On August 3, the Federal Register published HUD’s proposed Fair Market Rents (FMRs) for Fiscal Year 2013. The proposed FMRs reflect several methodological changes.
First, HUD has made several improvements to its methodology for calculating the recent mover factor, which is calculated as the percentage change between the five-year 2006-2010 American Community Survey (ACS) two-bedroom gross rent and the one-year 2010 ACS recent mover two-bedroom gross rent for the recent mover factor area. The primary change in methodology is that HUD no longer compares the standard quality gross rent to the recent mover gross rent to determine if the two statistics are significantly different. The revised recent mover factor process results in 91 percent of FMR areas having a recent mover factor greater than one in FY13 compared to only 38 percent in FY12.
Second, HUD had previously solicited comments regarding the trend factor used to meet statutory requirements that FMR estimates be “trended so the rentals will be current for the year to which they will apply” and had indicated last year that a new trend factor would be used for FY2013 FMRs. HUD has calculated that trend factor as the annualized change in median gross rents as measured between the one-year 2005 ACS and the one-year 2010 ACS, which comes to 4.1 percent over a 15-month time period.
Third, HUD has updated the bedroom ratio adjustment factors using 2006-2010 five-year ACS data, using a similar methodology to what was implemented when calculating bedroom ratios using 2000 Census data, detailed in the Notice.
The Notice of proposed FMRs also includes information about areas eligible for FMRs at the 50th percentile, updated FMR exceptions for manufactured home space rentals, and small area FMRs for the Dallas HMFA. The department anticipates announcing additional housing authorities eligible to use small area FMRs in the notice of final FY13 FMRs.
HUD seeks public comment on the methodology used to calculate FY13 Proposed FMRs and on the FMR levels for specific areas, with sufficient information to justify any proposed changes, more recent than the 2010 ACS. Comments are due by September 4, 2012.