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Section 8 voucher holders are getting a massive boost today as the U.S. Department of Housing and Urban Development (HUD) increased the value of fair market rent across the country. The biggest increases are over 30% in places where rents spiked the most over the past year.
On September 1, HUD introduced new Fair Market Rents (FMRs) for 2023–an annual update that coincides with rent fluctuations in the private sector.
For about 2.3 million households using housing choice vouchers, also known as Section 8 vouchers, this move will expand their buying power when looking for housing. HUD increased FMRs by an average of 10% nationwide, but that number is much higher in some areas of the country.
The new pricing will kick in on Oct. 1. Public housing authorities have up to 90 days to update their payment standards reflecting the new numbers.
But as sharp as these increases are, they still might not be enough. Inflation has driven up rent for a two-bedroom unit by an average of 38% year-over-year nationwide, leaving many low-income borrowers with vouchers unable to find affordable housing even with government assistance. The updated FMR levels are designed to help voucher holders keep up with the rising cost of rent.
“These new FMRs will make it easier for voucher holders facing this challenge to access affordable housing in most housing markets while expanding the range of housing opportunities available to households,” said HUD Secretary Marcia L. Fudge in a statement.
Currently, only 86% of voucher holders are using them. According to a statement from HUD, “declining vacancy rates and sharply rising rents have made it more difficult for low-income households to use vouchers.”
While the Fair Market Rent increase should help with this, it remains to be seen how impactful the new assessment will be.
The 25 Metro Areas With the Biggest Fair Market Rent Boost
Source: U.S. Department of Housing and Urban Development (HUD)
Cities like Phoenix and Tampa have made headlines for sharp rent hikes over the past year, shooting far beyond median salaries for those areas. But even though rent prices have recently begun to cool in the Sunbelt states, they make up a bulk of the top 25 metropolitan areas with the largest FMR increases.
Salinas, California, Phoenix, and San Benito County, California all received more than a 30% increase in their FMRs, while more than 820 metro areas saw double-digit gains.
Meanwhile, a handful of metro areas saw a drop in their FMR, including:
- Camden County, N.C.: – 10%
- Midland, Texas: – 7.2%
- Odessa, Texas: -2%
- Oldham County, Texas: -0.4%
- San Francisco: -0.3%
How FMR Is Used to Determine the Value of Housing Choice Vouchers
The FMR pricing estimates the cost of gross rents (which includes rent and utility expenses) on the 40th percentile of the rental housing supply in an area. Local public housing agencies (PHAs) use these price estimates to establish how much they’ll allot for rent to households using vouchers.
The value of section 8 housing vouchers is largely based on FMRs, so the bigger the FMR increase, the more voucher recipients can afford when shopping for housing. Voucher recipients have 60 days to find housing or they will lose their voucher benefit (although PHAs can extend that individually).
If you would like to apply for a housing voucher, contact your local public housing agency, which you can locate on HUD.gov.
Metro Area Increases Don’t Solve Neighborhood-Level Challenges for Renters
Although increasing FMRs is a step in the right direction to ensure access to affordable housing, more needs to be done, says Diane Yentel, CEO and president of the National Low Income Housing Coalition—namely expanding small area fair market rents (SAFMRs).
The advantage of SAFMRS is that they can more accurately gauge rent prices in localized neighborhoods. In a big city, prices vary wildly from ZIP code to ZIP code; this is where a more precise pricing instrument like SAFMRs can help voucher recipients more easily access affordable housing in their specific area.
“Until HUD more widely uses SAFMRs, voucher holders in many of the highest-cost and lowest-vacancy communities will continue to struggle to find decent and safe apartments,” Yentel says.