It’s that time of year again – the Defense Department yesterday released the magical list of who will getting more and less Basic Allowance for Housing (BAH) in 2013.
Overall, the news is good – an average increase of 3.8 percent across the board — almost double what we got last year! Some areas saw even bigger gains (like New York City) and some places will see sizable decreases (like Monterey, Calif.) — but overall, the rates are going up, according to this story.
Before we go any further, here’s a little reminder of how BAH rates work:
If you already live in a place with a rate set to increase such as, say, Fort Campbell, Ky., your paycheck will reflect the increase. If you’re set to move there next year, you will also receive the higher rate.
If you live in a place with a rate about to go down, don’t worry – you won’t experience the decrease. If you’re moving in 2013 to a new area whose rate just went down, however, you will get the lower rate.
Make sense?
So who were the big losers and winners this year?
Well, sadly for those of you who are about to PCS to Monterey, Calif., the rate there is going to drop an average of 7.5 percent. That’s a drop of $39 a month for an E-4 with dependents and a drop of almost $290 a month for a 0-3 with dependents … no small potatoes.
Other places to see less sizable decreases include Portsmouth, N.H./Kittery, Me., (average 5.6 percent drop), Fort Stewart, Ga. (average 3.4 percent drop) and Twentynine Palms, Calif. (average 5 percent drop).
The people this really hurts, of course, are military homeowners attempting to cover their mortgage (which is likely more in step with the old rates) by renting to new-to-the-area military families, who are receiving the new rate. The renter isn’t going to want to pay more than his BAH (and likely less than it in an attempt to cover his utilities). And you can’t rent you home out for anything below your mortgage payment, if even that low. Someone is going to get hurt here – and I don’t really see a good solution to the problem.
And now for the fun part: who is going to score more money? I am happy to report that this household will be banking a $103 increase (w00t! … because you care). But the folks who are really lucking out, especially if they are locked into a rental price tied to the current rate, are those in New York City, at Shaw Air Force Base, S.C. and at Altus Air Force Base, Okla. with average bumps of 14.1, 12 and 14 percent respectively.
So you’re probably wondering a few things. First, what makes the rates go up, or down for that matter? Well, the DoD BAH folks say they calculate rates based on an annual survey of prices in a certain area surrounding each base. The decision to raise or lower the rates is based on how the cost of living in that area has risen or fallen in the last year. If the area experiences a housing shortage because of a flood, population growth the rates will increase accordingly. If there is a housing surplus – well, you get the idea. T
hat is exactly what happened last year at Minot Air Force Base where rates jumped almost 40 percent. A major flood combined with a big oil boom left the town in desperate need of more housing. Demand went up, supply went down, and value of the product increased – the principles of basic economics before our very eyes.
Second question: why is it that some ranks receive a greater increase or decrease than others. For example, an 0-3 at Fort Benning, Ga. will receive an increase next year of about $100, while an E-4 will receive an increase of $114 … yet at Monterey, Calif., the E-4 is only losing $39, while the 0-3 is losing $270.
Huh?
The answer lies, again, in the surveys. A portion of that data used by the DoD to determine the rates is made-up of survey responses from military members living around the base. Family size and how much they are currently paying in rent are some of the factors taken into consideration. If you are really curious about the complete breakdown, our pal Kate over at Paycheck Chronicles explains it really well. Judging by the results, 0-3s in Monterey indicated that they were paying well below the current BAH levels, while E-4s indicated that they were paying, on average, only slightly below.
You can find all the details on your own new rates over here on Military.com.
How did you come out in this year’s BAH release?
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Comments
My husband is an E-6 and we are losing $72 this year. That just sucks.
No you aren't. Rates are locked from going down unless you have a change in status
Melissa — good news! As the story notes, you aren't losing anything :-). If you are already there you keep what you make. You only need to worry if moving somewhere new.
We are E7 in Fairbanks, AK. Our BAH went up by $3. I guess I could have bought a mocha, but since we live on post, I would just have to give it to housing…:-)
We are an E-6 family, with 4 children and I am currently a stay at home mom, we are in the San Diego area, Cali is expensive especially San Diego,.However, although not by much, our rate went down as well. I don't know all the logistics of how they get there Data, but I do know that my sister and brother in law live in the Fort Campbell area and the costs of living there is much, much, lower then San Diego, how is it that there rate increased and ours decreased? Hmmmm would love to see the paper work on this stuff.
Just remember — YOUR rate didn't actually do anything. You're locked in! Those people who are PCSing there soon, however … not so much. And as for Fort Campbell, my lovely home (ahem) … well, I cant explain. But there is a link in the story above to just how they figure these numbers. check it out!
Ft. Campbell is getting pretty built up right now. Home prices are increasing which means rent will increase to.
I agree. We are at fort knox and it has gone up each year we have been here. We went from having to live on post to moving into a beautiful new apartment complex and it just keeps growing, which means rental rates keep growing. Thus, rates go up.
We're an E5 family with 2 kids at Fort Bragg and ours stayed the same. It didn't go up or down. I'm thankful that it didn't decrease, but it's always nice to see a raise, even if its small. :-).
I agree with you, Nina, families in CA have a much larger burden as far as living expenses go. It doesn't make sense to me either. But alas, we're thrifty women who know how to stretch a budget no matter what, so keep on keepin' on!
FYI! Copied from an article pertaining to 2013 BAH rates "In areas where rates will decrease, the decrease will only apply to members newly reporting to those locations. Members are protected by individual rate protection which ensures that those already assigned to a given location will not see their BAH rate decrease, however, they will receive the increase if the rate goes up. This assures that members who have made long-term commitments in the form of a lease or contract are not penalized if the area's housing costs decrease"
And the story above says just that :-)
Some of the responders didn't appear to understand that aspect.
It's confusing, so it's all good :-) Mostly I just said that so that future readers (hello future readers!!) would go back to the post for a looksie :-)
We are moving to Joint Base Pearl Harbor – Hickham and thankfully the BAH has gone up. Whew!