Fair Market Rent Calculation Methodology
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Fair Market Rents for metropolitan areas and non-metropolitan FMR areas are developed as follows:
2011-2015 5-year American Community Survey (ACS) estimates of 2-bedroom adjusted standard quality gross rents calculated for each FMR area are used as the new basis for FY2018 provided the estimate is statistically reliable. For FY2018, the test for reliability is whether the margin of error for the estimate is less than 50% of the estimate itself and whether the ACS estimate is based on at least 100 survey cases. HUD does not receive the exact number of survey cases, but rather a categorical variable known as the count indicator indicating a range of cases. An estimate based on at least 100 cases corresponds to a count indicator of 4 or higher.
If an area does not have a reliable 2011-2015 5-year, HUD checks whether the area has had at least minimally reliable estimate in any of the past 3 years, or estimates that meet the 50% margin of error test described above. If so, the FY2018 base rent is the average of the inflated ACS estimates.
If an area has not had a minimally reliable estimate in the past 3 years, the estimate State for the area's corresponding metropolitan area (if applicable) or State non-metropolitan area is used as the basis for FY2018.
HUD calculates a recent mover adjustment factor by comparing a 2015 1-year 40th percentile recent mover 2-bedrooom rent to the 2011-2015 5-year 40th percentile adjusted standard quality gross rent. If either the recent mover and non-recent mover rent estimates are not reliable, HUD uses the recent mover adjustment for a larger geography. For metropolitan areas, the order of geographies examined is: FMR Area, Entire Metropolitan Area (for Metropolitan Sub-Areas), State Metropolitan Portion, Entire State, and Entire US; for non-metropolitan areas, the order of geographies examined is: FMR Area, State Non-Metropolitan Portion, Entire State, and Entire US. The recent mover adjustment factor is floored at one.
HUD calculates the appropriate recent mover adjustment factor between the 5-year data and the 1-year data and applies this to the 5-year base rent estimate.
Rents are calculated as of 2016 using the relevant (regional or local) change in gross rent Consumer Price Index (CPI) from annual 2015 to annual 2016.
All estimates are then inflated from 2016 to FY2018 using a trend factor based on the forecast of gross rent changes through FY2018.
FY2018 FMRs are then compared to a State minimum rent, and any area whose preliminary FMR falls below this value is raised to the level of the State minimum.
FY2018 FMRs may not be less than 90% of FY2017 FMRs.
The results of the Fair Market Rent Step-by-Step Process
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The following are the 2015 American Community Survey 5-year 2-Bedroom Adjusted Standard Quality Gross Rent estimate and margin of error for Garfield County, OK.
Since the ACS2015 Margin of Error Ratio is less than .5, the ACS2015 Garfield County, OK value is used for the estimate of 2-Bedroom Adjusted Standard Quality Gross Rent:Area ACS2015 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent ACS2015 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent Margin of Error Ratio Sample Size Category Result Garfield County, OK $633 $20 $20 / $633=0.032 5 0.032 < .5
5 ≥ 4
Use ACS2015 5-Year Garfield County, OK 2-Bedroom Adjusted Standard Quality Gross RentArea FY2018 Base Rent Garfield County, OK $633 -
A recent mover adjustment factor is applied based on the smallest area of geography which contains Garfield County, OK and has an ACS2015 1-year Adjusted Standard Quality Recent-Mover estimate with a Margin of Error Ratio that is less than .5.
Area ACS2015 1-Year Adjusted Standard Quality Recent-Mover Gross Rent ACS2015 1-Year Adjusted Standard Quality Recent-Mover Gross Rent Margin of Error Ratio Sample Size Category Result Garfield County, OK – 2 Bedroom N/A N/A N/A N/A No ACS2015 1-Year 2-Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For Garfield County, OK Garfield County, OK – All Bedroom N/A N/A N/A N/A No ACS2015 1-Year All Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For Garfield County, OK Oklahoma Non-metropolitan Portion – 2 Bedroom $670 $18 0.027 6 0.027 < .5
6 ≥ 4
Use ACS2015 1-Year Non-metropolitan Portion 2-Bedroom Adjusted Standard Quality Recent-Mover Gross RentThe smallest area of geography which contains Garfield County, OK and has an ACS2015 1-year Adjusted Standard Quality Recent-Mover estimate with a Margin of Error Ratio that is less than .5 and with a sufficient number of sample cases is the Oklahoma Non-metropolitan Portion.
- The calculation of the relevant Recent-Mover Adjustment Factor for Garfield County, OK is as follows:
ACS2015 5-Year Area ACS2015 5-Year 40th Percentile Adjusted Standard Quality Gross Rent ACS2015 1-Year 40th Percentile Adjusted Standard Quality Recent-Mover Gross Rent Oklahoma Non-metropolitan Portion – 2 Bedroom $597 $670 Area Ratio Recent-Mover Adjustment Factor Garfield County, OK $670 / $597
=1.1221.122 ≥ 1.0 Use calculated Recent-Mover Adjustment Factor of 1.122 -
The calculation of the relevant CPI Update Factors for Garfield County, OK is as follows:
HUD updates the 2015 intermediate rent with the ratio of the annual 2016 local or regional CPI to the annual 2015 local or regional CPI to establish rents as of 2016.
Update Factor Type CPI Update Factor 1.0194 Region CPI -
The calculation of the Trend Factor is as follows: HUD forecasts the change in national gross rents from 2016 to 2018. This makes Fair Market Rents "as of" FY2018.
National Trend Factor 1.0589 - The FY 2018 2-Bedroom Fair Market Rent for Garfield County, OK is calculated as follows:
Area ACS2015 5-Year Estimate Recent-Mover Adjustment Factor Annual 2015 to 2016 CPI Adjustment Trending 1.0589 to FY2018 FY 2018 2-Bedroom FMR Garfield County, OK $633 1.122 1.0194 1.0589 $633 * 1.122 * 1.0194 * 1.0589=$767 -
In keeping with HUD policy, the preliminary FY 2018 FMR is checked to ensure that is does not fall below the state minimum.
Area Preliminary FY2018 2-Bedroom FMR FY 2018 Oklahoma State Minimum Final FY2018 2-Bedroom FMR Garfield County, OK $767 $697 $767 ≥ $697 Use Garfield County, OK FMR of $767 -
Bedroom ratios are applied to calculate FMRs for unit sizes other than two bedrooms.
Click on the links in the table to see how the bedroom ratios are calculated.
FY 2018 FMRs By Unit Bedrooms Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY 2018 FMR $489 $587 $767 $1,093 $1,325 -
The FY2018 FMR must not be below 90% of the FY2017 FMR.
Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY2017 FMR $457 $554 $707 $1,002 $1,246 FY2017 floor $411 $499 $636 $902 $1,121 FY 2018 FMR $489 $587 $767 $1,093 $1,325 Use FY2017 floor for FY2018? No No No No No
Final FY2018 Rents for All Bedroom Sizes for Garfield County, OK
The following table shows the Final FY 2018 FMRs by bedroom sizes.
| Final FY 2018 FMRs By Unit Bedrooms | |||||
|---|---|---|---|---|---|
| Efficiency | One-Bedroom | Two-Bedroom | Three-Bedroom | Four-Bedroom | |
| Final FY 2018 FMR | $489 | $587 | $767 | $1,093 | $1,325 |
The FMRs for unit sizes larger than four bedrooms are calculated by adding 15 percent to the four bedroom FMR, for each extra bedroom. For example, the FMR for a five bedroom unit is 1.15 times the four bedroom FMR, and the FMR for a six bedroom unit is 1.30 times the four bedroom FMR. FMRs for single-room occupancy units are 0.75 times the zero bedroom (efficiency) FMR.