WASHINGTON – June 2, 2015 – (RealEstateRama) — In some areas of the country, housing costs limit the “choice” for families receiving assistance from HUD’s Housing Choice Voucher (HCV) Program to only a few neighborhoods. For the areas of the country where this problem is most severe, the U.S. Department of Housing and Urban Development (HUD) is proposing a change to its rules that will expand the neighborhood options available to families.
Today, HUD is seeking public comment on changing the geography HUD uses to calculate rental limits in certain housing markets with highly variable rents as a means to expand the options these families have to live in lower poverty neighborhoods closer to better schools and higher paying jobs. Read HUD’s Notice.
HUD Secretary Julián Castro said, “HUD’s mission is to provide more opportunity and more choice for the families we help. We need to take a closer look at those neighborhoods where voucher-assisted families are concentrated and explore new ways to open more doors of opportunity.”
“Clearly, the yardstick we use to set voucher subsidies is limiting choice in many rental markets,” said Kathy O’Regan, HUD’s Assistant Secretary for Policy Development and Research. “We hope to stimulate a robust discussion over how HUD might use Fair Market Rents calculated at the zip code level so we can offer more choice in the Housing Choice Voucher Program.”
Fair Market Rents (FMRs) are gross rent estimates that are used to calculate the maximum subsidy HUD provides families receiving rental assistance, including the 2.2 million households assisted through theHousing Choice Voucher (HCV) Program. These households generally contribute 30 percent of their adjusted monthly income toward their rent with the rental subsidy paying the rest. FMRs are usually set at the 40th percentile of all rents charged in an entire metropolitan area although in 2000, HUD began to set this rent standard to the 50th percentile in areas where voucher families were highly concentrated within the FMR area.
The main objective of the 50th percentile program was to provide a broader range of housing choices that would enable voucher holders to move to areas of higher opportunity. However, research indicates that rather than incentivizing voucher holders to move to higher opportunity neighborhoods, most of the additional subsidies provided through 50th percentile FMRs appear to accrue to landlords in the form of higher rents. HUD is now exploring how to use FMRs calculated by zip codes within metropolitan areas as a mechanism to expand choices these households have.
Earlier this month, a group of Harvard University social scientists published a study based largely on HUD data. This report sought to measure the long-term effects of moving families away from neighborhoods with deeply concentrated poverty to low-poverty environments and to gauge the impact these moves had on the overall well-being of these families. The authors found that children who moved to low-poverty neighborhoods when they were young are doing better as adults, with significantly higher earnings and a greater likelihood of having attended college.
Findings from this new study, along with HUD’s own research, support the Department’s current policy direction of fostering opportunities for economic mobility while also investing in place-based strategies that revitalize distressed neighborhoods. Read more.
HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
More information about HUD and its programs is available on the Internet
at www.hud.gov and http://espanol.hud.gov.