A tough rental market for affordable housing is making it difficult for many families in the Twin Cities region to use their housing vouchers.
“The pool of rent-burdened people continues to grow, as rents rise faster than wages,” said Terri Smith, director of the Metropolitan Council’s Housing Redevelopment Authority (Metro HRA). “Our goal is to serve as many households and families as possible, while providing as much choice around housing type and location, within our budget authority.”
Under a federal program, administered by housing authorities across the country, voucher-holders pay approximately 30% of their income towards rent and housing authorities pay the remainder to the property owner.
According to Smith, “Waiting lists are long and generally closed. It can take years to even get on the waiting list for a voucher. Once on the waiting list, applicants can wait years longer for their name to reach the top. Once a voucher is issued, it can be hard to find a place to live where a landlord is willing to participate in the program.” This reality is a national problem not unique to the Metro HRA.
Nonluxury housing units have seen the biggest price hikes
“From 2021-22, the Twin Cities region experienced below-average rent increases compared to other metropolitan areas, like Chicago, Portland, and San Diego,” said Joel Huting, senior manager of the Met Council’s Research department. “However, nonluxury rental units – those deemed most affordable – have seen the largest price hikes since 2010. Additionally, in this market segment, the vacancy rate is very low and indicates demand is outpacing supply.”
“This makes finding a rental unit very difficult for voucher holders,” Smith said.
At least half of all voucher holders are working
“Metro HRA houses our neighbors, families, and friends.” Smith said. “About 50% of voucher holders are elderly and/or living with a disability.” Most people on disability are subject to income caps, if they can work, and some have conditions or regular treatments, like dialysis or chemotherapy, that prevent them from working or severely limit their employability.
“The other 50% of voucher holders earn income, they just need a little extra help to make ends meet,” Smith explained. “Many of our voucher holders are essential workers like teaching assistants, dental hygienists, retail, service, and health care workers.” In recent months, many housing assistance participants in this group are likely getting pushed out of the home sale market as mortgage rates rise.
At a July 2022 Resident Advisory Board meeting, Metro HRA staff heard comments that affordable properties in preferred areas don’t accept vouchers, and many of the unit rents in favorable locations are more than the Metro HRA’s payment standards.
“Currently, about 60% of voucher holders coming off the waiting list successfully secure housing,” Smith said. “This results in 40% of vouchers issued going to the next person on the waiting list. This can happen for a variety of reasons, including not being able to find a rental unit to already having another solution in place, or changed circumstances resulting in no longer a need for a voucher.”
Met Council considers raising rent limits
In July 2020, Metro HRA implemented Small Area Fair Market Rents to make it easier for tenants to place their vouchers. These are payment standards, or rent limits, within a metro area at the zip code level versus one payment standard for the entire metro area.
“These payment standards allow participants the ability to afford homes in areas of high opportunity and for more landlords to work with the program based on the higher payment,” Smith explained. “Essentially, the money tied to the vouchers goes further with lower payment standards, but payment standards must be high enough for voucher holders to achieve success in finding a unit. It is a balancing act. The more Metro HRA’s portion of the rent, the fewer families we can support.”
Met Council members are deliberating about an increase to the small area rents to further support successful placement of housing vouchers. This would be one of the most significant changes to payment standards since 2020. A decision is expected in November.
Metro HRA seeks more property owners to join the program
Another piece to balancing the equation is partnerships with landlords and property owners willing to accept housing vouchers. Metro HRA regularly hosts virtual Housing Choice Voucher 101 sessions for landlords interested in exploring a partnership or current landlords looking for a refresher on the topic. Questions can be directed to Brenda Pierson at email@example.com.
Metro HRA rental assistance information