Reassessing the basic allowance for housing for Army personnel in a rapidly changing housing market

Abstract: Rising housing prices and inflation since 2020 have brought attention to the adequacy of the Basic Allowance for Housing (BAH) for military personnel. The authors of this report assess the adequacy of BAH and the BAH rate-setting methodology from the standpoint of Army personnel, in the context of recent changes in the housing market. The authors first assess the BAH methodology by considering the housing choices made by Army personnel and whether soldiers are making choices consistent with the way the allowance is set. They then assess the adequacy of BAH and the housing procured by members by using the 2017–2021 American Community Survey data to assess the extent to which the housing expenditures of active duty soldiers are comparable with those of income-matched civilians and civilians with comparable demographic characteristics. They also assess the extent to which there are observable differences between soldiers and civilians in neighborhood amenities across six exemplar installations. Finally, they assess the extent to which the BAH methodology adequately captured changes in housing prices, particularly given the dramatic increases in both rents and home sale prices in the years since the start of the coronavirus disease 2019 (COVID-19) pandemic.

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