DoD’s average housing subsidy sees big increase as real estate continues to get pricier
The average amount of housing subsidies the Defense Department will give out to service members in 2022 is increasing substantially compared to previous years.
The Pentagon says the mean increase of basic allowance for housing (BAH) will go up by 5.1{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, a wide jump from the past two years, which have averaged just below 3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. DoD will spend $25.6 billion on BAH for 2022.
Depending on grade and dependency status, service members will see BAH go up by a range of $74 to $168. Allowances will not decrease.
“The department is committed to the preservation of a compensation and benefit structure that provides members with an adequate standard of living to sustain a trained, experienced, and ready force now and in the future,” DoD wrote in a Wednesday press release.
It’s important to note that the BAH increase is only an average. Some service members may not see the full 5.1{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} increase; others could see allowances even higher than that.
“The Department collects rental housing cost data annually for approximately 300 military housing areas in the United States, including Alaska and Hawaii,” the release states. “Median current market rent and average utilities (including electricity, heat, and water/sewer) comprise the total housing cost for each military housing area and are included in the BAH computation. Total housing costs are developed for six housing profiles (based on dwelling type and number of bedrooms) in each military housing area. BAH rates are then calculated for each pay grade, both with and without dependents.”
Part of the reason for the hefty increase in BAH may be because housing and rental prices rose in 2021 and 2020.
According to Redfin, a real estate brokerage firm, the median sales price for a house increased by 13.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} when comparing settlements from October 2020 to October 2021. Sales prices increased 14{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} from October 2019 to October 2020.
Meanwhile, the number of homes for sale is down nearly 18{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, and 44.3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of houses sold over their listing price.
The housing market became so competitive last year that DoD temporarily increased BAH in 56 areas for the last quarter 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 DoD September release read.
The 2022 BAH rate supersedes those temporary increases.
According to Redfin, some of the areas with the fastest growing sales prices are cities in Florida and Arizona, as well as Detroit. The military has multiple bases in all of those areas.
Lawmakers have recently had some concerns about BAH. The 2022 Defense Authorization Act requires a report from DoD on whether BAH is sufficient enough for an average military family.
