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Abstract
How the recent U.S. foreclosure crisis affected federal housing mobility programs has not been well studied. This article explores the crisis’s impact on low-income renters receiving Section 8 vouchers in Phoenix, Arizona. We find that (a) 8% of voucher holders lived in homes that underwent foreclosure, (b) they were in comparably affluent neighborhoods, and (c) most eventually moved after foreclosure. Yet, those who moved after foreclosure were not overtly disadvantaged in the housing market. This unexpected finding may be explained by the opening up of new housing opportunities for voucher holders as foreclosures in more affluent areas were converted to rentals. Overall, this research suggests that the foreclosure crisis did not adversely affect the Section 8 program’s goal of deconcentrating poverty in Phoenix and may have even advanced it—a dynamic potentially occurring in other formerly booming and economically distressed Sunbelt regions.
Acknowledgements
We are grateful to Michael Orr of ASU’s Center for Real Estate Theory and Practice and Elizabeth Morales and other staff at the city of Phoenix Housing Department for helping us to access the real estate transaction and voucher holder data.
Notes
1. Determining the occupancy status of foreclosures is difficult because single-family home rentals are often mistakenly classified as owner occupied (Dobies & Halasz, Citation2010). Moreover, due to incidences of rental fraud that displace tenants prior to foreclosure, these numbers might underrepresent renters affected by foreclosure (Been & Glashausser, Citation2008).
2. The number of renter households grew by more than 5 million during the 2000s. An additional million renter households were added each year in the early 2010s, which is much higher than the typical 400,000 annual additions in earlier decades (Joint Center for Housing Studies, Citation2013b). The flooding of renters into the market, many of them extremely low-income households earning 30% or less of the region’s median income, led to sharp decreases in rental vacancies and increasing rents in some regions. The gap between the number of extremely low-income renters and the number of homes affordable and available to them grew from 1.9 to 4.9 million between 2001 and 2011 (Joint Center for Housing Studies, Citation2013a).
3. Most Section 8 leases in Phoenix span 1 year. The 1 month lag accounts for typical delays in lease renewal and the tendency for foreclosure proceedings to begin before a trustee’s deed is formally recorded by the county.
4. The relatively long distances that tenants moved may be a function of various factors, including the automobile-centric sprawl of the Phoenix region, their reduced attachment to their communities, or heated competition for housing in their origin neighborhoods (Reagor, Citation2010). Median rents increased about 8% controlling for inflation in the city of Phoenix from 2005 to 2009 (U.S. Census, Citation2005, Citation2009). Rentals were especially scarce in communities such as Maryvale on the city’s west side, which had a high concentration of Section 8 tenants during the first half of the study period (O’Dell & Reagor, Citation2012).
5. Voucher holders who moved into investor-purchased foreclosures after experiencing foreclosure had slightly shorter residencies than those who did not move into investor-purchased foreclosures after experiencing foreclosure (415 days vs. 442 days). However, this difference was not statistically significant at the 5% level.