Panel Paper: Voucher Rent Limits and Housing Choice Sets: The Case of Hud’s Small Area Fair Market Rent Program

Friday, November 3, 2017
Wright (Hyatt Regency Chicago)

*Names in bold indicate Presenter

Vincent Reina, University of Pennsylvania, Raphael Bostic, Federal Reserve Bank of Atlanta and Arthur Acolin, University of Washington

The Housing Choice Voucher program is the U.S. Department of Housing and Urban Development’s (HUD) largest affordable housing program. Traditionally, the concern with the voucher program is that the level of rent the government will pay through this subsidy is below actual market rent in some neighborhoods, making these places effectively off limits to households who receive rental assistance. As a result, HUD created the Small Area Fair Market Rent (SAFMR) demonstration program, which allows public housing authorities to adjust the rent HUD will pay through its voucher program so that these rents more closely align with local neighborhood rents. This program has since been applied to all vouchers across the country. Despite the implications of this policy, we know little about how it affects voucher households, which is the question of interest in this paper.

This paper evaluates the impact of HUD’s SAFMR demonstration program on voucher recipients and rental markets using tenant-level data from HUD in all six sites- Mamaroneck, NY; Laredo, TX; Dallas, TX; Cook County, IL; Long Beach, CA; and Chattanooga, TN. This study identifies whether HUD’s SAFMR program increases a voucher household’s choice set using a series of descriptive statistics and regression models. This paper find little change in the number and types of neighborhoods households access across the demonstration sites, but a more even distribution of voucher households across neighborhoods where there were already voucher households living. The one exception to these findings is Dallas, where households do access more neighborhoods in the initial years of the program. This paper analyzes whether the way voucher rents are calculated increases a voucher household’s choice set and the quality of the neighborhood where they live. In addition, household location choices provide important insight about preferences and the role of neighborhood features in influencing location choices.