HUD Issues Proposed 2012 Fair Market Rents 

The U.S. Department of Housing and Urban Development (HUD) has issued its proposed FY 2012 Fair Market Rents (FMR), and there are significant changes in FMRs in almost all areas. Specifically, HUD is using the new five-year 2005-2009 data from the American Community Survey (ACS).

This is the first time five-year estimates have been available. However, because it is based on data ending in 2009, a weak recessionary year, it has resulted in artificially low rents in many areas. According to one estimate, the FY 2012 FMRs are lower than FY 2011 rents in approximately 70 percent of U.S. counties. A number of metro areas also record double-digit increases. The changes are particularly extreme in areas with relatively small populations.

While the methodology used by HUD for the new FMRs appears to be sound, and the move to more accurate five-year estimates is encouraged, the wide variations in rents from one year to another will have an adverse effect on many local housing agencies and private property owners who participate in the Section 8 program. NAA/NMHC and a coalition of organizations submitted comments to
HUD recommending the Department setting a floor of 5 percent on FMR decreases to mitigate the impact of moving to the new data source.

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