Small Area Fair Market Rent Demonstration Evaluation: Final Report
Impact: Based on lessons from this research, as well as a few other studies (Collinson and Ganong, 2018; Reina et al., 2019), HUD tweaked the policy and has now mandated that housing agencies in 65 metropolitan areas use Small Area FMRs to set voucher payment standards, covering over a million voucher holders. Subsequent research shows that the shift to these spatially varying rent subsidies is continuing to expand choice at no additional government expense (Ellen et al., 2025; Eriksen et al., 2024). This is one example of how careful research and analysis has made the voucher program more effective and efficient.
Researchers: Samuel Dastrup, Meryl Finkel, Kimberly Burnett, and Tanya de Sousa of Abt Associates
Summary:
The housing choice voucher program is the largest rental assistance program in the U.S., providing support to roughly 2.3 low-income households annually who rent homes on the private market. Voucher holders generally pay 30 percent of their income towards rent, and the voucher covers the balance of the rent, up to a local payment standard. While rigorous studies show the voucher program provides significant benefits to participating households, the program has fallen short on enhancing residential choice.
In response to concerns that the use of metropolitan area-wide Fair Market Rents (FMRs) to set rent subsidies was limiting residential choices to the higher poverty neighborhoods where most of the affordable units were located, analysts in the Policy Development and Research division at HUD decided to explore whether more granular subsidy limits could help. Specifically, research staff developed FMRs that vary with rent levels in ZIP Codes (Bibler et al., 2019). These Small Area FMRs tilt voucher rent subsidies, offering higher subsidies in higher-rent (generally lower poverty) neighborhoods but lower subsidies in lower rent neighborhoods.
In 2012, HUD launched a pilot to test the use of these ZIP Code level rent subsidies and hired Abt Associates to evaluate it. The HUD-supported evaluation found that the introduction of Small Area FMRs increased the share of voucher recipients moving to higher rent and higher opportunity neighborhoods, especially among households with children (Dastrup et al., 2018; Dastrup et al., 2019). Critically, the research showed that this enhanced neighborhood choice came at no additional government expense.
References:
Bibler, A., C. Brandly, P. Kahn, M. Lihn, and L. Taghavi (2019). Guest Editors’ Introduction: Small Area Fair Market Rents. Cityscape 21 (3), 3–16.
Collinson, R. and P. Ganong (2018). How Do Changes in Housing Voucher Design Affect Rent and Neighborhood Quality? American Economic Journal: Economic Policy 10 (2), 62-89.
Dastrup, S., M. Finkel, K. Burnett, and T. D. Sousa (2018). Small Area Fair Market Rent Demonstration Evaluation: Final Report. Prepared for the U.S. Department of Housing and Urban Development. https://www.huduser.gov/portal/publications/Small-Area-FMR-Evaluation-Final-Report.html
Dastrup, S., M. Finkel, and I. G. Ellen (2019). The Effects of Small Area Fair Market Rents on the Neighborhood Choices of Families with Children. Cityscape 21 (3), 19–48.
Ellen, I., K. O’Regan, and S. Strochak. (2025). Pricing for Opportunity: The Impact of Spatially Varying Rent Subsidies on Housing Voucher Neighborhoods and Take-up. Available at SSRN: https://ssrn.com/abstract=4898968 or http://dx.doi.org/10.2139/ssrn.4898968.
Eriksen, M., E. Kwon, and G. Yang (2024, June). The Effect of Targeted Subsidies on the Location Choice of Housing Voucher Recipients: Evidence from the Small-Area Fair Market Rents. Barcelona, Spain.
Reina, V., A. Acolin, and R. W. Bostic (2019). Section 8 Vouchers and Rent Limits: Do Small Area Fair Market Rent Limits Increase Access to Opportunity Neighborhoods? An Early Evaluation. Housing Policy Debate 29 (1), 44–61.