The Section 8 Housing Assistance Payments program : an analysis of the effect of the existing housing program component on the rental market in Maryville, Tennessee

Investigation of the previous research into this issue produced mixed results. From an economic theory standpoint, such an intervention into the private market would be expected to induce rent inflation. Findings from the Experimental Housing Allowance Program and from the early evaluations of the Section 8 Existing Housing program, however, have not uncovered any significant disruptions of the local markets.

The author decided to examine the impact of the program on the Maryville market through the development of a Rent Comparison Experiment. In this experiment, Section 8 program units would be carefully matched with comparable units which were not receiving Section 8 payments and the rent levels of these matched-pairs would be analyzed. Units were matched according to the number of bedrooms, the type of structure, and location. Other factors such as square footage of the unit, assessed value, age and general condition were also considered.

The findings of the Rent Comparison Experiment showed that of the sixty matched-pairs studied, the program unit rents were higher in twenty-six cases, lower in twenty-five cases and the same in the remaining nine cases. The average program unit rented for $1.89 more per month than the average nonprogram unit. The Wilcoxan matched-pairs-signed-ranks test was used to evaluate the significance of these findings. The test showed that the minor variation in rent levels was not significant. Eleven subsets of the matched-pairs were also tested to see if the Section 8 Existing Housing program was impacting specific submarkets in Maryville. Nine of the subsets produced negative findings, but two of them, the three-bedroom units and the program units matched with identical nonprogram units, were found to exhibit significantly different rent levels. The test of the three-bedroom units showed that the program units were renting for significantly more than the nonprogram units, while the test of the "identical" matched-pairs showed that the program units were renting for less than their private market counterparts.

The overall effect of the Section 8 Existing Housing program in Maryville, Tennessee is negligible. Two submarkets have been identified as being affected by the program, but since these impacts are in opposite directions, they tend to offset one another. The study has allayed the author's concerns about the program, and has shown that the Section 8 Existing Housing program can be a useful tool in providing assisted housing opportunities to lower-income households.