Examining the Transition to HUD Small Area Fair Market Rents Using Craigslist Data

The limitations of the U.S. Department of Housing and Urban Development's (HUD) metropolitan-scale, American Community Survey (ACS)-driven annual Fair Market Rent (FMR) estimates are familiar to local housing officials. Each year, scores of comment letters are received by HUD as FMRs are updated and implications for local housing markets become known. The transition to Small Area Fair Market Rent (SAFMRs) holds great promise in mitigating key shortcomings of using areawide geography, offering a much more submarket-specific variable payment standard for use by public housing authorities (PHAs). This potentially opens up more high-opportunity areas to the program's users. A more formal, large-scale assessment of this key rental housing policy, however, has been difficult due to paucity of current national yet sufficiently local, datasets describing rental housing markets. Using recent and spatially comprehensive rental data from Craigslist, a listing website that includes housing, we analyze HUD data for 2,600 FMR areas nationwide and show rental gaps between the actual cost of rentals and what PHAs will pay per the FMR payment standard. We analyze how a shift to SAFMRs changes the potential availability of units, focusing on both the 24 HUD rule areas and the nation at large. Based on our findings, we argue that more areas should be included in the program if appropriate safeguards can be instituted.