HUD helps renters by raising market-driven rents – Forbes Advisor
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Section 8 voucher holders are getting a massive boost today as the U.S. Department of Housing and Urban Development (HUD) increased the value of market rent across the country. At over 30%, the largest increases are in those areas where rents have risen the most in the past year.
On September 1, HUD introduced new Fair Market Rents (FMRs) for 2023 — an annual update that coincides with fluctuations in private sector rents.
For around 2.3 million households that use housing choice vouchers, also known as Section 8 vouchers, this step increases their purchasing power when looking for an apartment. HUD increased FMRs by an average of 10% nationwide, but that number is much higher in some areas of the country.
The new prices will come into effect on October 1st. Public housing authorities have up to 90 days to update their payment standards to reflect the new figures.
But as strong as these increases are, they still might not be enough. Inflation has pushed up the rent for a two-bedroom apartment nationwide by an average of 38% year over year, leaving many low-income borrowers with vouchers unable to find affordable housing even with government assistance. The updated FMR values are intended to help voucher holders keep up with rising rental costs.
“These new FMRs will give coupon holders who are meeting this challenge easier access to affordable housing in most housing markets, while expanding the range of housing options available to households,” HUD Secretary Marcia L. Fudge said in a statement.
Currently, only 86% of coupon holders use them. According to a statement from HUD, “declining vacancies and sharply rising rents have made it more difficult for low-income households to use vouchers”.
While the increase in market rent should help, it remains to be seen how effective the new rating will be.
The 25 metropolitan regions with the largest market-driven rent increases
Source: US Department of Housing and Urban Development (HUD)
Cities like Phoenix and Tampa have made headlines over the past year with sharp rent increases that have soared well above the average wages for those areas. But while rental prices in the Sunbelt states have started to fall recently, they make up a majority of the top 25 metro areas with the largest FMR increases.
Salinas, Calif., Phoenix, and San Benito County, Calif. all saw their FMRs increase by more than 30%, while more than 820 metro areas saw double-digit increases.
Meanwhile, a handful of metro areas saw their FMR fall, including:
- Camden County, NC: -10%
- Midland, Texas: -7.2%
- Odessa, Texas: -2%
- Oldham County, Texas: -0.4%
- San Francisco: -0.3%
How FMR is used to determine the value of Housing Choice Vouchers
FMR pricing estimates the cost of gross rents (including rent and utilities) at the 40th percentile of rental housing supply in an area. Local public housing agencies (PHAs) use these price estimates to determine how much they will allocate to households with vouchers to rent.
The value of Section 8 housing credits is largely based on FMRs. The larger the FMR increase, the more voucher recipients can afford when buying a home. Voucher recipients have 60 days to find accommodation or lose their voucher benefit (although PHAs can extend it individually).
If you wish to apply for a housing voucher, contact your local public housing agency, which can be found at HUD.gov.
The increase in the metropolitan area does not solve any neighborhood-level challenges for tenants
While raising FMRs is a step in the right direction to ensure access to affordable housing, says Diane Yentel, CEO and president of the National Low Income Housing Coalition, more needs to be done — namely expanding fair market rents for small areas (SAFMRs).
The benefit of SAFMRS is that they can more accurately assess rental rates in localized neighborhoods. In a large city, prices vary widely from zip code to zip code; This is where a more accurate pricing tool like SAFMRs can help voucher recipients more easily access affordable housing in their specific area.
“Until HUD deploys SAFMRs on a larger scale, voucher holders will continue to struggle to find decent and safe housing in many of the communities with the highest costs and lowest vacancy rates,” Yentel said.
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