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FY 2023 Fair Market Rent Documentation System

The FY 2023 Indianapolis-Carmel, IN HUD Metro FMR Area FMRs for All Bedroom Sizes

Final FY 2023 & Final FY 2022 FMRs By Unit Bedrooms
Year Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom
FY 2023 FMR $771 $897 $1,065 $1,397 $1,671
FY 2022 FMR $677 $782 $939 $1,231 $1,456

Marion County, IN is part of the Indianapolis-Carmel, IN HUD Metro FMR Area, which consists of the following counties: Boone County, IN; Brown County, IN; Hamilton County, IN; Hancock County, IN; Hendricks County, IN; Johnson County, IN; Marion County, IN; Morgan County, IN; and Shelby County, IN. All information here applies to the entirety of the Indianapolis-Carmel, IN HUD Metro FMR Area.

Fair Market Rent Calculation Methodology

Show/Hide Methodology Narrative

Fair Market Rents for metropolitan areas and non-metropolitan FMR areas are developed as follows:

  1. Calculate the Base Rent: HUD uses 2016-2020 5-year American Community Survey (ACS) estimates of 2-bedroom adjusted standard quality gross rents calculated for each FMR area as the new basis for FY2023, provided the estimate is statistically reliable. For FY2023, 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 2016-2020 5-year estimate, HUD checks whether the area has had at least 2 minimally reliable estimates in the past 3 years, or estimates that meet the 50% margin of error test described above. If so, the FY2023 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, HUD uses the estimate for the area's corresponding metropolitan area (if applicable) or State non-metropolitan area as the basis for FY2023.

  2. Calculate the Basis for Recent Mover Adjustment Factor: HUD has changed the calculation of the FY2023 Recent Mover Factor from previous years due to the unavailability of ACS2020 1-year estimates. The Census Bureau did not release standard 1-year estimates from the 2020 American Community Survey (ACS) due to the impacts of the COVID-19 pandemic on data collection. For FY2023, HUD uses a multi-pronged approach that includes private sources of rental data.

    In order to calculate rents that are "as of" 2020, HUD takes the average of the recent mover factor from 1-year ACS2019 recent mover rent inflated by 2019-2020 gross rent change; and the factor from 5-year ACS2020 recent mover rent. For areas where private data is available, the 2019-2020 gross rent change uses a weighted average of private sources and the Consumer Price Index (CPI) to calculate the annual percentage change in rents plus utilities from annual 2019 to annual 2020. For areas where private data is not available, the 2019-2020 gross rent change is based only on the CPI.

  3. Adjust for Inflation: In order to calculate rents that are "as of" 2021, for areas where private data is available, HUD calculates the relevant (regional or local) change in gross rent inflation using a weighted average of private data sources and the Consumer Price Index (CPI) from annual 2020 to annual 2021. For areas where private data is not available, HUD uses only the CPI, which is the same process used in previous years.

  4. Calculate the Trend Factor: To further inflate rents from 2021 to FY2023, HUD uses a "trend factor" based on the forecast of CPI gross rent changes through FY2023.

  5. Multiply the Factors: HUD multiplies the base rent by the recent mover factor, the gross rent inflation factor, and the trend factor to produce a rent that is "as of" the current fiscal year.

  6. Compare to the State minimum: FY2023 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.

  7. Calculate Bedroom Ratios: HUD calculates "bedroom ratios" and multiplies these by the two-bedroom rent to produce preliminary FMRs for unit sizes other than two bedrooms.

  8. Compare to Last Year's FMR: FY2023 FMRs may not be less than 90% of FY2022 FMRs. Therefore, HUD applies "floors" based on the prior year's FMRs.

The results of the Fair Market Rent Step-by-Step Process

  1. Base Rent Calculation
    The following are the 2020 American Community Survey 5-year 2-Bedroom Adjusted Standard Quality Gross Rent estimates and margins of error for Indianapolis-Carmel, IN HUD Metro FMR Area.
    Area ACS2020 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent ACS2020 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent Margin of Error Ratio Sample Size Category Result
    Indianapolis-Carmel, IN HUD Metro FMR Area $887 $8 $8 / $887=0.00902 6 0.00902 < .5
    6 ≥ 4
    Use ACS2020 5-Year Indianapolis-Carmel, IN HUD Metro FMR Area 2-Bedroom Adjusted Standard Quality Gross Rent
    Since the ACS2020 Margin of Error Ratio is less than .5, HUD uses the ACS2020 Indianapolis-Carmel, IN HUD Metro FMR Area value for the estimate of 2-Bedroom Adjusted Standard Quality Gross Rent (Base Rent).
    Area FY2023 Base Rent
    Indianapolis-Carmel, IN HUD Metro FMR Area $887

  2. Recent Mover Adjustment Factor Calculation
    Since Indianapolis-Carmel, IN HUD Metro FMR Area is covered by at least 3 private data sources, the calculation of the recent mover adjustment factor is as follows:

    Area ACS2019 1-Year Adjusted Standard
    Quality Recent-Mover Gross Rent    		 Average of Private Sources Annual Rent % Change 2019-2020 CPI Shelter Rent % Change 2019-2020 Combination of Private Sources and CPI (Shelter Rent Change) Gross Rent Inflation Factor Calculation (Weighted Average of Shelter Rent and Utilities Changes) ACS2019
    Recent Mover Rent Inflated to 2020    		 ACS2020 5-year All Mover Rent Ratio
    Indianapolis-Carmel, IN HUD Metro FMR Area $879 1.03636 1.03173 (1.03636 * 0.6) + (1.03173 * 0.4) =
    1.03451    		 (1.03451 * 0.80863) + (0.99854 * 0.19137) =
    1.02763     		$879 * 1.02763 =
    $903    		 $887 $903 / $887 =
    1.01804
    3. Area ACS2020 5-Year Adjusted
    Standard Quality
    Recent-Mover Gross Rent    		 ACS2020 5-year All Mover Rent Ratio
    Indianapolis-Carmel, IN HUD Metro FMR Area $920 $887 $920 / $887 =
    1.03720
    Area Average of Recent-Mover Ratios Final Recent-Mover Adjustment Factor
    Indianapolis-Carmel, IN HUD Metro FMR Area (1.0372+1.01804)/2 = 1.02762 1.02762 ≥ 1.0 Use calculated Recent-Mover Adjustment Factor of 1.02762

  3. Inflation Adjustment Factor Calculation
    Since Indianapolis-Carmel, IN HUD Metro FMR Area is covered by at least 3 private data sources, the calculation of the inflation adjustment factor is as follows: Compute the average change in rent measured by available private sector rent data sources between 2020 and 2021, compute the change in shelter rent between 2020 and 2021 measured by CPI local or regional CPI, compute a weighted average of the private and CPI rent changes, then compute the gross rent inflation factor as a weighted average of the combined private and CPI shelter rent increases and local or regional CPI utility price increases. The result inflates gross rents to be “as of” 2021.

    Average of Private Sources Annual Shelter Rent % Change 2020-2021 CPI Shelter Rent % Change 2020-2021 Combination of Private Sources and CPI (Shelter Rent Change) Gross Rent Inflation Factor Calculation (Weighted Average of Shelter Rent and Utilities Changes) Type
    Inflation Update Factor 1.08694 1.03003 (1.08694 * 0.6) + (1.03003 * 0.4) =
    1.06417    		 (1.06417 * 0.79141) + (1.08649 * 0.20859) =
    1.06883    		 Private Sources + CPI Update Factor
  4. Trend Factor Adjustment
    The calculation of the Trend Factor is as follows: HUD forecasts the change in national gross rents from 2021 to 2023 for each CPI area and Census Region. This makes Fair Market Rents "as of" FY2023.
    Trend Factor Trend Factor Type
    Trend Factor 1.09345 Region
  5. Combination of Factors
    The FY 2023 2-Bedroom Fair Market Rent for Indianapolis-Carmel, IN HUD Metro FMR Area is calculated as follows:
    Area Base Rent Recent-Mover Adjustment Factor Annual 2020 to 2021 Gross Rent Inflation Adjustment Trending 2021 to FY2023 FY 2023 2-Bedroom FMR
    Indianapolis-Carmel, IN HUD Metro FMR Area $887 1.02762 1.06883 1.09345 $887 * 1.02762 * 1.06883 * 1.09345=$1,065

  6. State Minimum Comparison
    In keeping with HUD policy, the preliminary FY 2023 FMR is checked to ensure that it does not fall below the state minimum.

    Area Preliminary FY2023
    2-Bedroom FMR    		 FY 2023 Indiana
    State Minimum    		 Final FY2023 2-Bedroom FMR
    Indianapolis-Carmel, IN HUD Metro FMR Area $1,065 $826 $1,065 ≥ $826 Use Indianapolis-Carmel, IN HUD Metro FMR Area FMR of $1,065

  7. Bedroom Ratios Application
    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 2023 FMRs By Unit Bedrooms
      Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom
    FY 2023 FMR $771 $897 $1,065 $1,397 $1,671

  8. Comparison to Previous Year
    The FY2023 FMRs for each bedroom size must not be below 90% of the FY2022 FMRs.

      Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom
    FY2022 FMR $677 $782 $939 $1,231 $1,456
    FY2022 floor $610 $704 $846 $1,108 $1,311
    FY 2023 FMR $771 $897 $1,065 $1,397 $1,671
    Use FY2022 floor for FY2023? No No No No No

Final FY2023 Rents for All Bedroom Sizes for Indianapolis-Carmel, IN HUD Metro FMR Area

Final FY 2023 FMRs By Unit Bedrooms
  Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom
Final FY 2023 FMR $771 $897 $1,065 $1,397 $1,671

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.

Permanent link to this page: http://www.huduser.gov/portal/datasets/fmr/fmrs/FY2023_code/2023summary.odn?&year=2023&fmrtype=Final&selection_type=county&fips=1809799999

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Prepared by the Program Parameters and Research Division, HUD. Technical problems or questions? Contact Us.