The Dream Revisited

Housing Choice Shouldn’t Be At The Expense of Other Low-Income Renters

by Rachel Fee | July 2016

HUD wants to expand their successful pilot for Small Area Fair Market Rents (SAFMR) to New York City. With promising outcomes in a Dallas demonstration program, HUD proposes new rules for New York City and other regions with high levels of voucher concentration to both encourage and enable voucher holders to move to areas of higher opportunity and lower poverty. Instead of a citywide fair market rent (FMR), rents will be set by zip code.  This “cost effective” proposal will raise allowable rents in some zip codes and lower them in others to more accurately reflect housing sub-markets within a region. This proposal is full of promise and may work well in some localities but in a high-cost, extremely low-vacancy city like New York, it could have disastrous consequences.

In New York City, our housing agencies estimate that roughly one third of our 120,000 voucher holders’ rental assistance payments would go down.  HUD's proposal is made without a Section 8 budget increase, so housing "opportunity" for some low-income families will come at the expense of others.  Families who choose to stay in their current homes in high poverty areas or those who are unable to move, will literally pay the price of higher rents for families using their voucher in more expensive neighborhoods.  Half of impacted households are elderly and/or disabled with average annual income of less than $15,000- paying higher rent will surely impact the quality of life for these households. In a red hot real estate market which has driven homelessness to all-time heights and a vacancy rate of 3.4%, classified at emergency level by HUD, finding an apartment at all will be a challenge, even in an only marginally lower-poverty neighborhood.

Within 13 to 24 months, 36,000 families would be expected to move to a higher-income neighborhood or remain in place by negotiating a lower rent or by paying more.  A higher rent burden is the likely outcome for families who stay. The premise underlying HUD’s policy proposal is that landlords will accept lower rents in high-poverty, low-rent neighborhoods so that tenant payments won't rise much when subsidy amounts fall.  This is an unrealistic and risky assumption when rents are rising and vacancy rates are low, even in high-poverty neighborhoods, some of which are rapidly gentrifying.  For movers, the new vouchers, set at 40th percentile rents, may have insufficient purchasing power in a tight rental market to open up new neighborhood options to families.  Another problem with SAFMRs is that zip codes fail to delineate meaningful boundaries for housing sub-markets in New York. While HUD's proposal may offer some flexibility for housing authorities to combine zip codes upon application, the geography of zip codes offers no comfort to affordable housing advocates concerned by the immensely complicated process of finding an apartment to use a Section 8 voucher with 176 rent levels, matching our number of zip codes. 

Section 8 is a mobility program. When only one in five families use their vouchers to rent in low-poverty areas nationally, it is clearly not providing the mobility intended.  In New York, vouchers are primarily concentrated in poor neighborhoods in Brooklyn and the Bronx.  That must change. Giving low-income families more housing options, especially in high-opportunity neighborhoods with better schools, lower crime, access to employment and transit, is what the program should do. But program improvements should not be achieved on the backs of low-income families who choose not to or who are unable to move. Only with a significant budget increase, should HUD consider offering higher rent levels in New York City—not by zip code—but perhaps in high performing school districts or other more meaningful boundaries.

Rachel Fee is Executive Director of New York Housing Conference.

More in Discussion 20: Making Vouchers More Mobile