Happy New Year 2024

Happy New Year 2024

Since 2019, I've used the annual ritual of changing the calendars to reflect on the past year's accomplishments and what to expect in the coming year from the Office of Policy Development and Research (PD&R).

I got a head start on this tradition in my PD&R Edge article from a few weeks ago, “Best Housing Research and Data for 2023.” Today’s article highlights what to look forward to in 2024 from PD&R, with the caveat that the office does not yet have a formal budget for fiscal year 2024, so these projects are expected rather than guaranteed.

In the news

My "hook" for this discussion of what's on tap for PD&R in 2024 consists of questions raised in a flurry of news articles published at the end of 2023. These articles raised three questions:

• Why has housing assistance been frozen at roughly 4.6 million households since 2004?

• Why did homelessness rates increase between January 2022 and January 2023?

• Why isn't factory-built construction of homes more widely used in the United States?

Why has housing assistance been frozen at roughly 4.6 million households since 2004?

In my recent PD&R@50 series article about PD&R research supporting the Housing Choice Voucher (HCV) program, I included a chart showing the shift in HUD’s “deep subsidy” housing assistance from project based to tenant based. This chart conveys that shift but also conveys the issue raised by the New York Times and the Harvard Joint Center for Housing Studies — HUD’s housing assistance levels have been frozen at roughly 4.6 million households served since 2004.

Source: HUD-maintained file on annual occupied housing unit counts by program, Picture of Subsidized Households dataset, and Office of Public and Indian Housing HCV Data Dashboard.

Why has this combined inventory remained essentially unchanged since 2004? The reason largely comes down to money. The project-based inventory needs to cover the cost of managing the housing and ensuring that it does not fall into disrepair — costs that increase with inflation. The tenant-based inventory costs must keep up with rising market rents. Unlike entitlement programs such as the Supplemental Nutrition Assistance Program, Supplemental Security Income program, Medicare, and Medicaid, which Congress funds through mandatory appropriations, HUD's programs are funded through annual discretionary appropriations that are subject to congressionally determined budget caps. Because rent inflation leads to higher per-unit costs each year, adhering to these budget caps has required HUD to make difficult funding decisions that have prioritized housing assistance over other programs, such as the Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) programs, just to maintain the service level of roughly 4.6 million households for the past 20 years.

Based on data from our Picture of Subsidized Households dataset, the total cost to rent or maintain a unit for a HUD-assisted tenant, including utilities, has risen from $769 per month in 2004 to $1,405 per month in 2023, an increase of 83 percent over 18 years. The cost of this housing is split between what tenants can afford, at 30 percent of their income, and the remaining cost of the housing, which HUD covers. Because of increasing average incomes, tenant contributions toward rent rose from a national average of $246 per month in 2004 to $416 per month in 2023, an increase of 69 percent. The HUD subsidy portion (the amount between the tenant payment and the gross rent), however, rose faster, from $523 per month in 2004 to $989 per month in 2023, an increase of 89 percent. The latter cost is the one that Congress has needed to maintain through appropriations, averaging nearly 5 percent annually through 2023.

These 4.6 million assisted households have a turnover rate of approximately 9 percent annually; some people die, some no longer meet the program requirements, and some increase their incomes and no longer qualify for assistance. That turnover, however, does not come close to serving all of the households needing assistance, which means long wait times and an inadequate supply of deep subsidy housing units in many places; and this shortage of deep subsidy housing units hinders our ability to solve homelessness.

These are some of PD&R's research initiatives to look forward to in 2024:

• Cityscape: Two issues examining the 50th anniversary of the Housing and Community Development Act of 1974 (HCD Act).

• Section 8 of the HUD Act created HUD’s two largest programs, the HCV and Project-Based Rental Assistance programs. One of this year’s Cityscape issues will feature a symposium on the HCV program.

• The HCD Act also created the CDBG program. Another 2024 issue of Cityscape will cover the 50th anniversary of the CDBG program. If funding for the CDBG program had kept pace with inflation since 1974, it would total more than $20 billion today; instead, CDBG program funding for fiscal year 2023 was approximately $3.3 billion. The symposium will explore what this funding shortfall means for the “Urban Development” part of HUD.

• Conclusion of two major demonstrations geared toward encouraging work among HUD-assisted tenants.

• For approximately a decade, PD&R has been managing a large, randomized controlled trial of the Family Self-Sufficiency program. We will publish our year 7, and final, report for this demonstration this year.

• During the same time frame, we have managed another randomized controlled trial examining the impact of triennial recertifications and some other rent reforms to determine how these changes might affect employment rates.



These studies, along with our recently published research on the Jobs Plus demonstration, are an opportunity to reflect on HUD’s overall self-sufficiency strategy for work-able tenants in HUD-assisted housing. Most of this research has shown that these programs offer several benefits, but increasing employment levels relative to a control group is not one of them. An Insights publication planned for 2024 will explore what we’ve learned from this research and what future research directions we may take in studying the relationship between housing assistance and self-sufficiency aspirations.

• Creating more certainty with the income limit methodology. In January, we published a Federal Register Notice seeking comment on how we calculate income limits. Comments are due February 8. This Notice is seeking comments primarily on a methodology change based on recent experience with rapid changes in rent levels and income, but the request extends beyond that. Income limits are used for many things besides determining program eligibility, including setting rents in the Low-Income Housing Tax Credit and HOME programs. The law also gives HUD some leeway to adjust income limits in areas with very high or very low housing costs. The request for comments also asks whether HUD should take other factors into account when making these adjustments.

• Meanwhile, 2024 is going to be a year of discovery when it comes to data for our housing assistance programs, because the new Housing Opportunity through Modernization Act of 2016 rule, the expansion of the Moving to Work Demonstration Program, and new National Standards for the Physical Inspection of Real Estate inspection requirements have forced agencies to implement significant changes. For decades, the Picture of Subsidized Households data have been crucial for understanding the people HUD serves through its housing assistance programs (2023 data now available!). I see 2024 as a year in which we start planning to update this critical public dataset to account for these recent program changes.

• I expect that researchers will continue their expansive use of our data licenses to access HUD-assisted tenant data. These data allow researchers to tackle many great questions. If you missed our summary of the work published using data licenses, take a moment to read this October 2023 PD&R Edge post, which includes a bibliography of published works that have used our data licenses.

• Although we don’t yet know what research projects will receive funding for fiscal year 2024, these are the most likely candidates among our HUD-assisted housing programs (because they are in either the House or Senate subcommittee report language):

• Ongoing research on the Moving to Work expansion. This involves continued funding for four demonstrations examining better ways to provide housing assistance.

• Expanding eligible uses of the HCV Housing Assistance Payment (HAP). This new demonstration would study allowing the use of HAP to pay security deposits.

• Utility allowance modeling. This funding would support updating HUD’s Utility Schedule Model, which was last updated in 2016.

• Native American Block Grant competitive program evaluation. First funded by Congress in 2018, this competitive program supplements the formula allocation with approximately $100 million per year. This study would assess the program’s impact on units built or rehabilitated.

• Rent reasonableness for the HCV program. To evaluate the alignment of HCV-approved rent with the housing market, the study would identify alternative data sources and approaches that public housing agencies could consider to improve the accuracy of rent reasonableness calculations.

• Section 811 long-term outcomes evaluation. This study would be a longer-term examination of the program than HUD’s initial evaluations in 2018 and 2020. The new study would leverage the availability of better data to assess healthcare outcomes, program tenure, and service gaps across a much larger sample of states and assisted households than the previous study and over a longer period.

Why did homelessness rates increase between January 2022 and January 2023?

In January 2024, communities nationwide will be undertaking the annual Point-in-Time count. The count will inform us about how federal, state, and local efforts to reduce homelessness in 2023, combined with the current state of the economy and housing markets, have affected the number of sheltered and unsheltered people experiencing homelessness during a single night, just as the January 2023 count informed us about what happened in 2022.

The across-the-board increases in homelessness rates between January 2022 and January 2023 are troubling. In an August 2023 PD&R Edge post, we highlighted two driving forces: rising rents in 2022 and a reduction in pandemic-related assistance, including emergency rental assistance and various eviction moratoria.

The recent Point-in-Time counts noted two other troubling trends: a significant increase in the inflow of people experiencing homelessness for the first time, and an increase in the number of people experiencing chronic homelessness.

PD&R has played a small role in preventing, delaying, and softening the impact of evictions through its Eviction Protection Grant Program. In 2024, we will be issuing a new Notice of Funding Opportunity (NOFO) for at least $20 million in fiscal year 2023 appropriated funds for the program as well as for funds Congress may appropriate in fiscal year 2024.

In 2024, we will continue our robust work exploring ways to reduce homelessness. This will include the continuation of research begun in 2023 to learn from the American Rescue Plan (ARP)-funded interventions targeted toward ending and preventing homelessness — Emergency Housing Vouchers and the Emergency Rental Assistance program. We are also continuing to collect data to measure long-term impacts in the Family Options Study.

The following are the leading candidates for our funded homelessness research for fiscal year 2024:

• Use of HOME-ARP and state and local fiscal recovery funds for housing supply. The U.S. Department of the Treasury's Coronavirus State and Local Fiscal Recovery Funds budgeted nearly $16 billion for 2,100 projects, and HUD's HOME-ARP program funds $5 billion more. These historic investments are significantly larger than other, ongoing housing block grant programs, and this process evaluation would study how these investments affect the supply of available housing, including housing for people experiencing homelessness.

• Unsheltered and rural homelessness evaluation. In 2023, HUD awarded a total of $315 million to 46 Continuums of Care nationwide to address unsheltered homelessness and homeless encampments. This evaluation would document how this special funding is used.

Why isn't factory-built home construction more widely used in the United States?

About a year ago, PD&R published its Research Roadmap for factory-built construction research. The roadmap notes that HUD's Operation Breakthrough in the late 1960s led to the national HUD Code for manufactured housing that, at its peak in 1998, produced one-third of the nation's single-family homes and produces roughly 10 percent today. Other forms of factory-built construction methods such as modular and panelized construction are rarely used. Why not? The Research Roadmap authors believe that increasing the use of factory-built construction requires "the resolution of knowledge gaps in regulations, standards, capital, finance, and insurance" more so than "project delivery, contracts, labor, workforce, and business models." The United States can learn lessons from other countries, particularly Sweden and Japan. More opportunities for additional factory-built development are arising as many state and local governments permit higher-density development in traditional single-family-zoned neighborhoods, including expanding zoning rules to allow accessory dwelling units in many neighborhoods, which lend themselves to factory-built construction.

In 2024, PD&R will move forward with the Research Roadmap. We will be publishing research that examines the international experience and success with factory-built construction, and soon we will announce research we are supporting on reducing regulatory barriers and advancing building technologies that we solicited through a NOFO in 2023.

Subject to fiscal year 2024 funding, we expect to continue supporting more research featured in the Research Roadmap, including possible new research on reducing regulatory barriers to affordable housing and continued advances in building technology.

Of course, we also plan to host the annual Innovative Housing Showcase on the National Mall in June 2024.

Anything else?

Other research Congress may fund in fiscal year 2024 includes the following:

• Fair Housing. Testing innovative Housing Discrimination Study methodologies.

• Housing Finance.

• Missing middle financing.

• Bias in the appraisal process.

• Home repairs and sustainable homeownership.

• Climate. Assessing the impacts of climate change on Tribal communities and U.S. territories.

• Land Use. Managing land and investment in economically distressed neighborhoods.

• Centers of Excellence. We expect to receive additional funding for housing and community development research being conducted by historically Black colleges and universities (HBCUs), Hispanic-serving institutions, and (potentially new for fiscal year 2024) Tribal colleges. Even if Congress does not provide this funding, we still have $5 million in funding from fiscal year 2023 for HBCU Centers for Excellence, for which we will soon issue a NOFO.

This year will be a significant one for the American Housing Survey as we release our 2023 data, which captures the major changes in the housing market between 2021 and 2023, including the substantial increase in average rents and home values during that period. We will also collect data for the 2024 Rental Housing Finance Survey, which tracks the owners of rental housing and the financial health of that inventory.

Our housing market data and publications continue to be important sources of information as housing markets adjust to the current interest rate environment.

The coming year also includes plans for our technical assistance work. To ensure that we are well positioned to provide effective and efficient technical assistance in 2025, we plan to issue the fiscal year 2024/2025 Community Compass NOFO this year.

As always, we will keep you informed of the latest news at huduser.gov. Please subscribe to our Cityscape and Evidence Matters publications, which we release three times a year; we’ll even mail you a hard copy! You can also keep up with the latest news by signing up for email reminders.

Have a great 2024.