Do Housing Vouchers Serve as An Effective Safety Net?

The project-based Section 8 program is the largest rental assistance program used by the US Department of Housing and Urban Development (HUD) to finance private owners to develop and manage affordable housing. Through this program, HUD financed over 1.2 million housing units that were all built before 1980. In the mid-1990s, the subsidy contracts on these properties began to expire, and between 1996 and 2010, there were more than 115,000 households in properties where either the owner chose to opt out of the subsidy program or HUD terminated the contract because of compliance issues. When place-based rental subsidies expire, tenants are offered a Section 8 voucher to shield them from being displaced or spending a higher share of their income to rent a different unit on the private market. This represents the only programmatic use of a voucher as a safety net and the only federal rental safety-net program in the USA. To understand the effectiveness of housing vouchers as a safety net, this study analyzes voucher use among households who lived in properties where project-based subsidies expired.  

Using HUD tenant-level data between 2002 and 2010, researchers constructed a national database of more than 69,000 households who were offered a voucher after their place-based subsidy expired and explored how voucher-use rates varied, where households who used the vouchers moved, how often households moved with their voucher, and whether these households moved to lower-poverty neighborhoods. To conduct the analysis, researchers compared the variation in voucher use and moves across various demand, supply, and household demographic factors, including the cost of rent, market vacancy rates, household income, household size, and the age and race and ethnicity of the head of household. The study could only track households who received some form of rental assistance and thus could not capture what happened to households who did not use the voucher after the place-based subsidy expired. On average, households who lived in these properties had an annual income of $7,771, paid $198 per month in rent, and received a HUD rental subsidy of $464 per month. Black-headed households accounted for 48 percent of the sample, and almost 60 percent of households in these properties were nonwhite.

Key findings

• Fewer than 50 percent of eligible households in the sample used their voucher. Households with the lowest incomes, households with dependents, older households, and Black-headed households are the least likely to use their voucher.
• Households with the highest demand for the subsidy (e.g., households with the lowest incomes and households with the highest rents) have lower odds of using their voucher.
• Households where the head is older than 62 have 98 percent lower odds of using their voucher, with a 30 percent voucher-use rate if they lived in an opt-out property and only a 9 percent rate if they lived in a property where the contract was terminated.
• Households with dependents have lower voucher-use rates. Each additional dependent is associated with 31 to 34 percent lower odds of using a voucher for households who lived in an opt-out property, and 20 percent lower odds for households who lived in a property where the contract was terminated.
• Among households who lived in an opt-out property, Black-headed households have 22 to 25 percent lower odds of using their voucher than white-headed households.
• Households with higher rents and those with higher incomes were more likely to move one or more times than not move at all, and this was particularly true for the high-rent households who lived in an opt-out property. In addition, households with dependents, and those where the head was older than 62 or Black, had higher odds of moving at least once.

Overall, moves to another tract with a voucher was associated with living in a lower-poverty neighborhood. However, Black- or Hispanic-headed households were still associated with living in higher-poverty tracts than white-headed households.

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