Rising rental costs in Montana driving need for assistance

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Posted at 7:05 AM, Oct 04, 2022

HELENA — In response to rising housing costs across the country, the federal government has announced it’s raising “fair market rents,” which determine how much programs like the Section 8 Housing Choice Voucher can cover.

Fair market rents are an estimate, updated every year, of how much money would be needed to cover rent and utility costs on 40 percent of rental units in an area. Nationwide, the U.S. Department of Housing and Urban Development says it increased them by about 10% for the 2023 fiscal year, which went into effect Oct. 1.

The specific fair market rents are different in every county and vary based on the size of home. For a two-bedroom apartment in Lewis and Clark County, the amount went up from $923 a month last year to $1,003 this year. In Cascade County, it went from $849 a month to $914.

The Housing Choice Voucher program covers part of the cost for eligible families and individuals to rent housing from private landlords. The participants typically pay 30% of their monthly income, and the voucher money covers the rest – but only up to a “payment standard,” based on the fair market rent. That means more expensive housing can be out of reach.

Michael O’Neil is executive director of the Helena Housing Authority, which administers voucher programs for Lewis and Clark, Broadwater and Jefferson Counties. He says, if the amount available through those vouchers doesn’t keep up with the market, families can get out-competed by others looking at the same housing.

“The fair market rents and payment standards are kind of the tail behind rises in rents,” he said. “So when we’ve seen rapid rent increases, we’ve been in kind of a tough situation.”

O’Neil said fair market rents have generally remained flat in recent years, and they actually declined last year. This increase is the biggest he’s seen in a long time.

“That’s going to make a difference for folks,” he said. “An extra hundred dollars will go a long way.”

This year’s increases came after HUD updated its process – using additional data to get a better picture of market conditions.

“Housing affordability is an issue that affects countless people in our region and across the nation,” said Dominique Jackson, HUD’s Rocky Mountain Region administrator, in a statement to MTN. “To address this issue, HUD -- for the first time -- used private data sources to supplement public data in calculating this year’s Fair Market Rent rates. This resulted in historic FMR rate increases that keep up with the rising rents we see across the country. This means that more housing voucher holders in Lewis and Clark County will have the opportunity to make the dream of a stable and affordable home a reality.”

O’Neil says the department has also agreed to continue a waiver for Lewis and Clark County, allowing them to set their payment standard at 120% of the fair market rent, instead of the standard 110%. That waiver is based on the fact that some current voucher holders haven’t been able to use theirs because of limited housing supply and rising prices.

If the waiver hadn’t been extended, the 10% decrease in the payment standard would have essentially wiped out the increase in fair market rents.

“If a voucher can’t be used, that’s a real tragic situation,” O’Neil said. “Families are on waiting lists often for 18 months, two years, and they’re very excited – ‘We finally came to the top of the list and maybe we can get a chance to afford a home.’ If you can’t find a place to rent, that’s not a success. I think with these increases, we’ll be able to have more successful placement of vouchers.”

O’Neil says the Helena Housing Authority has updated their systems to make it easier for people to get on their wait lists, and to check where they are on those lists. You can find more information on how to apply for their programs on their website.

“I always say to folks, ‘Waiting lists do not get shorter if you’re not on them,” O’Neil said.

For those in other parts of the state, you can find information on the Housing Choice Voucher program on the Montana Department of Commerce website.

O’Neil said the success of the Housing Choice Voucher program is also thanks to landlords who work with the program. He said they’re grateful for those who participate, and they hope the increase in fair market rents will help cover their rising costs as well.

“The other part of having competitive payment standards, competitive fair market rents, is that I think it encourages investors and developers to come in and build additional rental properties, and I think that’s what we’re seeing,” he said.