Broad new federal housing initiatives will soon aid low-income families confronting escalating rents across the nation. The Department of Housing and Urban Development (HUD) recently unveiled new funding that will further assist low-income families, seniors and disabled individuals to secure affordable single-family homes and apartments within the private sector across the United States.
In September, HUD released $113 million in housing choice voucher funds for public housing agencies in 36 states – aid which will come as welcome relief to around 9,500 additional low-income households across the country as they grapple with rising rents.
According to Rent.’s October Rent Report, the median apartment price nationally stands at $2,011, a 0.40 percent increase since last year. Since 2020, prices are up over 19.5 percent. In response to escalating costs, HUD also established a 12 percent nationwide average increase in fair market rental rates (FMR) for fiscal year 2024. The adjustment will increase the number of affordable, privately owned rental properties families using housing vouchers will have access to.
The increase came into effect October 1 and aims to ease financial challenges posed by rising rents in increasingly competitive rental markets across the U.S., according to a recent HUD announcement.
What are fair market rental rates?
A fair market rent rate is simply a snapshot of a reasonable rent price, typically a bit lower than the median rent, in a given region. You can find the fair market rent for your area here.
Landlords and property management companies often refer to regional FMR rates to determine the appropriate amount to charge for rent in a given locale. Federal agencies like HUD also use FMR rates to calculate dollar amounts allocated toward rental assistance programs like the Housing Choice Voucher Program, also known as Section 8.
In order to maintain accuracy, HUD creates and updates FMR rates annually, parsing troves of data collected from national mail questionnaires, cold-call telephone surveys and U.S. Census data. The data collection takes into account local and regional market prices, inflation, square footage and rent forecasts with the aim of calculating a fair market rent price that typically falls around the 40th percentile of median rents within a given zip code.
As an example, the fair market rent rate for a two-bedroom apartment in Miami is currently $1,923, according to Miami-Dade County housing data. That means, in theory, that $1,923 should reflect housing expenses of around 40 percent of Miami's rental properties. According to Rent.'s most recent data, which only accounts for current asking rents, the median cost of an apartment in Miami is currently hovering around $2,930. In its latest round of funding, HUD has allocated an additional $766,113 toward its voucher program in Florida.
HUD anticipates that recently adjusted FMR rates will more accurately reflect a national trend of rising rents and give voucher holders in competitive markets like these greater access to a broader range of rental options, including types of housing and neighborhoods.
"Housing choice vouchers are some of the strongest tools we have to help families find stable and affordable housing," said HUD Secretary Marcia L. Fudge. "This year, HUD found that rents rose once again, accentuating the strain on costs for American families. These updated Fair Market Rents and our funding will ensure households can utilize vouchers in a competitive rental market."
Understanding the Housing Choice Voucher program
In 2021, the U.S. government spent $90 billion on rental assistance programs. The Housing Choice Voucher program, or Section 8, is the largest source of rental assistance in the U.S., with an estimated 2.3 million families relying on the federal program annually. Administered by HUD, the program allocates vouchers that low-income renters apply toward affordable housing of their choice in the private market.
The number of households turning to housing choice vouchers has risen by more than 40,000 from October through May, according to HUD data.
Housing vouchers are aimed at assisting very low-income households. Eligibility to receive vouchers depends on several factors, including household size, location and gross annual income, which may not exceed 50 percent of the median income for the region in which the family chooses to live. Vouchers are accessible to both U.S. citizens and eligible non-citizens with legal immigration status.
Section 8 housing is not limited to subsidized housing “projects," but also includes single-family homes, townhouses and apartments. Cost-burdened renters can apply to the Housing Choice Voucher Program on HUD's webpage.
How renters use housing vouchers
Once a household or individual with vouchers finds suitable housing where the owner or property management company agrees to participate in the Section 8 housing program, a price is negotiated and a subsidy is paid directly to the landlord by a public housing agency, or regional office, which receives and administers the HUD benefits on behalf of the eligible household. Rent assistance programs like Section 8 will use the adjusted FMR rates as a baseline when public housing agencies and private landlords engage in rent price negotiations for HUD voucher recipients.
Housing choice vouchers typically account for around 70 percent of asking rent. The receiving family is responsible for at least 30 percent of its monthly adjusted gross income for rent and utilities, although specifics can vary based on apartment size and other market factors.
The recently announced new funding by HUD will award $113 million to “high-performing" public housing agencies in 36 states across the country. California received a lion's share of the additional federal funding, bringing in a total of $36,998,830. Texas, where rents have risen to $1,460, will receive $33,794,190 in voucher allocations. Here is a complete list of states which will receive new allocations.
The Housing Choice Voucher program is not without its criticisms. As affordable rents slip further out of reach for millions across the nation, Section 8 recipients have decried a number of challenges in navigating the federal housing subsidy program, including difficulty finding and applying their vouchers toward reasonably priced housing. Low-income renters complain of years-long waitlists, income discrimination, landlords unwilling to participate in the program and a general housing shortage nationally. There is no federal law requiring landlords to participate in the housing program.
HUD regards the recent increase in fair housing rental rates, coupled with increased funding for its voucher program, as vital tools to keep low-income renters safely housed in the face of rising rents nationally.
“We want to make sure communities have the tools they need to help families lease homes," said Richard J. Monocchio, Principal Deputy Assistant Secretary for Public and Indian Housing. “The additional funding we are awarding … helps these agencies that are already maximizing funds to house as many families as possible."
