The Effects of Small Area Fair Market Rents on the Neighborhood Choices of Families with Children
This paper reports and extends the quantitative findings of the Small Area Fair Market Rent Demonstration Evaluation, focusing on the important subgroup of families with children. The authors test whether varying housing assistance subsidy caps with ZIP Code rent levels (that is, introducing Small Area Fair Market Rents or SAFMRs) increases the likelihood that voucher-holder families with children locate in higher opportunity neighborhoods, as proxied by poverty rates, the proficiency levels of local elementary schools, jobs proximity, and environmental hazards. Five years after implementation, Small Area FMRs do not appear to affect overall move rates, but they meaningfully affect the locational outcomes among families with children who move.
The Housing Choice Voucher (HCV) program, the largest housing assistance program administered by the United States Department of Housing and Urban Development (HUD), provides rental subsidies to over 2.5 million children under the age of 18. In theory, voucher holders can locate in a wide variety of neighborhoods, including low-poverty neighborhoods that offer a rich set of resources and opportunities. In practice, however, households with vouchers are frequently concentrated in high-poverty neighborhoods with limited access to the amenities and services associated with economic opportunity.
The authors explore the efficacy of one particular policy reform aimed at encouraging moves to higher opportunity neighborhoods: Small Area Fair Market Rents (SAFMRs), voucher ceiling rents that vary with ZIP Code rent levels. They compare pre to post changes in opportunity measures for the ZIP Codes where voucher families with children locate in these seven SAFMR Public Housing Authorities (PHAs) to the same location outcomes over the same time period for a large sample of voucher families with children assisted by PHAs that were eligible for the demonstration but were not randomly selected to participate.
The authors’ analysis shows that, as intended, SAFMRs increase the pool of units affordable to voucher holders in high-opportunity neighborhoods and decrease the number affordable in low opportunity neighborhoods. Further, they find evidence that the shift to SAFMRs affects voucher holder families’ choice of locations.
In late 2016, HUD made SAFMRs optional for all PHAs, and beginning in 2018, it required the housing agencies in 24 metro areas to administer their tenant-based voucher program using SAFMRs. By mandating SAFMRs in entire metropolitan areas rather than individual housing agencies, HUD limited the change in the pool of available units within a metro area. Given this mandate, together with the greater flexibility nationwide, we will see increased use of SAFMRs in the coming years, and this article sheds important light on their potential effect on voucher holder families with children.
