A recent study by the U.S. Department of Housing and Urban Development (HUD) finds that the provision of rental assistance reduces the incidence of worst case needs (WCN). Worst case needs households are those with very low incomes (VLI) (earning less than 50% of the area median income) and who pay 50% or more of their income for housing. In its most recent worst case housing needs report, HUD found that 7.1 million households had WCN in 2009, an increase of nearly 20% from the 5.9 million WCN households found in 2007 (see Memo, 2/4).
The new study, entitled Reduction of Worst Case Housing Needs by Assisted Housing, reports that nearly 85% of households receiving housing assistance in 2009 were VLI. According to the study, without rental assistance, an additional 4.3 million VLI households would have experienced worst case housing needs in 2009.
The authors analyzed data from 44 metropolitan area markets to test the effectiveness of HUD rent assistance in alleviating housing cost burdens among VLI rental households. The rental assistance observed in the study included public housing, housing choice vouchers, project-based Section 8 housing, and other multifamily programs.
Researchers expected that each new household who received assistance would result in a commensurate reduction in households with WCN. Data from the American Housing Survey, American Community Survey, and decennial census were used to determine the amount of rental assistance provided to the study areas and the condition of submarket factors, including the scarcity of affordable units, the physical condition of the housing stock, income levels, and labor supply.
The authors used metropolitan regression models to test the influence of submarket factors on the relationship of rental assistance to incidence of worst case needs. Of the four study models tested, the overall findings suggest that the greatest reduction in WCN households occurred in markets with greater numbers of renter households, and in those with higher incomes and higher rents.
The results show that for every 100 assisted units added to a market, the number of households with worst case needs is reduced by 94. This is tantamount to saying just six of the households receiving assistance would be predicted to not have had worst case needs prior to receiving assistance, evidence that assistance is reaching a truly needy population.
To see the full results of the metropolitan data analysis, visit http://www.huduser.org/Publications/pdf/ReductionofWCHNAssistedHousing.pdf