Small Area Fair Market Rent (SAFMR)

What Is a Small Area Fair Market Rent?

A Small Area Fair Market Rent (SAFMR) is a fair market rent calculated for a single ZIP Code. A standard FMR applies one figure to an entire metropolitan area. In a large metro, that can mean the same voucher value in an expensive suburb and in a low-rent, high-poverty neighborhood.

SAFMRs adjust the benchmark to local rents. They rise in high-rent ZIP Codes and fall in low-rent ones. The U.S. Department of Housing and Urban Development (HUD) publishes them each year alongside its metro-wide FMRs.

How SAFMRs Work

SAFMRs matter mainly for the Housing Choice Voucher program. They are used in three ways:

• Mandatory areas. In metro areas HUD designates, public housing agencies must base voucher payment standards on SAFMRs.
• Voluntary use. Agencies elsewhere may opt in.
• Exception payment standards. Agencies not using SAFMRs may still set payment standards for a ZIP Code up to 110% of its SAFMR.

HUD’s rule selects mandatory areas using factors such as the number of vouchers in use, how much of the rental stock sits in ZIP Codes where the SAFMR is more than 110% of the metro FMR, how concentrated voucher families are in low-income areas, and vacancy rates.

HUD designated the first 24 metro areas under a final rule published November 16, 2016, and agencies there began using SAFMRs on April 1, 2018. A notice published October 25, 2023, added 41 more and gave agencies until January 1, 2025, to comply. HUD said at the time that the two groups together covered about 45% of households in the voucher program. The rule calls for HUD to make new designations every five years.

SAFMR vs. Metro-Wide FMR

Criticisms and Limitations

Evidence suggests SAFMRs work as intended for families who move. A 2019 study in HUD’s Cityscape journal looked at seven housing agencies that adopted SAFMRs early, five of them through a HUD demonstration. Five years after implementation, overall move rates had not changed, but among families with children who did move, the share settling in the top quarter of neighborhoods on the study’s opportunity index rose by 11 percentage points.

The tradeoffs are real, though. Families who stay in lower-rent ZIP Codes can see payment standards fall, which may raise what they pay. HUD rules let agencies hold such families at the old amount for as long as they stay in the same unit, and any reduction requires at least 12 months’ written notice. Agencies face added administrative work, and landlords in high-rent areas are not required to accept vouchers unless state or local source-of-income laws apply.