HUD Fair Market Rent Changes

Last month HUD published in the Federal Register their proposed FY 2014 Fair Market Rents (FMRs).  The FMR is considered to be the 40th percentile of gross rents (cost associated with rent plus utilities) for typical, non-substandard rental units occupied by recent movers in a local housing market. The determined FMR in an area significantly impacts numerous individuals and families in various housing assistance programs. FMRs are primarily used to determine payment standards for the Housing Choice Voucher (HCV) program, Moderate Rehabilitation Single Room Occupancy program, initial renewal rents for some Section 8 contracts, and to serve as rent ceilings in the HOME program. Those dealing with housing issues in Vermont found HUD’s determination not to accurately reflect the rental market for the state, and in particular for three counties – in BenningtonWindham, and Windsor. A number of organizations dealing with housing, including the Vermont Affordable Housing Coalition, have jointly submitted comments to HUD voicing these concerns:

Of the 11 rural counties, eight have proposed FMRs that are lower than median rents according to recent rental studies. That said, the agencies signed below have prioritized studying Bennington, Windham and Windsor counties because of the adverse impact these lower FMRs will have on existing Housing Choice Voucher residents, as well as rent ceilings for the HOME and Shelter Plus Care programs. The dramatically lower proposed FMRs in these three counties and the local and state PHA’s inability to raise its allowable payment standards any higher than they already are will undoubtedly harm many current Housing Choice Voucher residents. They will be in a position to either become cost-burdened despite having a Housing Choice voucher, or be forced to leave their home and struggle to find a new unit with a rent level far below what’s available locally.

The American Community Survey (ACS) is used to determine the FMR.  Rural states like Vermont deal with small sample sizes which can skew results far from what the FMR should be considered in a community.   The Vermont State Housing Authority objected to the proposed changes, and submitted additional comments:

It is our position that the limited ACS sample sizes leads to inaccurate projected rents.  The best way for HUD to determine accurate FMR’s is through the performance of Rent Surveys.  In fact, this proved to be the case in Burlington – South Burlington Vermont in FFY2013.  HUD agreed to the performance of a Rent Survey, in response to practitioners comments, and found the actual 40th percentile rents were 27% higher than the 2012 FMR. In general, we believe that HUD’s methodology for formulating the FMRs in Vermont is flawed — as the rental housing markets in Vermont have not reversed course so dramatically on an annual basis, as suggested by the dramatic increases and decreases in FMRs over a four year period.

To give a picture of those increases and decreases, as well as how recent market comparability studies show the purposed FMRs are well below market trends take a look at the following tables:

FMR Trends

#Housing #HUDNews

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