The Department's policy is for its military members to rely on the private sector first for housing. Of those living in civilian or military family housing, about 619,000 personnel (67 percent) live in civilian housing, while about 300,000 personnel (33 percent) live in military housing. Housing Allowance Increase Will Better Satisfy Preference for Civilian Housing

According to DOD's 1999 Survey of Active Duty Personnel, 72 percent of military personnel would prefer civilian housing if costs were equal (see fig. And about 130,000 of those that prefer military housing now live in civilian housing. Department officials anticipate that increasing the housing allowance will decrease demand for military housing. On the basis of our analysis of specific attributes of military housing, personnel living in military housing were more satisfied than dissatisfied with all of the measured characteristics. Only about 26 percent of those receiving housing allowances were satisfied, while 57 percent were dissatisfied. DOD did not raise any questions or concerns about our conclusion that higher housing allowances should increase the demand for civilian housing by military personnel. We stated that “DOD should not expect a substantial increase in personnel retention solely from its initiative to increase the housing allowance.”  While we agree that increasing compensation may have a positive effect on the overall level of retention and stated so in our report, DOD does not have a problem with overall retention.
What GAO Found

Increasing the housing allowance should help satisfy servicemembers' demand for civilian housing. Of those servicemembers who receive an allowance or live in military housing, about 72 percent said that they would prefer civilian housing if the costs were the same, but only about two-thirds now live in civilian housing. Thus, if military members' housing preferences were satisfied, thousands of additional personnel would be in civilian housing instead of military housing. As the Department of Defense (DOD) increases the housing allowance during the next five years, the overall demand for civilian housing should increase, while the demand for military housing should decline. As a result, DOD should be in a better position to implement its stated policy of relying on the private sector first for housing. DOD cannot expect a substantial increase in retention solely as a result of higher housing allowances. Together, housing and housing allowances were cited by less than one percent of those surveyed as reasons for leaving the military. Overall, of those living in military housing, more were satisfied than dissatisfied. Of those living in civilian housing, a high proportion were satisfied with the homes they chose. However, 57 percent were dissatisfied with their housing allowance.