Are Landlords Overcharging Housing Voucher Holders?

Abstract

The structure of rental markets coupled with the design of the Housing Choice Voucher Program (HCVP), the largest federal housing subsidy for low‐income families in the United States, provides the opportunity to overcharge voucher holders. Applying hedonic regression models to a unique data set of Milwaukee renters combined with administrative records, we find that vouchered households are charged between $51 and $68 more in monthly rent than unassisted renters in comparable units and neighborhoods. Overcharging voucher holders costs taxpayers an estimated $3.8 million each year in Milwaukee alone, the equivalent of supplying 620 additional families in that city with housing assistance. These findings suggest that the HCVP could be made more cost‐effective—and therefore more expansive—if overcharging were prevented.

Do the Poor Pay More for Housing? Exploitation, Profit, and Risk in Rental Markets

“…Third, initiatives designed to expand affordable housing that do not directly confront profit seeking among landlords may prove ineffective. For example, studies have shown that landlords in low-income neighborhoods overcharge housing voucher holders, making the program less cost-effective and therefore limiting its reach (Desmond and Perkins 2016). Public policies aimed at easing families' rent burdens should be grounded in a firm understanding of property owners' business practices.…”

How Do Changes in Housing Voucher Design Affect Rent and Neighborhood Quality?

“…These research designs estimate who benefits from marginal changes to the rent ceiling. SeeDesmond and Perkins (2016) for estimates of differences in average rents between similar voucher and non-voucher units in Milwaukee.…”

Racial rent differences in U.S. housing markets: Evidence from the housing voucher program

“…Based on a random sample of voucher units throughout the country and estimates of market rents by professional real estate appraisers, ORC/Macro () concluded that the program paid 10% less than market rents for units occupied by voucher recipients. At the other extreme, Desmond and Perkins () estimated a hedonic equation that indicated that landlords in Milwaukee received rents about 7% higher than market rents. Earlier studies that estimated hedonics based on excellent data found intermediate results.…”