Fair Market Rent Calculation Methodology
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Fair Market Rents for metropolitan areas and non-metropolitan FMR areas are developed as follows:
2013-2017 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 FY2020 provided the estimate is statistically reliable. For FY2020, 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 2013-2017 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 FY2020 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 FY2020.
HUD calculates a recent mover adjustment factor by comparing a 2017 1-year 40th percentile recent mover 2-bedrooom rent to the 2013-2017 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 2018 using the relevant (regional or local) change in gross rent Consumer Price Index (CPI) from annual 2017 to annual 2018.
All estimates are then inflated from 2018 to FY2020 using a trend factor based on the forecast of gross rent changes through FY2020.
FY2020 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.
FY2020 FMRs may not be less than 90% of FY2019 FMRs.
The results of the Fair Market Rent Step-by-Step Process
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The following are the 2017 American Community Survey 5-year 2-Bedroom Adjusted Standard Quality Gross Rent estimate and margin of error for .
Area ACS2017 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent ACS2017 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent Margin of Error Ratio Sample Size Category Result N/A N/A N/A
Check for reliable local ACS estimates from previous years
Since 0 of 3 ACS estimates are minimally reliable, the base rent is that of 's parent state of metropolitan or non-metropolitan portion.ACS2017 5-year Estimate ACS2017 5-year Error ACS2017 5-year Estimate Minimally Reliable? 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? N/A N/A N/A N/A N/A N/A N/A N/A N/A Area FY2020 Base Rent -
A recent mover adjustment factor is applied based on the smallest area of geography which contains and has an ACS2017 1-year Adjusted Standard Quality Recent-Mover estimate with a Margin of Error Ratio that is less than .5.
Since does not have a useable local level recent mover factor, a population weighted average of its parent state metropolitan portion recent mover factors will be used.
State ACS2017 1-Year Adjusted Standard Quality Recent-Mover Gross Rent ACS2017 1-Year Adjusted Standard Quality Recent-Mover Gross Rent Margin of Error Ratio Sample Size Category ACS2017 5-Year Adjusted Standard Quality All-Mover Gross Rent Recent Mover Factor Population The recent mover factor is the population weighted average of 's containing state metropolitan portions, or .
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The calculation of the relevant CPI Update Factors for is as follows:
HUD updates the 2017 intermediate rent with the ratio of the annual 2018 local or regional CPI to the annual 2017 local or regional CPI to establish rents as of 2018.
Update Factor Type CPI Update Factor CPI -
The calculation of the Trend Factor is as follows: HUD forecasts the change in national gross rents from 2018 to 2020 for each CPI area and Census Region. This makes Fair Market Rents "as of" FY2020.
Trend Factor Trend Factor Type - The FY 2020 2-Bedroom Fair Market Rent for is calculated as follows:
Area ACS2017 5-Year Estimate Recent-Mover Adjustment Factor Annual 2017 to 2018 CPI Adjustment Trending to FY2020 FY 2020 2-Bedroom FMR * * * = -
In keeping with HUD policy, the preliminary FY 2020 FMR is checked to ensure that is does not fall below the state minimum.
Area Preliminary FY2020 2-Bedroom FMR FY 2020 State Minimum Final FY2020 2-Bedroom FMR $714 ≤ $714 Use minimum of $714 -
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 2020 FMRs By Unit Bedrooms Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY 2020 FMR -
The FY2020 FMR must not be below 90% of the FY2019 FMR.
Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY2019 FMR FY2019 floor FY 2020 FMR Use FY2019 floor for FY2020? No No No No No
Final FY2020 Rents for All Bedroom Sizes for
The following table shows the Final FY 2020 FMRs by bedroom sizes.
| Final FY 2020 FMRs By Unit Bedrooms | |||||
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| Efficiency | One-Bedroom | Two-Bedroom | Three-Bedroom | Four-Bedroom | |
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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.