Report Finds Large Share of Voucher-Assisted Families in Lower Opportunity and Segregated Neighborhoods

A report from the Center on Budget and Policy Priorities, Where Families with Children Use Housing Vouchers: A Comparative Look at the 50 Largest Metropolitan Areas, examines the neighborhood characteristics of rental housing affordable or leased to families using Housing Choice Vouchers (HCVs) in metropolitan areas. The report finds that a large share of families with vouchers live in high-poverty, low-opportunity, and minority-concentrated neighborhoods, despite the apparent availability of rental homes affordable to voucher holders in better neighborhoods.

HCV recipients contribute 30% of their adjusted gross income toward rental housing in the private market, while the voucher pays the rest up to a payment standard typically between 90% and 110% of HUD’s Fair Market Rents (FMRs). Recipients contribute more than 30% of their income toward housing if they choose a rental home that costs more than the payment standard.

Using data from HUD and the American Community Survey, the report’s authors determined the location of voucher-assisted families with children and voucher-affordable units in all U.S metropolitan areas. Voucher-affordable units are those whose rents are less than HUD’s Small Area FMRs for two-bedroom units. Small Area FMRs are set at the ZIP code level to better reflect small-scale housing markets within metropolitan areas, while traditional FMRs are applied to an entire metropolitan area. Small Area FMRs raise the payment standard (rents that would be voucher-affordable) in higher-cost neighborhoods and lower them in lower-cost neighborhoods. Using Small Area FMRs may over-estimate the actual share of voucher-affordable units in low-poverty, high-opportunity neighborhoods as only 24 metropolitan areas are required to use them, though all public housing authorities in metropolitan areas have the option to do so. The authors also measured neighborhood poverty, opportunity, and racial and ethnic composition at the census-tract level.

Only 14% of voucher-assisted families with children lived in low-poverty neighborhoods (with poverty rates below 10%), while 25% of voucher-affordable units were in these neighborhoods. High-poverty neighborhoods with poverty rates above 30% contained 33% of voucher-assisted families and 22% of voucher-affordable units. The share of voucher-assisted families in high-poverty neighborhoods varied considerably across the 50 largest metropolitan areas, from 61% in the Buffalo, NY, to only 1% in San Jose, CA.

The authors created a composite score of neighborhood opportunity with five of HUD’s Affirmatively Furthering Fair Housing indices: school quality, poverty, labor market engagement, access to jobs, and access to transit. “Low-opportunity” and “high-opportunity” neighborhoods scored in the bottom 20% and top 20% of neighborhoods across all metropolitan areas, respectively. Forty percent of voucher-assisted families, but 21% of voucher-affordable units, were in low-opportunity neighborhoods. Five percent of voucher-assisted families, but 18% of voucher-affordable units, were in high-opportunity neighborhoods.

The authors also examined the share of voucher-assisted families by race living in minority-concentrated neighborhoods, which are census tracts where the share of people of color is at least 20 percentage points greater than their respective metropolitan areas. Sixty-one percent of voucher-assisted families of color were in minority-concentrated neighborhoods compared to 19% of white, non-Hispanic voucher-assisted families. Only 32% of voucher-affordable units were in these neighborhoods. The share of voucher-assisted families of color residing in minority-concentrated neighborhoods exceeded the share of all low-income renters of color in minority-concentrated neighborhoods in 43 of the 50 largest metropolitan areas.

The report concludes that several reforms are needed to strengthen the HCV program to give voucher-assisted families more housing mobility and choice. Perhaps most importantly, the authors advocate for establishing and funding the Housing Choice Voucher Mobility Demonstration (see Memo, 5/29/2018), which would fund efforts at selected public housing agencies to improve voucher mobility. These efforts include pre- and post- move support (e.g. financial coaching), landlord outreach, and housing search assistance to help voucher-assisted families access higher opportunity neighborhoods. Other recommended reforms include: encouraging greater utilization of Small Area FMRs; giving greater weight to location outcomes for voucher-assisted families in measuring public housing authority performance and rewarding good performers with additional administrative fees; full implementation of the Affirmatively Furthering Fair Housing rule; expanding the supply of rental housing affordable to voucher holders in high-opportunity and low-poverty neighborhoods through adoption of Small Area FMRs and better coordination of vouchers with Low-Income Housing Tax Credit (LIHTC) properties; and further investment to improve communities where families with vouchers already reside.

Where Families with Children Use Housing Vouchers: A Comparative Look at the 50 Largest Metropolitan Areas is available at: https://bit.ly/2CMl3Rk

An interactive map of where voucher holders live in the 50 largest metropolitan areas is available at: https://bit.ly/2SzPaAP