Now that pandemic eviction protections and emergency assistance programs are done, inflation is making it even harder for low-income renters to find affordable housing.
With rents skyrocketing in many areas around the nation, even households lucky enough to get a Section 8 Housing Choice Voucher may find themselves priced out of the market.
This makes finding housing difficult enough, but the rising rents cause even more problems for low-income renters.
Rising rents leave few units available
In many large rental markets, renters lucky enough to receive a Section 8 Housing Choice Voucher have a hard time finding apartments that they can afford.
Vouchers can only be used on apartments that rent for less than HUD’s Fair Market Rent (FMR) for the area. The FMR for a metropolitan area or county is “the amount below which 40% of the standard-quality rental housing units can be rented.”
Even before the pandemic, low-income renters in the nation’s largest cities had trouble finding apartments with rents below the local FMRs. Zillow Research found in 2017 that in 75 of the 100 largest counties in the U.S. less than 40% of the rental stock fell below the FMR. In 15 of the largest counties, fewer than 10% of units rented for less than the FMR.
Research confirms this trend has grown
2021 research by Zillow found that the value of voucher assistance still failed to keep up with market-rate rents. Zillow also found that the faster rents rose in an area, the less likely the value of Section 8 Housing Choice Vouchers kept pace with those rents.
HUD FMRs are calculated each year, but in hot markets rents have been increasing so fast that many apartments no longer fall under the FMR limit.
Local housing authorities have the discretion to raise the payment standards so that voucher recipients have a better chance of finding apartments. However, this may mean a housing authority serves fewer voucher clients because they have to use more rental assistance for each household they help.
Landlords refuse vouchers for higher rents
Many landlords around the country refuse to accept Section 8 Housing Choice Vouchers. Landlords who refuse vouchers often say the program creates too much extra work. They also cite the need to meet HUD Housing Quality Standards and pass an inspection each year.
When rents are rising quickly, landlords have even less incentive to rent to tenants with vouchers. They can get much higher rents without having the administrative burden of working with a government program.
Caitlyn Byers, a Legal Aid attorney in Cincinnati, told Spectrum News 1 that skyrocketing rents in her area were making it hard for those with vouchers to find housing.
“Landlords have their pick of people who want to rent from them, so it’s very hard to convince a landlord to accept what the voucher will pay,” said Byers.
According to Redfin, Cincinnati was in the top 10 cities for rent increases in the past year. Asking rents were up 32% year-over-year in June 2022; the fourth highest increase among U.S. cities.
Increased risk of losing vouchers
When low-income renters receive a voucher, they have 60 days to find an apartment that rents under the FMR and will accept it. Housing authorities can approve up to two extensions of 30 days each. When rents are rising quickly and renters cannot find units renting under the FMR, it takes longer to find a place that will accept a voucher.
San Diego provides a good example of the challenges in using a voucher in a high cost market. Search times for vouchers issued by the county housing authority increased from an average of 80 days, to an average of 90 days over the last year.
The City of San Diego housing authority saw an even greater increase. Search times for its voucher clients grew from an average of 80 days to an average of 104 days over the last year.
If renters cannot find a suitable unit after 120 days, they have to return their vouchers. The housing authorities then reissue them to other households on the waiting list. Both the county and city housing authorities in San Diego saw increases in the number of vouchers they had to reissue.
“Mega-Landlords” create issues in some markets
There are many cities where only a few “mega-landlords” will accept Section 8 Housing Choice Vouchers. With a lot of smaller landlords refusing to take vouchers, these large landlords with hundreds of units are the only option for voucher recipients.
In New Haven, Connecticut, only a couple of large landlords will rent to Section 8 voucher holders. This makes it harder for voucher holders to find apartments before their search times run out. Fewer landlords participating means fewer apartment choices.
The New Haven Housing Authority had 382 of its vouchers expire in 2021. This is more than twice the 155 vouchers that expired in 2019.
Because they have a “lock” on apartments accepting vouchers, mega-landlords do not have much incentive to maintain their units above the minimum HUD standards. Multiple code violations have prompted many low-income renters to describe one New Haven management company as “slumlords.”
Skyrocketing rents limit portability
Rising rents not only affect renters who first receive a Section 8 Housing Choice Voucher. When rents skyrocket, they also make it harder for renters to move to areas with better schools and job opportunities.
Section 8 vouchers are portable. This means that renters with vouchers can move to other neighborhoods and still keep their rental assistance in a new unit. If they live in the jurisdiction where they got their voucher for one year, they can take their voucher anywhere in the country.
In places where rents are rising fast, voucher holders have more incentive to stay put because it is harder to find new units in better neighborhoods. The cities with the fastest growing rents also tend to be the places with a lot of job growth. When lots of people move into an area in search of jobs, it creates more demand for a small number of affordable rentals.
HUD this year changed how it sets FMRs so that voucher holders can rent in a wider range of neighborhoods. For large metropolitan areas, FMRs will be set at the neighborhood level instead of for the metro area as a whole.
HUD’s move means that FMRs will be higher for more affluent neighborhoods. According to the Center on Budget and Policy Priorities, this will help voucher holders access neighborhoods with greater opportunities.
Skyrocketing rents hurt all low-income renters, even those fortunate enough to have federal rental assistance. Making vouchers more responsive to rent changes is a good start. Building enough affordable housing to meet the need, though, is the only long term solution.