Commentary: Housing markets tight for military communities

The inability of homebuilders to secure construction loans in this weak economy, combined with major force realignments from Europe and other areas, has created housing shortages for families at many large stateside military bases, the Government Accountability Office reports.

The housing squeeze, which impacts at least 19 bases, isn’t going to be relieved anytime soon and will worsen in some areas, GAO explains in a new audit report on the effectiveness of rate-setting under the Basic Allowance for Housing (BAH) program.

“Adequate and affordable” housing for military families is in short supply at three quarters of bases identified as “growth” installations because they have gained, or will gain, at least 2000 personnel under long-planned shifts in U.S. force structure.

The shortage of family housing to rent in surrounding communities exceeds 20 percent at some stateside bases.

The policy of the department over the last two decades has been to rely largely on local communities to build housing for base populations. They are incentivized to do so through housing privatization and build-to-lease agreements with local bases.

But recent economic conditions “have made it difficult for developers to obtain funding for new construction projects…particularly for multifamily rental housing projects,” GAO reports. This is particularly true around bases experiencing frequent troop deployments for wars in Iraq and Afghanistan. The constant turnover leaves many lenders uncertain about occupancy rates and income streams from proposed or new constructed projects.

GAO found significant housing “deficits” for families at four of the five bases that its own auditors visited for its report on BAH rates. Cannon Air Force Base, projects a 20-percent family housing shortage (530 units) for its expanding base population. The shortage will be aggravated by growth in the civilian labor force expected from major base construction projects. Occupancy rates for rental housing in the community exceeded 99 percent in 2010 and 2011, with high demand reported “for even inadequate housing units on base” and off base rental in “less desirable areas.” Rents are higher than monthly BAH rates for many members.

Fort Drum, N.Y., reports a shortage of 1,700 family housing units, and increasing numbers of soldiers are relocating there without families so they can rent smaller units or share housing with other members. More soldiers can only find affordable housing 30 to 40 miles from post.

The services are using a variety of “tools” to address their housing challenges including housing privatization projects and closer collaboration between installations and communities, GAO says. But auditors criticize the DoD for lacking a “formal communication process” to share information between installations on what’s available and working to ease shortages.

BAH rates are set using local cost surveys of rent, utilities and rental insurance for particular types of housing deemed appropriate for each pay grade, with and without dependents. On average, more than 75 percent of BAH covers actual rent and more than 20 percent covers utilities, with renter’s insurance accounting for the remaining costs.