On September 30, HUD published a notice of its final FY12 Fair Market Rents (FMRs). The FMRs are used to determine rent thresholds for housing assistance programs, including the Housing Choice Voucher program. The final FMRs are unchanged from the proposed FMRs released in August (see Memo, 8/26). On average, the FMR declined by $16 from FY11 to FY12. In total, FMRs declined in 1,770 FMR areas. Twenty areas remained the same, and 782 had an increase.
This year, HUD fully transitioned to using American Community Survey (ACS) data as the baseline for calculating FMRs, instead of using the Decennial Census. The FY12 FMRs are calculated using the 2005-2009 ACS. The five-year data are more reliable than the one-year data for small geographies, but using the five-year data presents other challenges. In the past, FMRs were based on gross rents for recent movers. It is not possible to identify recent movers in the five year ACS data, so all areas are assigned a base rent based upon the standard quality gross rent from the five year ACS. The base rents are then adjusted based on a recent mover adjustment factor developed by HUD. For a more detailed description of the methodological changes introduced for FY12, see Memo, 8/26.
HUD reviewed public comments submitted after the release of the proposed FMRs and determined that the comments did not justify any changes requested at this time. HUD will continue to review these comments and any changes will be posted to the Federal Register.
Many of the comments submitted expressed concern about the drop in FMR levels between FY11 and FY12. In response, HUD notes that the FY12 FMRs are not necessarily reflective of actual rent changes because FY12 is a re-benchmarking year. HUD underscores the importance of using the ACS data as they are the most current and reliable data available, while the costs of completing local surveys to acquire more up to date data is prohibitive. HUD also notes that public housing agencies (PHAs) have the option to use Exception Payment Standards for subareas within the FMR area or Success Rate Payment Standards to address an FMR decline.
Currently, Dallas is the only area where Small Area FMRs are being implemented. According to the FMR Final Notice, HUD is still evaluating applications from other PHAs that would like to participate in the Small Area FMR demonstration program. The Small Area FMR Demonstration Project proposes to use ZIP code-based FMRs to account for differences in rents within a metropolitan area.
In the proposed FMRs, HUD suggested a formal publication date of October 1 or December 1 for income limits. According to the Notice, the FY12 Income Limits are to be published on December 1.
The FMRs, along with HUD’s response to comments, can be downloaded from HUDuser at http://www.huduser.org/portal/datasets/fmr.html