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The added federal assistance is the result of changes in how the Department of Housing and Urban Development calculates rental costs. Its new approach factors in data from companies like Zillow.
Many low-income renters are on track to get hundreds of dollars in extra federal housing aid each month thanks to a technical change in how the Department of Housing and Urban Development calculates the prevailing residential rents in different parts of the country.
Under HUD’s Housing Choice Voucher program, 2.3 million low-income households contribute about 30% of their income toward their rent. The vouchers cover the difference between what renters pay and what HUD considers to be the “fair market rent” in the areas where those people live. Alternatively, the vouchers can fill the gap between what people can pay and an amount set by housing authorities that’s between 90% and 120% of the fair market rent.
Because of a change that kicked in for the 2023 fiscal year, which began on Oct. 1, what HUD considers fair market rent rose by an average of 10% nationally, meaning voucher recipients will receive more help every month.
Housing advocates and some local government officials applauded this move by HUD, which involved looking at rental price data from companies like Zillow. But they also acknowledged that it will only go so far in helping people who are struggling to afford housing.
The change will have a more significant effect in some places than others, according to federal data analyzed by a left-of-center Washington think tank, the Center on Budget and Policy Priorities.
In Arizona’s Maricopa County, for instance, low-income people could get about $400 more a month for a two-bedroom apartment. What HUD considers to be the fair market rent in that area for a two-bedroom apartment rose by a third, from $1,311 to $1,740 a month.
In Florida’s Hillsborough County, around Tampa, HUD will pay up to $1,659 a month, minus what households contribute, for a two-bedroom unit. That’s a 23% increase over the $1,347-a-month HUD considered to be the fair market rent in the area last year.
The boost in aid that some renters will see will not be enough to solve the problem of rising rents in many cities and counties around the country, Alicia Mazzara, deputy director for housing equity and data analysis for the Center on Budget and Policy Priorities, said in an interview.
The $27.4 billion voucher program will still only provide help for about a fourth of Americans who need rental assistance, Mazzara said. “I don’t think cities and counties get a reprieve given how big the need is,” Mazzara said. However, the change should help to address the fact that the voucher program hasn’t kept up with rising rents.
A problem, Mazzara wrote in a recent report, is that the data from the U.S. Census Bureau’s American Community Survey that HUD uses to calculate fair market rents lags behind rental markets and does not always reflect how costs are truly rising.
For instance, the agency said in announcing the change to the fair market rents, that its old method of calculating the values would have relied on the most recent American Community Survey data available, from 2016 to 2020, to establish the fair market rents this year.
The department in previous years has also tried to factor in rent inflation by using the Consumer Price Index, as reported by the Bureau of Labor Statistics.
But these figures have not always captured the extent to which rents can rise rapidly in a year.
Between 2021 and 2022, for instance, Zillow data showed that rents went up by 15% nationwide, according to the Center on Budget and Policy Priorities report. However, the average fair market rent for two bedroom apartments calculated by HUD only rose 3%.
Because the size of the vouchers has not kept pace with climbing rents in some areas, people have had a harder time finding homes they can afford, even with the help.
That can be tough on people. “Lengthy housing searches are especially burdensome for people who are already unhoused and may be living in a shelter, car, hotel, or motel,” the report said.
“Other renters may only be able to rent units in a very limited range of neighborhoods, which can reinforce racial and economic segregation,” according to the report.
HUD Secretary Marcia Fudge agreed in a press release announcing the change. “One of the reasons that housing voucher holders are unable to use those vouchers is because the value of their vouchers has not kept up with rapid rent increases,” she said.
To determine the fair market rent for the upcoming year, HUD decided to look beyond the Census Bureau data and to also factor in information from real estate companies, like Zillow and ApartmentList.
The department said it’s unsure if it will continue using this new approach, but that it will be evaluating it and examining whether other data sources should be used.
At least for this year, the change will mean more help for low-income renters in Hamilton County, Tennessee, around Chattanooga. Under HUD’s new method, the fair market monthly rent for a two-bedroom apartment in the area is pegged at $1,067. Last year, it was 21% less, $883.
In Fulton County, Georgia the fair market rent this year is considered to be $1,552 for a two-bedroom, 20% higher than the $1,289 last year.
“It’s a pretty big jump,” Mazzara said. “Rent has been rising pretty rapidly.”
A housing voucher specialist in Grand Rapids, Michigan, in comments filed with the department, praised the change when it was proposed in July.
“Data from even 2 years ago does NOT accurately depict the actual rental rates many areas are experiencing. In my metropolitan area, some rental rates have increased by an average of $300 per month over the rates in 2020,” the specialist wrote.
Los Angeles Mayor Eric Garcetti’s office also praised the change, in its comments to the agency, saying it is “more accurately reflecting Los Angeles’ competitive rental market.”
The fair market rent for a two-bedroom apartment in Los Angeles County is considered to be $2,222, compared to $2,044 last year.
While housing authorities generally approved of the change for this year, some also raised concerns.
The Maine State Housing Authority, for instance, wrote HUD that it has expressed concern that the Census Bureau data “underestimates rent for rural areas.” At the same time, the authority said it was concerned private companies do not have data for parts of the state.
“The use of private sector data does not instill confidence in the proposed methodology changes,” the authority wrote.
Kery Murakami is a senior reporter for Route Fifty.