Race, Space, and Take Up: Explaining housing voucher lease-up rates

Abstract

While housing choice vouchers provide significant benefits to households who successfully lease homes with their vouchers, many recipients fail to do so. Understanding more about lease-up rates is critical, yet the latest national study was published over two decades ago and reported on the outcomes of only 2,600 voucher recipients across 48 housing authorities (Finkel and Buron, 2001). We use unique administrative data to estimate voucher lease-up rates and search times for about 85,000 new voucher recipients each year in 433 metropolitan housing authorities for 2015 to 2019, which allows us to explore variation over time, across housing agencies, and across individuals within housing agencies. Overall, only 60 percent of recipients successfully use their vouchers, even after waiting for two and a half years on average to receive them. Consistent with theoretical expectations, we show that lease-up rates are generally lower in markets with lower vacancy rates, more spatial variation in rent levels, and older housing, which may be less able to pass HUD’s quality standards. But we also find considerable variation across individuals within markets. Most notably, perhaps, we find that Black and Hispanic voucher recipients are less likely to lease homes than other recipients in their same markets. We explore mechanisms and find evidence that racial disparities are partly explained by differing conditions in the neighborhoods where voucher recipients start: voucher recipients are less likely to lease-up and take longer to successfully rent homes when they start in neighborhoods with older housing stocks and larger Black and Hispanic population shares. Observed and unobserved neighborhood factors explain about 40 percent of individual racial differences in lease-up rates. We also provide suggestive evidence showing that policy interventions, such as extended search times, neighborhood-based rent ceilings, and source of income discrimination laws, can help both to boost overall lease-up rates and to reduce these racial and spatial disparities.