Deriving Local Trend Factors for Fair Market Rent Estimation
In the fall of 2018, PD&R tasked a multidisciplinary research team to explore ways to refine HUD’s current methodology, particularly as it relates to calculating a trend factor, to address public and Congressional concerns. The first phase (Phase I) of the study presents a statistical approach for deriving local trend factors for selected areas where local Consumer Price Index (CPI) data is available for use in the calculation of FMRs by expanding on HUD’s existing methodology for estimating a national trend factor and applying it to CPI data for the 13 metropolitan and 4 regional areas of two different size classes produced by the Bureau of Labor Statistics. The second phase (Phase II) of the report presents alternative approaches to augmenting local market conditions into calculations of FMRs for a broader range of metropolitan areas by utilizing alternative sources of data and empirical frameworks.
Learn more about Multidisciplinary Research Team (MDRT)