Fair Market Rent Calculation Methodology
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Fair Market Rents for metropolitan areas and non-metropolitan FMR areas are developed as follows:
Calculate the Base Rent: HUD uses 2018-2022 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 FY2025, provided the estimate is statistically reliable. For FY2025, 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 2018-2022 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 FY2025 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 FY2025.
Calculate the Basis for Recent Mover Adjustment Factor: HUD calculates a recent mover adjustment factor by comparing an ACS 2022 1-year 40th percentile recent mover 2-bedroom rent to the ACS 2018-2022 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 first examines recent movers who have moved within the current year of the ACS survey. If there is no reliable local area estimate, HUD then examines those who have moved into their residence within the current year or preceding year of the ACS survey. Upon determining a reliable recent mover estimate, HUD calculates the appropriate recent mover adjustment factor between the 5-year data and the 1-year data.
Adjust for Inflation: In order to calculate rents that are "as of" 2023, HUD applies a gross rent inflation adjustment factor using data from commercial rent data sources and the Consumer Price Index. HUD uses a local measure of private rent inflation for markets that are covered by at least three of the six available sources of private rent data. HUD combines this local measure of rent inflation with either the local metropolitan area CPI rent of primary residence for the 23 areas where such data exist, or the regional CPI rent in areas without a local index.
For areas without at least three of the six private rent data sources available, HUD uses a regional average of private rent inflation factors alongside the regional CPI rent of primary residence. HUD constructs the regional average by taking the rental unit weighted average of the change in rents of each area in a region that does have private rent data coverage. HUD averages the private and CPI shelter rent data with the year-to-year change in the CPI housing fuels and utilities index for the area in order to make the resulting inflation measure reflective of gross rents.
The private and CPI gross rent update factors are then combined using a weighting scheme which controls the national weighted average of the private and CPI gross rent factors to the national change in the ACS recent mover gross rent. The resulting weights assigned are as follows: W2023 = 0.7499 assigned to the private gross rent factor and (1-W2023) = 0.2501 assigned to the CPI gross rent factor.
Calculate the Trend Factor: To further inflate rents from CY2023 to FY2025, HUD uses a "trend factor" based on the forecast of CPI gross rent changes through FY2025.
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.
Compare to the State minimum: FY2025 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.
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.
Compare to Last Year's FMR: FY2025 FMRs may not be less than 90% of FY2024 FMRs. Therefore, HUD applies "floors" based on the prior year's FMRs.
The results of the Fair Market Rent Step-by-Step Process
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Base Rent Calculation
The following are the 2022 American Community Survey 5-year 2-Bedroom Adjusted Standard Quality Gross Rent estimates and margins of error for .Area ACS2022 5-Year 2-Bedroom Adjusted Standard Quality Gross Rent ACS2022 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 the 3 ACS estimates are minimally reliable, the base rent is that of 's parent state of metropolitan or non-metropolitan portion.ACS2022 5-year Estimate ACS2022 5-year Error ACS2022 5-year Estimate Minimally Reliable? ACS2021 5-year Estimate ACS2021 5-year Error ACS2021 5-year Estimate Minimally Reliable? ACS2020 5-year Estimate ACS2020 5-year Error ACS2020 5-year Estimate Minimally Reliable? N/A N/A N/A N/A N/A N/A N/A N/A N/A Area FY2025 Base Rent -
Recent Mover Adjustment Factor Calculation
A recent mover adjustment factor is applied based on the smallest area of geography containing that has an ACS2022 1-year Adjusted Standard Quality Recent-Mover estimate with a Margin of Error Ratio that is less than .5 and a sufficient number of sample cases.
The calculation of the relevant Recent-Mover Adjustment Factor for is as follows:Area ACS2022 1-Year Adjusted Standard Quality Recent-Mover Gross Rent ACS2022 1-Year Adjusted Standard Quality Recent-Mover Gross Rent Margin of Error Ratio Sample Size Category Result – ACS 1-year recent mover 2 Bedroom N/A N/A N/A N/A No ACS2022 1-Year 2-Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For – ACS 1-year recent mover All Bedroom N/A N/A N/A N/A No ACS2022 1-Year All Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For – ACS 2-year recent mover 2 Bedroom N/A N/A N/A N/A No ACS2022 1-Year 2 Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For – ACS 2-year recent mover All Bedroom N/A N/A N/A N/A No ACS2022 1-Year All Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For Non-metropolitan Portion – 2 Bedroom N/A N/A N/A No ACS2022 1-Year 2-Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For Non-metropolitan Portion Non-metropolitan Portion – All Bedroom N/A N/A N/A No ACS2022 1-Year All Bedroom Adjusted Standard Quality Recent-Mover Gross Rent Produced For Non-metropolitan Portion ACS2022 5-Year Area ACS2022 5-Year 40th Percentile Adjusted Standard Quality Gross Rent ACS2022 1-Year 40th Percentile Adjusted Standard Quality Recent-Mover Gross Rent ODBscript Error: Non-numeric expression: (null) / (null)
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Inflation Adjustment Factor Calculation
A gross rent inflation adjustment factor is applied based on a weighted average of a private source gross rent inflation factor and a Consumer Price Index gross rent inflation factor. Since is covered by at least 3 private data sources, a local-based private rent factor is applied. Furthermore, since is not covered by a local-CPI rent area, a -based CPI gross rent factor is applied.Components of 2023 Inflation Adjustment Factor for R2023= Shelter Rent Change, 2022 to 2023 U2023 = CPI Annual Utilities Change, 2022 to 2023 C2023 = ACS Utility Cost as a Percent of Gross Rent Gross Rent Inflation Factor Calculation = (R2023 x (1-C2023) + U2023 x C2023) Inflation Factor Type P2023= Private Inflation Factor ODBscript Error: Non-numeric argument for round()
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[Error in file main.odn line 1280]The 2023 Gross Rent Inflation Factor for is computed as follows:
= CPI2023 x (1-W2023) + P2023 x W2023
= (
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Trend Factor Adjustment
The calculation of the Trend Factor is as follows: HUD forecasts the change in gross rents from 2023 to 2025 for each CPI area and Census Region. This makes Fair Market Rents "as of" FY2025.Because the crosses regions, a population weighted average of the regional Trend Factors will be used.
Region Trend Factor The Trend Factor is
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- Combination of Factors
The FY 2025 2-Bedroom Fair Market Rent for is calculated as follows:Area Base Rent Recent-Mover Adjustment Factor Annual 2022 to 2023 Gross Rent Inflation Adjustment Trending 2023 to FY2025 FY 2025 2-Bedroom FMR * * * = ODBscript Error: Non-numeric expression: (null) * (null)
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State Minimum Comparison
In keeping with HUD policy, the preliminary FY 2025 FMR is checked to ensure that it does not fall below the state minimum.ODBscript Error: Non-numeric expression: (null) * (null)
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2-Bedroom FMRFY 2025
State Minimum$fmrtype$ FY2025 2-Bedroom FMR ODBscript Error: Non-numeric expression: (null) * (null)
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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 2025 FMRs By Unit Bedrooms Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY 2025 FMR -
Comparison to Previous Year
The FY2025 FMRs for each bedroom size must not be below 90% of the FY2024 FMRs.Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom FY2024 FMR FY2024 floor FY 2025 FMR Use FY2024 floor for FY2025? No No No No No
$fmrtype$ FY2025 Rents for All Bedroom Sizes for
| $fmrtype$ FY 2025 FMRs By Unit Bedrooms | |||||
|---|---|---|---|---|---|
| Efficiency | One-Bedroom | Two-Bedroom | Three-Bedroom | Four-Bedroom | |
| FY 2025 FMR | ODBscript Error: Undefined function or non-numeric argument for function: $MAX( )
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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.