HUD announced in the Federal Register on September 1 the publication of the fiscal year (FY) 2023 Fair Market Rents (FMRs). In an accompanying press release, HUD stated that FMRs will increase by an average of 10% from FY2022, with significantly greater increases in metropolitan areas with even faster rent growth.
FMRs for a given area generally represent the gross rent (rent plus utilities) that a renter seeking housing today would need to pay for privately owned, decent, and modest (non-luxury) housing. They are used in the determination of payment standards for the Housing Choice Voucher (HCV) program; initial renewal rents for some expiring project-based Section 8 contracts; initial rents in the Moderate Rehabilitation Single Room Occupancy program; and rent ceilings for the HOME Investment Partnerships program and the Emergency Solutions Grants program. They are also used to calculate flat rents in public housing.
FY2023 FMRs are based on 5-year American Community Survey (ACS) data from 2016 to 2020. HUD then adjusted those data for inflation to 2023. HUD previously used only the Consumer Price Index (CPI) to adjust ACS data. For FY2023, however, HUD changed its inflation-adjustment methodology to incorporate rental data from private companies to better capture local rent inflation. The private data sources are RealPage (formerly Axiometrics) average effective rent per unit, Moody’s Analytics REIS average market rent, CoStar Group average effective rent, CoreLogic’s single-family combined 3-bedroom median rent, ApartmentList Rent Estimates, and the Zillow Observed Rent Index. These private sources provide localized data for more metropolitan regions than does the CPI.
NLIHC recently responded to HUD’s request for comment about these changes. NLIHC supports HUD’s efforts to improve its FMR methodology and the department’s decision to use private data for FY2023. However, NLIHC also stated that private data sources used by HUD in future FMR determinations should be more accessible to the public and provide a sufficiently transparent methodology.
Public housing agencies (PHAs) and other interested parties may comment on the FMRs and request a reevaluation by October 3. In multijurisdictional FMR areas, PHAs representing at least half of the voucher tenants must agree that the reevaluation is necessary. After October 3, HUD will post a list of areas requesting reevaluations, keeping FY2022 FMRs in effect in those areas. No later than January 6, 2023, requestors for reevaluations must supply HUD with recently collected data about gross rents of standard quality rental units. Questions about how to conduct rent surveys (data collection) can be addressed to the Program Parameters and Research Division at [email protected]. HUD will use the data provided to them to reevaluate FMRs. HUD will post a list of areas failing to deliver data on January 9, 2023, making the FY2023 FMRs effective in these areas.
Comments and requests for reevaluations must be submitted through http://www.regulations.gov/ or by mail to: HUD Regulations Division, Office of General Counsel, U.S. Department of Housing and Urban Development, 451 7th Street, SW, Room 10276, Washington, DC 20410-0500. HUD encourages electronic submissions.
FY2023 FMRs are available at: https://www.huduser.gov/portal/datasets/fmr.html