Developing More Accurate Reasonable Rent Estimates in the U.S. Housing Choice Voucher Program
Abstract
If the U.S. Department of Housing and Urban Development's (HUD's) Housing
Choice Voucher program (HCV) is to be successful, it is important that the rents charged by property owners are reasonable; otherwise the effect could be to inflate costs in the housing market as a whole. This paper describes a cost-effective approach that local public housing authorities in the United States could use to develop reasonable rent estimates. The methodology involves (1) cluster analysis to combine similar census block groups, and (2) regression analysis to predict market rent based on cluster location, number of bedrooms, building age, and building type. In the paper we demonstrate the superiority of this methodology to the tabular housing market region methodology currently being used by the Cincinnati Metropolitan Housing Authority. Our clusters - which contain block groups not necessarily spatially linked - are relatively homogeneous and therefore correspond relatively closely to the housing submarkets utilized by householders in making their mobility and locational choices.References
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Cincinnati Metropolitan Housing Authority (2005) Housing Choice Voucher Program Housing Allowances for Tenant Furnished Utilities and Other Services. Cincinnati.
HUD (U.S. Department of Housing and Urban Development) (2001) 2001 Voucher Program Guidebook. Washington, DC.
Knox, P. and McCarthy, L (2005) Urbanization: An Introduction to Urban Geography, 2nd Edition. New York: Random House.
Merusi Partners Inc. (2005) HCV Program 2005 Rent Reasonableness Study. PowerPoint presentation to the Cincinnati Metropolitan Housing Authority and the Hamilton County Department of Community Development, November 18.
Monk, D. (2006) Housing authority panel, consultant to review rent. Cincinnati Business Record, May 19, p. 3.
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