Final FY 2010 Fair Market Rent Documentation System
The Final FY 2010 Orange County, CA HUD Metro FMR Area FMRs for All Bedroom Sizes
The following table shows the Final FY 2010 FMRs by unit bedrooms.
Final FY 2010 FMRs By Unit Bedrooms
Efficiency
One-Bedroom
Two-Bedroom
Three-Bedroom
Four-Bedroom
Final FY 2010 FMR
$1,183
$1,336
$1,594
$2,256
$2,597
The remainder of this page provides complete documentation of the development of the
Final FY 2010 Fair Market Rents (FMRs) for
Orange County, CA HUD Metro FMR Area.
This page provides a summary and details of how the Final FY 2010 FMRs
were developed and updated starting with the formation of the FY 2010 FMR Areas from the
metropolitan Core-Based Statistical Areas (CBSAs) as established by the Office of Management and Budget
and incorporating newly available 2007 one and three year American Community Survey (ACS) Data.
FY 2010 FMRs include information from local Random Digit Dialing (RDD) surveys conducted during
2008. Aspects of the derivation of Final FY 2010 rents exclusive to FY 2010 are made explicit in the following text.
Aspects unchanged from FY 2009 can be reviewed by clicking on the associated link.
The following defines a summary of the steps taken to generate the Final FY 2010 FMR:
Orange County, CA HUD Metro FMR Area Final FY 2010 FMR Calculation Summary
Process Step
Step Result
1. Begin with Final FY 2009 2 Bedroom FMR
$1,546
2. Remove Trending and CPI Updates from Final FY 2009 2 Bedroom FMR
FY 2010 FMR Areas Follow FY 2009 Area Definitions with Modifications
FY 2010 FMR areas continue to use the revised Office of Management and Budget (OMB)
area definitions that were first issued in 2003 along with HUD defined Metropolitan areas (HMFAs) as described in the
FY 2009 FMR documentation which can be found at (Orange County, CA HUD Metro FMR Area FY 2009 FMR Documentation system).
FY 2010 areas reflect changes made to metropolitan areas by OMB through November 20, 2008 as published in OMB bulletin 09-01.
Orange County, CA HUD Metro FMR Area is made up of the following:
Orange County, CA
.
Orange County, CA HUD Metro FMR Area FMR Area Derivation (RECAP)
The Orange County, CA HUD Metro FMR Area is a HUD-defined metropolitan FMR area that is part of the Los Angeles-Long Beach-Santa Ana, CA MSA.
Orange County, CA HUD Metro FMR Area is considered its own FMR area because Orange County, CA HUD Metro FMR Area has a 2000 Census 40th Percentile Base Rent
($988)
that differs from the 2000 Census 40th Percentile Base Rent for Los Angeles-Long Beach-Santa Ana, CA MSA
($852)
by at least 5.0 percent.
In addition, the Orange County, CA HUD Metro FMR Area also qualifies as a separate HUD-defined metropolitan FMR area that is part of the Los Angeles-Long Beach-Santa Ana, CA MSA
because the Orange County, CA HUD Metro FMR Area has a 2000 Median Family Income ($64,611)
that differs from the 2000 Census Median Family Income for Los Angeles-Long Beach-Santa Ana, CA MSA($50,687)
by at least 5.0 percent.
HUD continues its use of ACS data in FY 2010, by building upon the FY 2009 Final FMRs (Orange County, CA HUD Metro FMR Area FY 2009 FMR Documentation system).
As in FY 2009, HUD uses 2007 ACS data in four different ways according to how many two-bedroom standard quality and recent mover sample cases are available in the FMR area or its
Core-Based Statistical Area (CBSA). ACS-1 through ACS-4 areas are described in detail here.
In most cases, Final FY 2010 FMRs are based on changes in rents measured by differences in ACS data collected in 2006 and 2007 and updated
CPI rent and utility inflation indexes. Depending on the size of the ACS survey sample, State or Local ACS data is used to update a June 2006-calculated
gross rent from the Final FY 2009 FMRs (Orange County, CA HUD Metro FMR Area FY 2009 FMR Documentation system)
to June 2007. In some cases, as described below, the 2007 ACS Survey result is used instead of a 2006 to 2007 updated value. The ACS updated 2007
rent is then adjusted with CPI inflation factors that measure changes from mid-2007 though year end 2008 and 1.25 years of trending to arrive at
Final FY 2010 FMRs. RDD survey results are applied where available and appropriate.
Orange County, CA HUD Metro FMR Area is an ACS-1 area.
ACS-1 areas are FMR Areas which have at least 200 sample cases of two-bedroom standard quality rents.
ACS-1 areas may be MSAs, subareas that are assigned CBSA base rents, subareas that have their own base rents, or
large nonmetropolitan counties.
In ACS-1 FMR areas, the update factor used to generate the June 2007 value is the ratio of the 2007 ACS two-bedroom standard quality
rent to the 2006 ACS two-bedroom standard quality rent for the FMR Area.
New for FY2010 Final FMRs, HUD has implemented a statistical test to determine if the change in the survey estimates from the 2006 ACS survey estimate
to the 2007 ACS survey is statistically signficant. This test is described and completed below.
In order to apply 2006 to 2007 ACS changes to FMRs (ACS data are assumed to be as of June of their respective survey years), FY 2009 FMRs are first
deflated to mid-2006 values by removing the CPI inflation and trend factors used to update mid-2006 values to April, 2009 inherint in the Final FY
2009 FMRs.(Orange County, CA HUD Metro FMR Area FY 2009 FMR Documentation system.)
Rent2006
=
Final FY 2009 Rent (CPI Change2006).5 x (CPI Change2007) x (Trend)
Rent2006
=
$1,546 (1.0660).5 x (1.0570) x (1.0376)
Rent2006
=
$1,546 (1.0325) x (1.0570) x (1.0376)
Rent2006
=
$1,546 (1.0913) x (1.0376)
Rent2006
=
$1,546 1.1324
Rent2006 = $1,365
The 2006 to 2007 Update Factor using 2007 ACS Data
As stated earlier, Orange County, CA HUD Metro FMR Area is an ACS-1 area.
ACS-1 areas are areas that have at least 200 ACS standard quality survey results in both the 2006 and 2007 surveys.
The 2007 ACS data contains enough Recent Mover observations for Orange County, CA HUD Metro FMR Area to evaluate whether the 2007 updated rent is statistically
different from the survey result. As will be shown in the table below, the 2007 updated rent is not statistically different from
the 2007 Recent Mover ACS Survey result for Orange County, CA HUD Metro FMR Area.
The 2006 and 2007 standard quality results for Orange County, CA HUD Metro FMR Area are used in the calculation of the 2006 to 2007 update factor.
The 2006 ACS result is $1,344
and the 2007 ACS result is $1,408.
This leads to an unadjusted update factor of:
UpdateFactor06-07 = $1,408 / $1,344
UpdateFactor06-07 = 1.0476
New for Final FY 2010 FMRs, HUD tests to see if the change in ACS survey results from 2006 to 2007 is statistically significant.
This is done by computing a "Z-Score". If the Z-Score value is greater than 1.645 the 2 survey results are considered to statistically different from each other.
If the Z-Score is less than 1.645 then the change is considered to be statistically insignificant and the change factor is set to 1.
The Z-Score is calculated as:
Z
=
EST07 - EST06 (SE072 + SE062)
Where EST06 is the 2006 ACS Survey Estimate, EST07 is the 2007 ACS Survey Estimate, SE06 is the standard error of the 2006 ACS Survey Estimate and SE07 is the
standard error of the 2007 ACS Survey Estimate.
Z
=
1,408 - 1,344 (12.1582 + 11.5502)
Z
=
64 (147.818 + 133.406)
Z
=
64 281.224
Z
=
64 16.770
Z = 3.816
As can be seen from the calculation above the z-score is greater than 1.645. Therefore the 2006 to
2007 update factor is 1.0476.
Consequently, the 2007 updated intermediate rent for Orange County, CA HUD Metro FMR Area is:
2007 ACS Recent Mover Survey Result Evaluation for Orange County, CA HUD Metro FMR Area
Rent2006
Local SQ Update Factor
Local SQ Updated Rent
2007 ACS Local Recent Mover Rent
2007 ACS Survey Confidence Interval
Is the Local SQ-Updated Rent Outside The Confidence Interval of RM Rent?
NO Recent Mover Rent is not statistically different from updated rent
SQ updated rent
$1,430
NOTE: The update factor shown in the calculation above may not match exactly the 2006 to 2007 factor shown throughout the demonstration
due to the rounding of Fair Market Rents to whole dollar amounts
HUD updates the 2007 intermediate rent (as of June 2007) with the appropriate CPI change (local or regional) to establish rents as of December 2008.
HUD then applies additional trending or results of Random Digit Dialing (RDD) surveys to update rents to April, 2010, the mid-point of FY 2010.
The Orange County, CA HUD Metro FMR Area has the following 2007-to-2010 Update Factor:
Update Factors used between June 2006 and April 2008
The Final FY 2010 2-Bedroom FMR is simply the product of the
2006 Rent from deflated from FINAL FY 2009 FMRs, the 2006 to 2007 update factor and the 2006-to-2010 Update Factors for Orange County, CA HUD Metro FMR Area as determined above:
Orange County, CA HUD Metro FMR Area Final FY 2010 FMR
The following table shows the
Final FY 2010 FMRs by unit bedrooms.
The FMRs for units
with different numbers of bedrooms are computed from the ratio of the
2005 Revised Final FMRs (based on 2000 Decennial Census Data) for the different unit sizes to the
2005 2-Bedroom Revised Final FMRs. These Rent Ratios are applied to the
Final FY 2010 2-Bedroom FMR
to determine the Final FY 2010 FMRs
for the different size units.
Click on the links in the table to see how the bedroom rents were derived.
The FMRs for unit sizes larger than four bedrooms are calculated by adding 15 percent to the four bedroom FMR, for each extra bedroom.
For example, the FMR for a five bedroom unit is 1.15 times the four bedroom FMR, and the FMR for a six bedroom unit is 1.30 times the four bedroom
FMR. FMRs for single-room occupancy units are 0.75 times the zero bedroom (efficiency) FMR.
(SE072 + SE062)