In mid-August, HUD published an interim evaluation which showed mixed results for the efficacy of Small Area Fair Market Rents (FMRs). Fair Market Rents are calculated by HUD on the county or metropolitan area level. HUD states that the FMR is the amount of money that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a modest nature. Fair Market Rents help determine the amount of rent covered by the voucher (i.e., the higher the FMR, the higher the potential value of the voucher). Small Area FMRs are FMRs calculated by zip code. The intended effect of Small Area FMRs is to decrease subsidies in low-opportunity (low-rent) neighborhoods and increase subsidies in high-opportunity (high-rent) neighborhoods to incentivize families to move from low-opportunity neighborhoods to high-opportunity neighborhoods.

In 2012, HUD began the Small Area FMR Demonstration (though the Demonstration uses PHAs which have been using Small Area FMRs since before 2012) which tested, among other things, the mobility incentive of Small Area FMRs across seven public housing agencies (PHAs) with varied and diverse characteristics. This new HUD interim evaluation titled “Small Area Fair Market Rent Demonstration Evaluation Interim Report” shows that Small Area FMRs have a mixed impact. Among other findings, the report has four key takeaways about the use of Small Area FMRs: 1) different housing markets are impacted differently; 2) there are more families moving into areas of opportunity; 3) there is a loss of affordable units; and 4) there is an aggregate higher cost burden for families. Understanding these findings illustrates why Small Area FMRs have both benefits and costs. Continue reading →