HUD Releases Final FY 2017 FMRs

Published by Thomas Stagg on Thursday, September 1, 2016 - 12:00am

The U.S. Department of Housing and Urban Development (HUD) issued final fair market rents (FMRs) for HUD fiscal year (FY) 2017, which will be effective on October 1, 2016. FMRs in FY 2017 increased for the majority of the country. FY 2017 FMRs are higher than FY 2016 FMRs for approximately 77 percent of counties and lower for approximately 23 percent of counties. The average change in FMR is an increase of approximately 3 percent. The average dollar amount increase is $25.57.

In general, the FMR for an area is an amount that would be needed to pay the rent and utilities of a privately owned, decent and safe rental housing unit of a modest nature with suitable amenities. FMRs are used to determine payment standards for the Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, rent ceilings in the HOME rental assistance program, and more. In addition, the FMRs influence income and rent limits for the Low-Income Housing Tax Credit (LIHTC) program, tax-exempt bond (TEB) programs and other affordable housing programs.

Novogradac’s analysis of the 2017 FMRs found the largest decrease is in the Danbury, Conn. HUD metro FMR area, which will see a $398, or 22 percent, decrease. The largest increase was Dunn County, N.D. at $757, or116 percent. (All information presented here is calculated at the two-bedroom unit size.)

Changes in FMR for the 13 largest cities in the U.S.:

  1. New York City - $66 (4 percent)
  2. Los Angeles - $55 (4 percent)
  3. Chicago - $56 (5 percent)
  4. Houston $28 (3 percent)
  5. Philadelphia $1 (0 percent)
  6. Phoenix - $30 (3 percent)
  7. San Antonio - $35 (4 percent)
  8. San Diego – $242 (16 percent)
  9. Dallas – Decrease ($20) (2 percent)
  10. San Jose - $226 (11 percent)
  11. Austin - $60 (7 percent)
  12. Jacksonville - $9 (1 percent)
  13. San Francisco - $729 increase (32 percent)

High cost housing areas with increases in FMRs will likely see increases in the HUD published multifamily tax subsidy project (MTSP) income limits; those with decreases in FMRs will likely see decreases in the HUD published MTSP income limit. For existing LIHTC and TEB properties, income limits will not decrease because of the hold harmless policy under Internal Revenue Code §142. However, new LIHTC and TEB units may have lower rent and income limits.