Fair Market Rent Calculation Methodology
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Fair Market Rents for metropolitan areas and non-metropolitan FMR areas are developed as follows:
2012-2016 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 FY2019 provided the estimate is statistically reliable. For FY2019, 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 2012-2016 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 FY2019 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 FY2019.
HUD calculates a recent mover adjustment factor by comparing a 2016 1-year 40th percentile recent mover 2-bedrooom rent to the 2012-2016 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 2017 using the relevant (regional or local) change in gross rent Consumer Price Index (CPI) from annual 2016 to annual 2017.
All estimates are then inflated from 2017 to FY2019 using a trend factor based on the forecast of gross rent changes through FY2019.
FY2019 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.
FY2019 FMRs may not be less than 90% of FY2018 FMRs.
The results of the Fair Market Rent Step-by-Step Process
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The following are the 2016 American Community Survey 5-year 2-Bedroom Adjusted Standard Quality Gross Rent estimate and margin of error for Benton County, MS HUD Metro FMR Area.
Area ACS2016 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent ACS2016 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent Margin of Error Ratio Sample Size Category Result Benton County, MS HUD Metro FMR Area $487 $35 $35 / $487=0.072 1 1 < 4
Check for reliable local ACS estimates from previous years
Since 3 of 3 ACS estimates are minimally reliable, the base rent is the average of those estimates, with each estimate first inflated to 2016 dollars (not shown).ACS2016 5-year Estimate ACS2016 5-year Error ACS2016 5-year Estimate Minimally Reliable? ACS2015 5-year Estimate ACS2015 5-year Error ACS2015 5-year Estimate Minimally Reliable? ACS2014 5-year Estimate ACS2014 5-year Error ACS2014 5-year Estimate Minimally Reliable? $487 $35 $35 / $487=0.072 $503 $51 $51 / $503=0.101 $506 $66 $66 / $506=0.13 Area FY2019 Base Rent Benton County, MS HUD Metro FMR Area $509 -
A recent mover adjustment factor is applied based on the smallest area of geography which contains Benton County, MS HUD Metro FMR Area and has an ACS2016 1-year Adjusted Standard Quality Recent-Mover estimate with a Margin of Error Ratio that is less than .5.
Area ACS2016 1-Year Adjusted Standard Quality Recent-Mover Gross Rent ACS2016 1-Year Adjusted Standard Quality Recent-Mover Gross Rent Margin of Error Ratio Sample Size Category Result Benton County, MS HUD Metro FMR Area – 2 Bedroom N/A N/A N/A N/A No ACS2016 1-Year 2-Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For Benton County, MS HUD Metro FMR Area Benton County, MS HUD Metro FMR Area – All Bedroom N/A N/A N/A N/A No ACS2016 1-Year All Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For Benton County, MS HUD Metro FMR Area Memphis, TN-MS-AR MSA – 2 Bedroom $796 $33 0.041 6 0.041 < .5
6 ≥ 4
Use ACS2016 1-Year Memphis, TN-MS-AR MSA 2-Bedroom Adjusted Standard Quality Recent-Mover Gross RentThe smallest area of geography which contains Benton County, MS HUD Metro FMR Area and has an ACS2016 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 Memphis, TN-MS-AR MSA.
- The calculation of the relevant Recent-Mover Adjustment Factor for Benton County, MS HUD Metro FMR Area is as follows:
ACS2016 5-Year Area ACS2016 5-Year 40th Percentile Adjusted Standard Quality Gross Rent ACS2016 1-Year 40th Percentile Adjusted Standard Quality Recent-Mover Gross Rent Memphis, TN-MS-AR MSA – 2 Bedroom $765 $796 Area Ratio Recent-Mover Adjustment Factor Benton County, MS HUD Metro FMR Area $796 / $765
=1.0411.0405 ≥ 1.0 Use calculated Recent-Mover Adjustment Factor of 1.0405 -
The calculation of the relevant CPI Update Factors for Benton County, MS HUD Metro FMR Area is as follows:
HUD updates the 2016 intermediate rent with the ratio of the annual 2017 local or regional CPI to the annual 2016 local or regional CPI to establish rents as of 2017.
Update Factor Type CPI Update Factor 1.0323 Region CPI -
The calculation of the Trend Factor is as follows: HUD forecasts the change in national gross rents from 2017 to 2019. This makes Fair Market Rents "as of" FY2019.
National Trend Factor 1.0572 - The FY 2019 2-Bedroom Fair Market Rent for Benton County, MS HUD Metro FMR Area is calculated as follows:
Area ACS2016 5-Year Estimate Recent-Mover Adjustment Factor Annual 2016 to 2017 CPI Adjustment Trending 1.0572 to FY2019 FY 2019 2-Bedroom FMR Benton County, MS HUD Metro FMR Area $509 1.0405 1.0323 1.0572 $509 * 1.041 * 1.0323 * 1.0572=$578 -
In keeping with HUD policy, the preliminary FY 2019 FMR is checked to ensure that is does not fall below the state minimum.
Area Preliminary FY2019 2-Bedroom FMR FY 2019 Mississippi State Minimum Final FY2019 2-Bedroom FMR Benton County, MS HUD Metro FMR Area $578 $651 $578 ≤ $651 Use Mississippi minimum of $651 -
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 2019 FMRs By Unit Bedrooms Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY 2019 FMR $491 $569 $651 $941 $1,014 -
The FY2019 FMR must not be below 90% of the FY2018 FMR.
Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY2018 FMR $501 $576 $661 $954 $1,041 FY2018 floor $451 $518 $595 $859 $937 FY 2019 FMR $491 $569 $651 $941 $1,014 Use FY2018 floor for FY2019? No No No No No
Final FY2019 Rents for All Bedroom Sizes for Benton County, MS HUD Metro FMR Area
The following table shows the Final FY 2019 FMRs by bedroom sizes.
| Final FY 2019 FMRs By Unit Bedrooms | |||||
|---|---|---|---|---|---|
| Efficiency | One-Bedroom | Two-Bedroom | Three-Bedroom | Four-Bedroom | |
| Final FY 2019 FMR | $491 | $569 | $651 | $941 | $1,014 |
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.