Small Area Fair Market Rents Lead to Better Locational Outcomes for Families with Children Who Move

Cityscape: A Journal of Policy Development and Research released a special issue dedicated to research on Small Area Fair Market Rents (SAFMRs). Over the next several editions of Memo, NLIHC will highlight papers from this issue. One of these papers, “The Effects of Small Area Fair Market Rents on the Neighborhood Choices of Families with Children,” found that the introduction of SAFMRs did not make voucher-recipient families with children more likely to move, but those who did move were more likely to locate in higher-opportunity neighborhoods.

The SAFMR rule reforms voucher payment standards. Whereas traditional Fair Market Rents determine a single rent standard for an entire metropolitan region, SAFMRs set varying rent standards in different U.S. Postal Service ZIP codes within a metropolitan region (see Memo, 11/14/16). This method of setting voucher payment standards can help voucher recipients move to higher-opportunity neighborhoods where rents are higher than the average for a metropolitan region. SAFMRs provide greater subsidies in higher-rent ZIP codes and lower subsidies in lower-rent ZIP codes.

The authors sort ZIP codes into categories of high-, medium-, and low-rent using a special tabulation of American Community Survey (ACS) data and 2008-2012 ACS 5-year estimates. The authors also create an Opportunity Index for each census tract using data on several opportunity indicators: poverty rate, local public elementary school proficiency (based on exam scores), jobs’ proximity access, and environmental hazards (based on EPA data). Finally, detailed household-level data on voucher-recipient families with children is drawn from a HUD administrative dataset. The analysis focuses on a sample of seven public housing agencies (PHAs) that have implemented SAFMRs and 138 PHAs that still use traditional Fair Market Rents (FMRs).

The paper analyzes the impact of SAFMRs on the number and location of units affordable to voucher-recipient families with children. Across the seven PHA jurisdictions using SAFMRs, the number of affordable homes in high-rent ZIP codes more than doubled compared to the number that would have been affordable under standard FMRs. The total number of rental homes affordable to voucher-recipient families fell after the adoption of SAFMRs, however, due to a substantial reduction of affordable units in low-rent areas. Overall, these results suggest that SAFMRs provide more options for voucher recipient families in high-rent and high-opportunity areas but introduce a potential tradeoff of reducing the overall supply of affordable homes.

The authors examine the actual locational outcomes of voucher-recipient families with children. They find the introduction of SAFMRs made voucher-recipient families with children who move almost seven percentage points more likely to move to neighborhoods with significantly higher opportunity index scores, compared to their counterparts in PHAs using FMRs. This effect was strongest for families that moved from low-rent neighborhoods. Additionally, the introduction of SAFMRs led to an average 4.4-percentile increase in families’ neighborhood opportunity index, more than double the increase in percentile ranking for families in areas using FMRs. By 2017, 15% of voucher-recipient families with children in SAFMR areas lived in high-opportunity neighborhoods compared to 10% in 2010. Voucher-recipient families supported by PHAs using FMRs experienced virtually no changes over the same period.

The authors conclude that their findings highlight the ongoing benefits of SAFMRs for voucher-recipient families with children. Not only do SAFMRs increase housing options in high-opportunity neighborhoods, they also make families who move more likely to use their vouchers in such neighborhoods. High-opportunity neighborhoods can provide access to better schools and job opportunities and less exposure to harmful environmental conditions for families with children. The authors recommend that PHAs using SAFMRs devote more resources to helping new voucher-recipient families navigate the housing market and to recruiting landlords in high-rent neighborhoods.

The full paper can be read at:

The entire Cityscape issue is available at: