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Efficiency Rent Calculation for Baltimore-Towson, MD HUD Metro FMR Area

The Efficiency FMR for Baltimore-Towson, MD HUD Metro FMR Area is computed as a function of the ratio of the 2010 5-Year Efficiency American Community Survey Rent to the 2010 5-Year 2-Bedroom American Community Survey Rent. This Efficiency Rent Ratio is applied to the Final FY 2015 2-Bedroom FMR to determine the Efficiency FMR.

The tables below provide the relevant steps for computing the Final FY 2015 Efficiency FMR:

  1. Check the Margin of Error Ratios for Baltimore-Towson, MD HUD Metro FMR Area. If either Margin of Error Ratio is greater than 1 or if there is not sufficient data to calculate the ratio, then the bedroom ratio is determined using data for the smallest geographic area encompassing Baltimore-Towson, MD HUD Metro FMR Area for which there is acceptable data.

    Check Margin of Error Ratios for Baltimore-Towson, MD HUD Metro FMR Area
    Area 2006-2010 5-Year ACS Efficiency Adjusted Standard Quality Rent Estimate 2006-2010 5-Year ACS Efficiency Adjusted Standard Quality Rent Margin of Error Efficiency Margin of Error Ratio 2006-2010 5-Year ACS 2-Bedroom Adjusted Standard Quality Rent Estimate 2006-2010 5-Year ACS 2-Bedroom Adjusted Standard Quality Rent Margin of Error 2-Bedroom Margin of Error Ratio
    Baltimore-Towson, MD MSA $665 $42 $42 / $665 = 0.0632 $988 $9 $9 / $988 = 0.0091

    The smallest geographic area for which both Margin of Error Ratios can be computed and are less than 1 is Baltimore-Towson, MD MSA.

  2. The Preliminary Efficiency Rent Ratio for Baltimore-Towson, MD HUD Metro FMR Area is caluclated by dividing the 2006-2010 5-Year ACS Efficiency Adjusted Standard Quality Rent Estimate for Baltimore-Towson, MD MSA by the 2006-2010 5-Year ACS 2-Bedroom Adjusted Standard Quality Rent Estimate for Baltimore-Towson, MD MSA.

    Preliminary Computation of Efficiency Rent Ratio for Baltimore-Towson, MD HUD Metro FMR Area
    2006-2010 5-Year ACS Efficiency Adjusted Standard Quality Rent Estimate 2006-2010 5-Year ACS 2-Bedroom Adjusted Standard Quality Rent Estimate Preliminary Efficiency Rent Ratio
    $665 $988 $665 / $988 = 0.673
  3. The Preliminary Efficiency Rent Ratio is checked against the caps and floors for that bedroom size. The floor is set at the 10th percentile of the national distribution of geographic areas with at least 100 2006-2010 5-Year ACS Adjusted Standard Quality observations, while the cap is set at the 90th percentile of the same distribution.

    Check Caps and Floors
    Baltimore-Towson, MD HUD Metro FMR Area Preliminary Efficiency Rent Ratio Efficiency Rent Ratio Floor Efficiency Rent Ratio Cap Baltimore-Towson, MD HUD Metro FMR Area Preliminary Efficiency Rent Ratio
    0.673 0.5949 0.8078 Ratio of 0.673 is subject to neither caps nor floors
  4. In order to ensure that Efficiency Fair Market Rents are not greater than the corresponding 1-Bedroom Fair Market Rent, the Efficiency Rent Ratio must be at least 0.005 less than the corresponding 1-Bedroom Rent Ratio.

    Efficiency Rent Ratio Consistency Check
    Baltimore-Towson, MD HUD Metro FMR Area Preliminary Efficiency Rent Ratio Baltimore-Towson, MD HUD Metro FMR Area 1-Bedroom Rent Ratio Efficiency Rent Ratio Comparison
    0.6731 0.7994 0.6731 <= (0.7994 - 0.005) 0.6731 <= 0.7944 Keep efficiency preliminary rent ratio
  5. Multiply the Efficiency Rent Ratio by the 2-Bedroom Fair Market Rent to determine the Efficiency Fair Market Rent for Baltimore-Towson, MD HUD Metro FMR Area.

    Final Computation of Efficiency FMR for Baltimore-Towson, MD HUD Metro FMR Area
    Final Efficiency Rent Ratio Final FY 2015 2-Bedroom FMR Final FY 2015 Efficiency FMR
    0.6731 $1,232 $1,232 * 0.6731 = $829

Prepared by the Economic and Market Analysis Division, HUD. Technical Problems or questions? Contact Us.