An Experimental Housing Assistance Program Produces a Striking Result

Housing voucher recipients in the Seattle area who received customized assistance finding housing through an experimental program were more likely to move to neighborhoods where children have historically had a better shot of moving up the economic ladder.

That’s according to a team of academic researchers who helped to conduct the program and analyzed the results. They say that going forward it would be useful to see the initiative duplicated in other cities to see if it could be scaled-up nationally.

The researchers began by considering two possibilities for why lower-income families tend to live in neighborhoods that often have limited opportunities for upward economic mobility—even when nearby places are known to have better opportunities and comparable rents.

One possibility was that people stay in these disadvantaged areas because they offer upsides like shorter commutes, proximity to family and community and greater diversity. 

But another explanation the researchers raised is that people in this situation face barriers like poor credit ratings, a lack of cash for moving expenses, and landlords who are reluctant to rent to them.

Between last year and the earlier part of this year, the research team worked with housing authorities in Seattle and King County, where the city is located, to design and implement a program known as Creating Moves to Opportunity, or CMTO. 

The program helped participants in three broad areas: searching for housing, engaging with landlords and financial aid to help cover moving-related expenses.

To test the program’s effect, the researchers conducted a “randomized controlled trial” with 421 households who were issued housing vouchers between April 2018 and April of this year. 

Some of the families were assigned to a “control group” that received the standard services the housing authorities provided. The “treatment group” participated in the CMTO program. People in both groups were free to move anywhere in their housing authority’s jurisdiction.

The results between the two differed sharply. 

Within the control group—the households that did not participate in the test program—just 14.3% leased housing in what the researchers defined as “high-opportunity” neighborhoods.

Among the group that participated in the program, the share of households that leased housing in high-opportunity neighborhoods was 40 percentage points higher, at 54.3%.

Survey results indicated that about 67% of families in the treatment group were very satisfied with the neighborhood they moved to. The same was true for only 33% of the control group.

“Our experimental results imply that most low-income families do not have a strong preference to stay in low-opportunity areas; rather, barriers to moving to high-opportunity areas play a central role in explaining neighborhood choice,” the researchers wrote.

They defined high-opportunity places as those where low-income children have historically gone on to have improved economic outcomes. They did so, they explain, because past research has shown that neighborhoods tend to have a greater effect on kids than adults in this respect.

What’s known as the Housing Choice Voucher program, or Section 8 vouchers, provided a foundation for the experiment. 

The voucher program is overseen by the U.S. Department of Housing and Urban Development and administered by local housing authorities. Each year, it provides about two million families with housing assistance and costs about $20 billion.

To qualify for the program in Seattle and King County, households must earn less than 80% of the median income in the area. But families who qualify outstrip the number of vouchers available, and the housing authorities use a lottery to select people from a waiting list.

The researchers point out that in practice, given how the waitlist is prioritized, almost everyone who receives a voucher from the city or county housing authorities has an income below 30% of the area median income, or about $29,900 for a family of three.

A typical family receiving a voucher during the experiment, they added, had been on the waitlist for about 18 months. Households that receive vouchers contribute 30% to 40% of their annual income to rent and utilities. The voucher covers the gap to pay the rest of their rent.

The maximum monthly voucher someone could receive for a two-bedroom residence in Seattle at the time of the experiment was $2,278. In King County the amount was $2,110.

A nonprofit group provided housing search assistance and engaged with landlords under the Creating Moves to Opportunity program.

With the housing search assistance component, the nonprofit provided households with information about the benefits of moving to high-opportunity areas, helped them with things like preparing rental documents, addressing credit issues and finding available housing.

The landlord engagement piece of the program involved the nonprofits making connections with landlords, explaining the program to them and urging them to lease to families with vouchers. This yielded a list of landlords who were willing to rent to voucher holders.

As part of the program, the landlords were also offered insurance for any damages not covered by security deposits, up to $2,000.

The third piece of the program provided people with the money they needed to cover the costs of going through the rental process, such as  application fees and security deposits. On average they received $1,070 of this sort of assistance.

Interviews with participants, the researchers say, suggest that one reason the program worked is that it was flexible and addressed each family’s specific needs, as opposed to offering more rigid one-size fits all assistance. Different people used it in different ways, they note.

“The customization of CMTO services—with nonprofit staff being able to flexibly respond to each family’s specific situation and needs—appears to be crucial to its success,” they write.

Costs for the program totaled about $2,600 per family, including the $1,070 in moving expense assistance. The other $1,500 covered labor costs for services.

Because the program resulted in some people renting in more expensive neighborhoods, the cost of each voucher also increased by an estimated $2,800 per year. But the researchers note that this figure is specific to the Seattle area and would likely vary in other places.

On average, the nonprofit staff implementing the program spent about seven hours working with each family.

There are some caveats that the researchers highlight.

One is that that they don’t have any evidence as to whether people who moved to high-opportunity areas will stay in those places. Another is that it’s unclear if the results are unique to Seattle and King County, or if the program will work similarly elsewhere.

More on the study can be found here.