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Research [in] Brief

Research [in] Brief: For Families with Housing Vouchers, Landlords Hold the Key to "Opportunity Neighborhoods"

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    When children grow up in high-poverty neighborhoods, commonly a legacy of residential segregation by race, they are less likely to thrive as adults. One way to improve their future success is by helping their families move to neighborhoods with less poverty and more resources. But voucher programs alone won’t help.
    Topics
    Neighborhood quality
    06.01.2020

    Primary issue

    When children grow up in high-poverty neighborhoods, which more often than not are a legacy of residential segregation by race, they are less likely to thrive as adults. One way to improve children’s future success is by helping their families move to “opportunity neighborhoods”—areas with less poverty, more resources, and better schools—with housing vouchers that subsidize private-market rent. But most voucher holders do not reside in such areas, despite the benefits. One suspected reason is that landlords may screen out tenants who use vouchers.

    Key findings

    Research published by the Cleveland Fed found that landlords respond less often to applicants with vouchers than to those without. In fact, among applicants who say they will use a voucher, landlord responses are cut by half.

    Some cities have tried raising voucher payment amounts in an effort to better enable voucher holders to move into opportunity neighborhoods. Even when the amounts are raised, though, many landlords still don’t respond to these prospective tenants. Higher payments are seemingly not enough to convince more landlords to accept tenants with vouchers in such neighborhoods.

    The bottom line

    Evidence from recent studies shows that while public policies can help families access different neighborhoods, getting landlords to accept voucher tenants is necessary for policies to succeed at moving families to opportunity neighborhoods.

    A successful, large-scale policy of moving people to neighborhoods with more opportunity requires efforts to make program participation more attractive to landlords through means other than raising voucher payments alone. Lowering compliance costs, shortening inspection windows, and assisting new landlords with navigating the program are promising steps to get more landlords to say “yes” to vouchers more often.

    Want the details? Check out "Landlords and Access to Opportunity" at clevelandfed.org/wp1902r2

    Related Work

    Landlords and Access to Opportunity

    Landlords in high-opportunity neighborhoods screen out tenants using vouchers. In our correspondence experiment, signaling voucher status cuts landlord responses in half. This voucher penalty increases with posted rent and varies little with signals of tenant quality and race. We repeat the experiment after a policy change and test how landlords respond to raising voucher payment limits by $450 per month in high-rent neighborhoods. Most landlords do not change their screening behavior; those who do respond are few and operate at small scale. Our results suggest a successful, systematic policy of moving to opportunity would require more direct engagement with landlords.

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