Pricing for Opportunity: The Impact of Spatially Varying Rent Subsidies on Housing Voucher Neighborhoods and Take-up

The Housing Choice Voucher program serves over 2.3 million households per year. While the program provides significant benefits, most voucher holders live in high-poverty neighborhoods, and many recipients fail to use their vouchers at all. A new research paper, “Pricing for Opportunity: The Impact of Spatially Varying Rent Subsidies on Housing Voucher Neighborhoods and Take-Up,” by NYU Furman Center’s Ingrid Gould Ellen, Katherine O’Regan, and Sarah Strochak, published in the Journal of Public Economics, evaluates a new programmatic approach for expanding and improving neighborhood outcomes, which pegs voucher subsidy amounts to ZIP Code-level rents, rather than being uniform across an entire metro area.

Researchers find that this pricing change increases moves to higher rent, lower poverty ZIP Codes without increasing overall financial costs or affecting the ability of new voucher recipients to use their vouchers to lease homes. This even holds true for the recipients most at risk of experiencing a decline in their ability to use vouchers because the stock of voucher-eligible units near them likely decreases. We show that subgroups of households and landlords make adjustments on other margins, however. Specifically, those leasing in low-rent neighborhoods rent smaller homes and spend more of their income on rent, while landlords in these neighborhoods charge lower rents to match rent subsidies.