Written by: Sarah E. Drysdale, University of Kentucky Family and Consumer Sciences Agent; Kristen Jowers, M.S.; & Nichole Huff, Ph.D, CFLE
Frequent relocations mean that military families make housing decisions more frequently than their civilian counterparts. Finding affordable and available housing can be challenging for families as they navigate a long list of “to-do’s” in their transition preparations (packing, enrolling in school, identifying new care providers, etc.).
Housing Market Concerns
It is often a significant stressor for military families to find affordable and available housing, especially with high inflation rates over the past two years. There is a shortage of affordable housing in the housing market resulting in high rental and mortgage prices. According to the U.S. Census Bureau, the median cost of housing for renters has risen from $1,354 to $1,406. In 2023, the national average for a starter home was around $196,611. If on-base housing is limited, and affordable housing options are further away, it could add to transportation expenses, longer commutes, and school/child care impacts for military families.
Interest rates also impact the affordability of off-installation housing. According to the Consumer Financial Protection Bureau (2024), mortgage interest rates rose over 5 points from the 2.65% low in January 2021 to the peak of 7.79% in October 2023. While interest rates were lower as of September 2024 (6.2%), higher interest rates make housing less affordable. As more resources are allocated to housing expenses, there may be less available to absorb a financial shock.
Temporary Lodging and Making Moves Easier
The confluence of inflation, availability of affordable housing, and mortgage interest may prolong the housing search for some families. Temporary housing costs, in conjunction with other fees (e.g., moving multiple vehicles, potential deposits or HOA fees, etc.) can add up quickly and may contribute to financial stress. To help with the costs associated with relocations, several initiatives are now in place to make moves easier for military families. Military families who may not immediately find housing when they arrive at their new location can now be reimbursed for up to 21 days of Temporary Lodging Expenses. A Temporary Lodging Allowance is also permitted for up to 60 days for Service members and their dependents.
Pet relocation expenses are also now reimbursable for up to one pet. While housing costs may be location-specific, the Basic Allowance for Housing (BAH) rates increased in 2024. The allowance is determined by the housing costs anticipated for the geographic area (including average utility costs) and will result in an estimated $27.9 billion dollars paid to Service members this year.
As you assist military families in navigating the housing conditions in your area, this Extension resource, Homebuyer’s Resource Guide: Home Ownership Made Easier from the University of Missouri Extension can help military families plan for a housing transition including weighing the pros and cons of renting vs. buying. Service providers can learn more about the VA home loan benefit to support military families who choose home ownership by watching the on-demand OneOp webinar, Military Home Buying Basics and VA Loans.
References
Consumer Financial Protection Bureau. (2024, September 17). Data Spotlight: The Impact of Changing Mortgage Interest Rates. https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-the-impact-of-changing-mortgage-interest-rates/
Kentucky Commission on Military Affairs. Kentucky General Assembly Military and Veterans Legislation. https://kcma.ky.gov/Legislation/Pages/default.aspx
U.S. Department of Defense. (2023). DoD Releases 2024 basic allowance for housing rates. https://www.defense.gov/News/Releases/Release/Article/3617400/dod-releases-2024-basic-allowance-for-housing-rates
U.S. Department of Defense. (2024). Secretary of Defense Announces Seven New Initiatives to Enhance Well-Being of Military Force and Their Families. https://www.defense.gov/News/Releases/Release/Article/3904786/secretary-of-defense-announces-seven-new-initiatives-to-enhance-well-being-of-m/
Photo credit: LIGHTFIELD STUDIOS/Adobe Stock
