HUD Releases FY2020 Fair Market Rents

HUD has published the fiscal year 2020 (FY20) Fair Market Rents (FMRs), which are now released only on huduser.gov. The FMRs are effective Oct. 1. In general, the FMR for an area is the amount that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities and is set at the 40th percentile of the distribution of gross rents.

The FMRs are calculated using the U.S. Census Bureau's five-year American Community Survey (ACS) data collected between 2013 and 2017, a "recent mover factor based on 1-year American Community Survey data from 2017," the Consumer Price Index, and trend factor forecasts. This year, HUD is replacing the national trend factor with local and regional trend factors in order to improve the accuracy of the FMRs. Additional calculations are made to adjust for the number of bedrooms. FMRs are subject to state or national minimums and to a limit on year-to-year decreases. Additionally, some public housing agencies use Small Area FMRs, which are calculated for ZIP codes within Metropolitan Areas.

Occasionally, an interested party will believe that the FMRs calculated by HUD don’t accurately reflect the rents for the area. For this scenario, the Federal Register notice announcing the FMRs contains the procedures for FMR reevaluation requests.

While any interested party can request a reevaluation, for a reevaluation to be granted by HUD, the request must be made by the local PHA. In an area with multiple PHAs, a collection of PHAs that when combined represent at least half of voucher tenants in the area must agree the reevaluation is necessary.

In addition, the interested party is required to gather sufficient data and incur the costs associated with gathering the data. In the Federal Register, HUD states, “PHAs may continue to fund such surveys independently, as specified below, using ongoing administrative fees or their administrative fee reserve if they so choose.”

For HUD to perform a reevaluation, the requesting party must collect data that is more recent than that data used by HUD in establishing the FMRs. Therefore, if a party requested a reevaluation of the 2020 FMRS, they must provide HUD with data that’s more recent than the 2017 ACS data. The Federal Register states the data must contain the following information, “HUD requires data on gross rents paid in the FMR area for standard quality rental housing units. The data delivered must be sufficient for HUD to calculate a 40th and 50th percentile two-bedroom rent.” If this type of data isn’t available, HUD states that requestors may gather this information using the survey guidance available in “Revised Area Survey Procedures” and “Principles for Conducting Area Rent Surveys.” The Federal Register provides more detail about how to obtain the data, appropriate sample sizes, and other information.