially pronounced for single mothers under age 36.

THE SECTION 8 RENTAL ASSISTANCE PROGRAM: COSTS AND POLICY OPTIONS

ABSTRACTHousing benefits and income transfers realized by Section 8 program participants are examined. The distribution of benefits depends on income eligibility rules and the level of Fair Market Rents, the latter establishing an upper limit on the quality of housing available to households. By establishing Fair Market Rents for an entire urban area, program regulations tend to exclude the poor from better quality neighborhoods. Subsidy costs for newly constructed units are twice as high as for existing units. Income eligibility rules are such that many more households are eligible than can be supported, creating difficult problems of horizontal equity. Lowering Fair Market Rents or raising the required share of tenant's income paid in rent would tend to reduce these horizontal equity problems.