New Data Source Used To Calculate Proposed FY 2012 Fair Market Rents

New Data Source Used To Calculate Proposed
FY 2012 Fair Market Rents

Proposed FY2012 HUD Area 2-Bedroom Fair Market Rents Last month HUD published proposed fiscal year (FY) 2012 Fair Market Rents (FMRs) in the Federal Register, with additional details and information available at www.huduser.gov. These figures were calculated using data from the American Community Survey. An area’s FMR is the amount needed to pay the gross rent (shelter rent plus utilities) of a privately owned, decent, and safe non luxury rental unit. HUD publishes separate FMRs for each metropolitan area defined by the Office of Management and Budget as well as each nonmetropolitan county in the United States, including Puerto Rico, the Pacific Islands (Guam, Northern Marianas, and American Samoa), and the U.S. Virgin Islands.

FMRs are used to determine payment standards for the Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, initial rents for housing assistance payment contracts in the Moderate Rehabilitation Single Room Occupancy program. FMRs also serve as rent ceilings in the HOME program.

HUD is required to calculate FMRs using the most recent data available. Because calculating FMRs requires large amounts of data, HUD relies primarily on data collected by the U.S. Census Bureau. As a result, for decades nationwide data was updated once every 10 years, with additional information gathered through HUD-commissioned local rent surveys. The information collected using the decennial long-form questionnaire, including housing characteristics such as renter statistics, owner costs, and household type, was critical for calculating FMRs.

In 2005 the Census Bureau implemented a new survey, the American Community Survey (ACS) to collect new data annually. The Census Bureau constructed the ACS so that multiple annual surveys could be grouped together and published as one set of survey results, ensuring that even the smallest geographic areas have published ACS data annually. Although far fewer surveys are completed during the annual ACS than during the decennial census in years past, the annual collection of nationwide socioeconomic information allows FMRs to be based on new survey data annually instead of decennially, even for the smallest places. Because the Census Bureau did not conduct a long-form survey during the 2010 Census, the ACS has become the only consistent source of data on rents across all FMR areas and their component geographies.

In its calculation of FMRs, HUD has incorporated as much ACS data as possible, as quickly as possible. In fact, ACS data have played an ever-expanding role in the calculation of FMRs since FY 2008. The proposed FY 2012 FMRs, however, are the first to benefit from the aggregated 5-year ACS data collected between 2005 and 2009. This aggregation of ACS data provides geographic coverage at the most local level possible and allows HUD to set a new base rent for each FMR area. HUD refers to the process as “rebenchmarking.” These 5-year base rents are updated using 2009 one-year ACS data in areas where statistically valid 1-year ACS data are available, typically for the largest metropolitan areas. Data from the Consumer Price Index for rent and utilities are used to further update ACS data from 2009 to the end of 2010. A nationally calculated trend value carries the ACS-based rent calculations into FY 2012 from the end of 2010.

Incorporation of the 5-year ACS data means that the FMRs of many areas, including all areas with a population of less than 20,000 as well as some larger areas, are based on new data for the first time since the introduction of 2000 decennial census data into the calculation of the FY 2005 FMRs. Between the FY 2005 and FY 2011 FMRs, the updates made to these smaller areas' FMRs depended on the annual change in gross rents measured at the state level. The large adjustments present in the FY 2012 FMR levels result from the use of 5-year ACS data in establishing the base rents.

For more information about HUD’s Fair market rents, please visit www.huduser.gov/portal/datasets/fmr.html, and for more information about the ACS, please visit www.census.gov/acs/www.

2012 FMRs have been published and can be viewed here.