An analysis of the effects of military housing allowances and other military related factors on private sector rental housing prices

Abstract

Privatization of Military Family Housing will place a greater reliance on private sector rental housing. Before the DoD embarks on any policy changes that place a greater emphasis on private sector housing, the DoD must be certain that rental property landlords do not raise rental prices based on changes in a service member's housing allowances. This thesis explores the relationship between changes in military housing allowances and changes in private sector rental prices. A multiple regression model was used to determine this correlation. Department of Housing and Urban Development (HUD) Fair Market Rent data was used to measure the changes in private sector rent prices in 25 cities. Basic Allowance for Quarters (BAQ), Variable Housing Allowance (VHA) rates, and a ratio that measured the presence of military members in a given area were used as the independent variables. Using the three independent variables described above, the result did confirm the popular impression that rent prices do rise with increases in housing allowances. However, the correlation was not as significant as anticipated. In an effort to make the model more useful as a policy tool, recommendations are provided for an expanded dependent variable data source and additional independent variables.