DoD temporarily raising housing subsidies for some troops as markets continue to climb

Defense

DoD temporarily raising housing subsidies for some troops as markets continue to climb

Some troops could get as much as a 20% hike. The benefits would last from Oct. 1 to the end of the year.

Scott Maucione@smaucioneWFED

September 27, 2021 12:08 pm

2 min read

The United States is seeing a spike in housing prices and the Defense Department is taking action after concerns that its service members may not be able to afford homes when moving to new orders.

The Pentagon announced it will raise basic allowance for housing (BAH) benefits for service members in 56 housing markets for troops who have incurred extra costs. The benefits are only accessible if a service member applied for them and will last from Oct. 1 to the end of the year.

“Rental housing market data collected by the Department of Defense from March-August 2021 indicates that the COVID-19 pandemic has had a significant impact on rental housing costs in the 56 affected markets. Notably, low availability and turnover of rental housing stock during the spring and summer months led to rental cost increases in many locations,” a statement from DoD reads.

“To help ease the financial burden of rising housing costs facing service members moving to new duty stations or signing new leases, the Department moved quickly to assess market changes across the U.S., develop a list of the most affected markets, and evaluate and implement potential solutions.”

Members who may receive the benefit will receive an email in the coming days about how to apply for higher rates.

DoD said those higher rates will be replaced by a readjusted BAH starting in 2022.

Because not all segments of a housing market increase or decrease at the same rate, the BAH rates for calendar year 2022 (effective as of the first of January) may differ from the temporarily increased 2021 rates,” the Pentagon said. “In some cases, 2022 BAH rates may be more than the temporarily increased 2021 BAH rates. In other cases, the 2022 BAH rates may be the same or may be less. BAH rate protection, which normally protects members from decreases in housing market costs, does not apply to temporary rate increases. Therefore, members should not assume these rate increases will continue into 2022.”

Areas eligible for the highest increases include Twenty Pine Palms in California, Eglin Air Force Base in Florida and two areas in Idaho. Service members in those areas can receive a 20% increase in BAH.

Areas in the 15% tier include Helena, Montana; Lubbock, Texas; and Sacramento, California.

The lowest, and most abundant tier, gives service members a 10% increase in BAH and include Savannah, Georgia; Portland, Maine; and Albuquerque, New Mexico.

The United States has seen a significant spike in housing and rental prices over the past year. According to Redfin, a real estate brokerage, U.S. housing prices increased 16.2% in August 2021 compared to the year before.

Some of the places with the fastest growing sales price include Round Rock, Texas; Detroit, Michigan; and Boise, Idaho. Arizona also had four cities in the top 10 for fastest growing sales prices.

At the same time, housing supply is down 26.1% compared to August 2020, while housing demand is up nearly 20%.

Some of the most competitive cities overlap with the BAH increases, like areas in Washington state and northern California.