A local Random Digit Dialing (RDD) survey of recent mover rents was completed for Puerto Rico HUD Nonmetro Area in December, 2005. The result was applied to the FMR for Puerto Rico HUD Nonmetro Area. HUD uses the results of a HUD-conducted local RDD to adjust the FMR if the evaluated rent based on the regular update factor is outside of the 95 percent confidence interval for the forward-trended RDD result.
A monthly change factor is calculated in order to deflate the 2005 Intermediate Rent of $295 to December, 2005 in order to assess the RDD survey conducted in 2005. This is accomplished by taking the 18th root of the normal June, 2005 to December, 2006 update factor of 1.0713 using Regional CPI Information.
monthly change = 1.07131/18
monthly change = 1.07130.0556
monthly change = 1.0038
The 2005 Intermediate Base rent for Puerto Rico HUD Nonmetro Area is then deflated to December, 2005 using 1 months of growth for use in comparison to the RDD result of $342. The 2005 deflated intermediate rent is calculated as $295 x 1.0038-1 = $294. The following table enumerates the evaluation of the RDD Result:
| December, 2005 RDD Evaluation for Puerto Rico HUD Nonmetro Area | ||||
|---|---|---|---|---|
| June 2005 Intermediate Rent |
June 2005 to December, 2005 Updated Rent for Comparison |
December, 2005 RDD Result |
December, 2005 RDD Error |
Decision |
| $295 | $294 | $342 | +/-$38 | Is ABS($342-$294)>$38? Is $48>$38? Yes RDD Result Used |
Therefore, the December, 2005 RDD Result of $342 is inflated to December of 2006 using the monthly update factor for 19 months. The 2006 Intermediate rent for Puerto Rico HUD Nonmetro Area is then computed as follows:
= $342 x 1.003819
= $342 x 1.0754
= $368
This yields an effective June 2005 - December 2006 change factor for Puerto Rico HUD Nonmetro Area of $368 / $295 = 1.2475
NOTE: Intermediate figures may not sum due to rounding. Also, update factors presented here may not precisely match the "6/2005 to 2006 Update Factor" on the Final FY 2008 FMR summary page due to rounding of FMRs to whole dollar amounts.
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