Fair Market Rents Calculation Process
The Department of Housing and Urban Development (HUD) uses similar procedures to calculate Fair Market Rents (FMRs), whether they are based on decennial Census data, American Community Survey (ACS) Data, or Random Digital Dialing (RDD) surveys. The main difference is in the way base year FMR estimates are developed from each of the sources of survey data. The procedures used to calculate FMRs and the differences in the base year estimates are explained below. Figures 1 and 2 provide flow charts for the evolution of the FMR calculation process.
FMR Documentation System
Beginning with the Fiscal Year (FY) 2005 FMR publication, HUD developed and maintains a web-based "FMR Documentation System." For any area of the country selected by the user, the documentation system provides a page containing a summary of how the selected years' FMRs were derived starting with the 2000 Census benchmark and including any subsequent re-benchmarking using local RDD, American Housing Survey (AHS) or ACS data. The tables on the summary page include links that provide complete details on how the data was developed.
HUD publishes a version of the documentation system to coincide with each publication of FMRs in the Federal Register. Examples of the calculation process can be found in exhaustive detail using the FMR documentation systems maintained by the Department. Please see the Office of Policy Development and Research (PD&R) website and select the FMR Documentation System for the year in which you are interested.
With the release of 2000 decennial Census information, FY 2005 FMRs were "re-benchmarked" to incorporate all 2000 Census information into the FMR creation process. This re-benchmarking was accomplished by computing 2000 Census 40th percentile base rents. For FY 2005, FY 2006 and FY 2007 FMRs, annual updating between 2001 and 2004 used local Consumer Price Index (CPI) data, RDD results, or Regional RDD results as appropriate.
Beginning in FY 2008, change factors detailing the change in rents from the 2000 Census to the current ACS data year (for FY 2008 this is 2005) were employed to update rents from 2000 to the current ACS data year. From the ACS year, local or regional CPI information is used to further update the rent estimates. From the latest CPI information (for FY 2008, this was 2006) to the midpoint of the FY for which the FMRs are being calculated, a national trend factor is applied.