HACSB FACT SHEET | Local Payment Standards | LANDLORDS

Local Payment Standards
In March 2008, the Housing Authority of the County of San Bernardino (HACSB) became one of
only 1% of housing authorities nationwide to be designated a Moving to Work (MTW)
demonstration site by the U.S. Department of Housing and Urban Development (HUD).
MTW is a demonstration program that allows housing authorities to design and test ways to: 1)
promote self-sufficiency among assisted families; 2) achieve programmatic efficiency and reduce
costs; and 3) increase housing choices for low-income households. As an MTW agency, HACSB
will have the opportunity to implement new policies outside the usual scope of HUD policies and
regulations.
HACSB proposed the Local Payment Standards Activity in its FY 2008-2009 MTW Annual Plan and
it was approved by HUD on June 29, 2009. As the largest county in the contiguous United States, it
was difficult to accurately reflect the varying rental submarkets that exist throughout the County
through the current Fair Market Rent (FMR) established by HUD. HUD’s FMR areas include San
Bernardino and Riverside County. Using FMRs are not an accurate rental submarket assessment
because: 1) the FMR areas are too large and encompass a variety of submarkets with varying rent
levels; and 2) the data sources used in developing the FMRs do not provide reliable information on
the local housing market, especially at the submarket level.
The Local Payment Standards Activity granted HACSB the flexibility in determining a more
accurate payment standard. HACSB hired Applied Real Estate Analysis Inc. (AREA), an
independent third party, to conduct the research and analysis. AREA divided the County into nine
submarkets and collected information on market rate rentals that included unit size, rent, amenities,
property type etc. Their analysis also included consultations with local real estate industry
representatives such as real estate agents, brokers, property managers and appraisers. In addition,
samples of the units were screened against comparable databases including HACSB. The updated
payment standards are effective July 1, 2011.
The payment standards will be updated annually by an independent third party firm. The updated
payment standards list and steps to determining the payment standard for a unit can be found under
the landlord tab at www.hacsb.com. A summary of the final report prepared by AREA follows.
Please feel free to contact us if you have any questions at the numbers listed below –
Lisa Jones – Director Housing Administration
Ontario Office – Tamara Avila, HCV Program Supervisor
San Bernardino Office – Theresa Quiroz, Program Integrity Manager
San Bernardino Office – Rebecca Murillo, HCV Program Supervisor
San Bernardino Office - Ines Work, HCV Program Supervisor
Victorville Office – Lizeri Guerrero, HCV Program Supervisor
(909) 890-9533
(909) 890-5360
(909) 890-9533
(909) 890-9533
(909) 890-9533
(760) 243-1043
Applied Real Estate Analysis, Inc.
ALTERNATIVE LOCAL PAYMENT STANDARDS
FOR THE
HOUSING AUTHORITY OF THE
COUNTY OF SAN BERNARDINO
HOUSING CHOICE VOUCHER PROGRAM
FINAL REPORT
JANUARY 27, 2011
Prepared for:
The Housing Authority of the
County of San Bernardino
Submitted by:
Applied Real Estate Analysis, Inc.
914 S. Wabash Ave.
Chicago, Illinois 60605
AREA file # 1919
A Real Estate and Policy Planning Corporation
T ABLE OF C ONTENTS
SECTION I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background on the Study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION II. SAN BERNARDINO COUNTY RENTAL HOUSING MARKET . . . . . . . . . . 3
Overview of the Rental Housing Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Overview of Rental Submarkets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Submarket Area 1: Desert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Submarket Area 2: Victor Valley/Barstow.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Submarket Area 3: Morongo Valley/Twentynine Palms. . . . . . . . . . . . . . . . . . 10
Submarket Area 4: Mountains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Submarket Areas 5 and 6: San Bernardino North and South.. . . . . . . . . . . . . 11
Submarket Area 7: East Valley.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Submarket Area 8: West Valley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Submarket Area 9: Central Valley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION III. ALTERNATIVE FMR STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Background on the HUD FMR and Challenges. . . . . . . . . . . . . . . . . . . . . . . . 14
Alternative Local Payment Standards.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION IV. NEXT STEPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Recommendations Regarding Future Analysis. . . . . . . . . . . . . . . . . . . . . . . . 18
APPENDICES
Appendix I. Alphabetical Listing of Cities with Submarket. . . . . . . . . . . . . . . A-2
Appendix II. Zip Codes by Submarket. . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
Appendix III. Census Tracts by Submarket. . . . . . . . . . . . . . . . . . . . . . . . . A-19
Appendix IV. Maps of Demographic Characteristics of Census Tracts. . . . A-28
Appendix V. Detailed Maps of Submarkets. . . . . . . . . . . . . . . . . . . . . . . . . A-47
APPLIED REAL ESTATE ANALYSIS, INC .
SECTION I.
INTRODUCTION
BACKGROUND ON THE STUDY
The Housing Authority of the County of San Bernardino (HACSB) subsidizes the rental
payments of approximately 7,300 households under the Housing Choice Voucher (HCV)
program under the HCV program. Participants pay a portion of rent to the owner, and the
remainder is paid by the housing authority. HACSB, like many other housing authorities,
is facing a decreased budget for its HCV program. At the same time, households’ incomes
are lower, resulting in the need for higher subsidies to rent units in the private market.
These two competing factors impact the housing authority’s ability to provide increased
housing opportunities for families, which is central to its mission.
HACSB has recognized the need to address this challenge and has decided to use its
flexibility under the Moving to Work (MTW) program to establish local payment standards.
To that end, HACSB contracted with Applied Real Estate Analysis (AREA), Inc., to conduct
an assessment of the local real estate market and to develop a local payment standard
based upon local market information at a submarket rather than countywide level. This
document provides the proposed alternative local payment standards.
METHODOLOGY
Data Collection
To analyze how the rental market varies from one part of the county to another, we divided
the county into nine submarkets. In some cases, these submarkets contain pockets in
which rents are higher or lower than is typical of the submarket, but they are included in
that submarket for reasons of geographic proximity and general competitiveness. Additional
information on the submarket area definition methodology can be found in Section II.
The next step in the process was to obtain information on market-rate rental housing units
across the county. This information included unit size, rent, and amenities. Various
amounts of information was collected on dozens of units in each submarket. The units
were located in various cities within each submarket and various property types (singlefamily homes, large multifamily properties, and small multifamily properties).
To collect information on units in the county, AREA developed a survey form to assist
surveyors in completing the research. The data collection form included information such
as unit size, building type, and exterior unit condition. AREA also spoke with real estate
industry representatives to obtain information on market trends. Industry representatives
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included property managers, real estate agents and brokers, and appraisers with familiarity
of the area.
The properties ranged from large multifamily properties with on-site managers, which are
traditionally included in rental housing surveys by private sector firms, to individual
single-family detached houses that are leased by absentee owners. To ensure that all units
analyzed were market-rate units, we screened the sample against the databases of
subsidized units maintained by HUD, the state's housing finance agency, and the housing
authority. In addition, the data collection process included a screening question to
determine whether or not there are income restrictions for tenants leasing the units.
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SECTION II.
SAN BERNARDINO COUNTY RENTAL HOUSING MARKET
OVERVIEW OF THE RENTAL HOUSING MARKET
According to the 2008 American Community Survey, approximately 37 percent of San
Bernardino County’s more than 580,360 households live in rented units. However, rental
housing is not distributed evenly throughout the county. In some sections nearly 90 percent
of units are owner-occupied; in others fewer than 10 percent of residents own their own
home. Ownership patterns are influenced by the character of the housing stock, the
incomes of area residents, and, increasingly, by the availability of financing.
The current economic and housing decline has largely impacted the rental market,
especially changes in the rental market stock. The downturn has slowed the population
increases in the southern portion of the High Desert and brought a halt to the development
of new subdivisions with single-family housing. Many unit owners are now entering
foreclosure or have already been foreclosed upon, with communities such as Victorville,
Apple Valley, Chino, and Adelanto facing foreclosure rates as high as two percent.
In attempts to stave off a fully-executed foreclosure, homeowners are also selling their
homes for amounts less than what is owned (also known as a “short sale”). The
combination of short sales, foreclosures, a 13 percent unemployment rate, and a weak
national economy has driven down housing prices significantly. Homes are now selling for
30 to 60 percent below 2006 and 2007 levels.
All of the aforementioned factors have affected the local rental housing market in several
significant ways. First, there is an increased inventory of rental housing. Second, there is
increased diversity in the inventory because more single-family homes owned by investors
or former owner-occupants have entered the rental pool. The impact of this increased
inventory and diversity on prices is debatable. Generally, an increase in supply results in
a downward pressure on rents. However, if more homeowners are not able to pay their
mortgage and must relocate to rental units, the demand could begin to outpace the supply,
resulting in an increase in rents. At the same time, the high unemployment rate has
resulted in some families “doubling up” in homes, which decreases the demand and puts
downward pressure on rents.
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OVERVIEW OF RENTAL SUBMARKETS
The AREA team has developed a set of nine submarkets in which to divide San Bernardino
County. We began our analysis by reviewing the demographic characteristics of the census
tracts in the county. Demographics reviewed included:
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Housing tenure
Occupancy rate
Vacancy rate
Racial and ethnic characteristics
Income levels
Poverty concentration
The data sources used included the addresses of voucher holders based upon data
provided by HACSB, the 2000 Census and the 2008 American Community Survey.
Although there have been extensive changes in the housing stock and socioeconomic
characteristics of the population since the 2000, the 2000 Census is the most accurate and
readily available source of data at the census tract level. This allowed us to combine the
tracts into groupings to analyze the demographics of custom-defined areas. We also
reviewed Claritas estimates of tract-level data for 2009. However, the estimates seem to
overestimate the population in some communities including those in the High Desert and
underestimate some communities in the western portion of the valley. Maps of these
demographics by census tract are available in Appendix IV.
AREA also reviewed public data sources to identify existing submarket area definitions
used in the county. A key source was the “2010 San Bernardino County Community
Indicators Report” developed by the San Bernardino Community Task Force and Report
Team for the Board of Supervisors for the County of San Bernardino. This report divided
the county into four large geographic areas.
The next step in the analysis was to hold discussions with local appraisers and real estate
brokers to further refine the submarket area definitions. We spoke with several
professionals in the real estate industry who specialize in the San Bernardino County
market. They provided their professional opinions of the various submarket areas within the
county.
The final step in the analysis was to conduct a windshield survey of the county. Over a fourday period from June 29, 2010 through July 2, 2010, senior AREA staff drove through
neighborhoods and cities throughout the more populous portions of the county, including
the following cities:
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Adelanto
Apple Valley
Chino
Chino Hills
Fonatana
Hesperia
Highland
Loma Linda
Ontario
Rancho Cucamonga
Redlands
Rialto
San Bernardino
Victorville
Yucaipa
The condition of a neighborhood is a key component of our analysis because it is one of
the major factors determining the price of a rental housing unit. For example, if a
two-bedroom apartment in average condition is located in a well-maintained submarket, it
will command a higher price than if it were located in a deteriorating submarket. During the
windshield survey, we noted the characteristics of each city’s housing stock, identified units
available for rent, and noted natural as well as manmade neighborhood boundaries (e.g.,
highways, mountains and hills, and rivers). AREA also met with HACSB staff to review our
findings from the data analysis and discuss some of the submarket area definitions.
Based upon the above data sources and the windshield survey, AREA developed nine
submarkets for the study:
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Submarket Area 1: Desert
Submarket Area 2: Victor Valley/Barstow
Submarket Area 3: Morongo Valley/Twentynine Palms
Submarket Area 4: Mountains
Submarket Area 5: San Bernardino North
Submarket Area 6: San Bernardino South
Submarket Area 7: East Valley
Submarket Area 8: West Valley
Submarket Area 9: Central Valley
Exhibit 1 on the following page provides a map of the county, followed by Exhibit 2, which
shows the submarket areas. Detailed maps of each submarket are provided in Appendix
V.
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Exhibit 1. San Bernardino County in Regional Context
IDAHO
IDAHO
OREGON
OREGON
2
1
WYOMING
WYOMING
5
80
4
3
80
3
4
70
3
4
COLORADO
COLORADO
UTAH
UTAH
NEVADA
NEVADA
15
4
3
5
1
2
CALIFORNIA
CALIFORNIA
NEW MEXICO
MEXICO
NEW
40
4
3
Pacific Ocean
ARIZONA
ARIZONA
San Bernardino
Bernardino County
County
San
10
3
4
8
1
2
6
10
4
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A PPLIED R EAL E STATE A N ALYSIS , IN C .
Exhibit 2. Submarket Areas for San Bernardino County
Submarket Areas
15
4
3
1. Desert
2. Victor Valley/Barstow
3. Morongo Valley/Twentynine Palms
4. Mountains
5. San Bernardino North
6. San Bernardino South
7. East Valley
8. West Valley
9. Central Valley
11
40
4
3
40
3
4
15
4
3
22
44
33
55
99
66
77
88
10
4
3
215
5
6
3
4
15
(Inset next page)
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A PPLIED R EAL E STATE A N ALYSIS , IN C .
Exhibit 2A. Submarket Areas for San Bernardino County Inset
44
215
6
5
15
4
3
55
99
66
5
6
215
88
10
4
3
77
Submarket Areas
1. Desert
2. Victor Valley/Barstow
3. Morongo Valley/Twentynine Palms
4. Mountains
5. San Bernardino North
6. San Bernardino South
7. East Valley
8. West Valley
9. Central Valley
15
4
3
8
215
6
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A PPLIED R EAL E STATE A N ALYSIS , IN C .
SUBMARKET AREA 1: DESERT
Communities:
Amboy
Baker
Cima
Daggett
Earp
Edwards
Essex
Fort Irwin
Hinkley
Ludlow
Mountain Pass
Needles
Newberry Springs
Nipton
Parker Dam
Ridgecrest
Trona
Vidal
Yermo
Submarket Area 1, the Desert, is home to some of the oldest cities in San Bernardino
County. It is dominated by desert, as well as military bases and facilities. Given the area’s
desert environment and the federal ownership of a large amount of the land, most of the
submarket is undeveloped and remains sparsely populated. Housing is concentered in the
small cities of Needles and Big River in the “Tri-State” area near the Arizona and Nevada
borders. Rental housing unit types include small single-family units, duplexes, and
multifamily low-rise complexes. Most of the housing dates from the 1940s to the 2000s.
The older units tend to be in average to poor condition as many have not been renovated
or updated. The newer units tend to be in good to excellent condition.
SUBMARKET AREA 2: VICTOR VALLEY/BARSTOW
Communities:
Adelanto
Apple Valley
Barstow
Helendale
Hesperia
Lucerne Valley
Oro Grande
Phelan
Pinon Hills
Victorville
Submarket Area 2 is located in the western portion of the county directly north of the
mountains. The area is predominantly a desert environment dominated by the Mojave
Desert. The area is predominantly low density, although Victorville is a notable exception.
The majority of the housing units in the area are single-family attached or detached homes.
This is primarily the result of two factors. First, the land available for development is more
plentiful relative to the rest of the county, and second, many of the communities in the area
have building requirements that make multifamily housing development extremely
challenging. Many of the multifamily homes in the area are located in Apple Valley,
Hesperia, and Victorville. Some older multifamily complex are located in Adelanto.
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APPLIED REAL ESTATE ANALYSIS, INC.
During the housing boom from 2006 through 2008, the Victor Valley/Barstow area
experienced significant increases in housing construction. The land in the area was
significantly more affordable than other parts of the county, especially those in closer
proximity to Los Angeles. As a result, developers began to put up large housing
developments in several cities including Hesperia, Barstow, and Apple Valley. The recent
economic downturn has ended this development activity. Many of the new subdivisions
have only portions of the initially planned phases completed. Of the completed units, a
significant portion are in foreclosure or have already been foreclosed upon. The area has
one of the highest foreclosure rates in the state and the country. In response, many
investors have purchased single-family homes at low prices. The investors are renting the
units, thereby increasing the rental inventory supply and putting a downward pressure on
rents.
SUBMARKET AREA 3: MORONGO VALLEY/TWENTYNINE PALMS
Communities:
Joshua Tree
Landers
Morongo Valley
Pioneertown
Twentynine Palms
Yucca Valley
Submarket Area 3, Morongo Valley/Twentynine Palms, lies between Joshua Tree National
Park, San Bernardino National Forest, and Marine Corps Air Ground Combat Center
(MCAGCC). Due to the area’s proximity to the MCAGCC, Marine Corps members and their
families tend to make up a large portion of the submarket’s population base. Most of the
area’s dense development, including apartment complexes, are located in the city of
Twentynine Palms and cater to those members of the military and their family.
Heading east from Twentynine Palms, development tends to concentrate on 29/Twentynine
Palms Highway or State Highway 62, and it decreases in density through Joshua Tree and
into Morongo Valley. Morongo Valley has very low density, and the housing stock mainly
consists of single-family homes. The multifamily properties that do exist tend to not be as
well maintained.
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SUBMARKET AREA 4: MOUNTAINS
Communities:
Angelus Oaks
Big Bear City
Big Bear Lake
Blue Jay
Cedar Glen
Crest Park
Crestline
Fawnskin
Forest Falls
Green Valley Lake
Lake Arrowhead
Lytle Creek
Mt Baldy
Rimforest
Running Springs
Skyforest
Sugarloaf
Twin Peaks
Wrightwood
Submarket 4, the Mountains, extends over the more recreational and resort areas of San
Bernardino County, and it includes municipalities such as Crestline, Lake Arrowhead,
Running Springs, Big Bear Lake, and Big Bear City. Very few multifamily residential units
are found in the area as most of the housing stock is single-family properties that function
as second or vacation homes. Currently, many of these property owners are experiencing
difficulty selling their second or vacation home, and consequently leasing the homes on a
short-term or long-term basis. The dominance of single-family homes in the rental market
along with the absence of many multifamily residential units inflates the rental rates in the
area. However, rates greatly vary in the area as proximity to the area’s lakes has a major
influence on cost of rental properties.
SUBMARKET AREAS 5 AND 6: SAN BERNARDINO NORTH AND SOUTH
Communities:
Cedarpines Park (Submarket Area 5)
Patton (Submarket Area 5)
San Bernardino (Submarket Areas 5 and 6)
The city of San Bernardino is divided into two submarkets: Submarket 5, which includes
the neighborhoods north of Interstate 210, and Submarket 6, which includes the
neighborhoods south of Interstate 210. The city is the county seat and has the highest
population, with more than 207,000 persons. Submarket 5 includes the campus of
California State University, San Bernardino. The size of the student population impacts the
availability of affordable quality housing as well as unit size. Students tend to group
together into available units and can as a group pay a higher rental rate than many families.
In addition, rental households with families tend to have a higher standard for housing
quality than rental households with students. These two factors combined resulted in fewer
housing options for lower- and moderate-income families. There are a number of
multifamily properties in the area, though they tend to be one- and two-bedroom units
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which cater to the student population. The housing stock is of better quality and newer
relative to Submarket 6; the units were generally built in the 1960s. The majority of the new
residential construction that has occured in the city has been in Submarket area 5.
Submarket 6 includes San Bernardino’s central business district, which is the location of
several federal, county, state, and local government offices. The submarket is also the
location of the former Norton U.S. Air Force Base, which was redeveloped into the San
Bernardino International Airport. The local housing stock in this submarket area is older and
not as well maintained as Submarket 5. Many of the homes were built in the 1940s and
1950s. Those units closer to the central business district are even older, having been built
in the 1920s and 1930s. The housing market crisis has impacted this submarket
extensively, with units in many of the neighborhoods in foreclosure.
SUBMARKET AREA 7: EAST VALLEY
Communities:
Bryn Mawr
Grand Terrace
Highland
Loma Linda
Mentone
Redlands
Yucaipa
Submarket 7, East Valley, has a number of communities that are very well maintained.
Some of the communities to the eastern edge of the submarket are not as developed and
are not densely populated. The submarket is bordered by the city of San Bernardino to the
north and west. As a result, those households looking to live in a more well-maintained
neighborhood may elect to live in East Valley rather than the city of San Bernardino. There
are also a number of agricultural areas within the submarket, which is known for its orange
groves. The housing stock includes homes in a typical suburban style, with single-family
homes in large subdivisions. The submarket also includes a number of multifamily
developments concentrated in Highland and Redlands.
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SUBMARKET AREA 8: WEST VALLEY
Communities:
Chino
Chino Hills
Corona
Fontana
Guasti
Montclair
Ontario
Pomona
Rancho Cucamonga
Upland
Submarket 8, West Valley, is one of the more affluent areas in San Bernardino County. The
area has an abundance of low-rise multifamily hosing units available for rent. Most of the
multifamily complexes are in good to excellent condition as they were built within the last
decade or have been recently updated to include many in-unit amenities, such as washer
and dryer, central air, and updated kitchens. The complexes also tend to be furnished with
full amenities, including pools, spas, clubhouses, and fitness centers. In addition to catering
to the senior, single, and young adult demographic, the rental units in this submarket also
cater to families, as many units have multiple bedrooms.
SUBMARKET AREA 9: CENTRAL VALLEY
Communities:
Bloomington
Colton
Rialto
Muscoy
The central valley includes incorporated communities (Rialto and Colton) but also two
unincorporated communities (Muscoy and Bloomington). Portions of the submarket are
more rural, with homes on large lots used by some for small-scale agriculture. The
unincorporated areas have become more suburban over the past two decades as a result
of pressure from the surrounding communities. Because the submarket area is located in
between two highly populated areas, it also serves as a bedroom community for the
communities to the east and west.
Much of the housing stock includes single-family homes. As in many other areas of the
county, there are a large number of single-family homes available for rent. There are also
some multifamily developments that are in the central and southern portion of the
submarket area.
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SECTION III.
ALTERNATIVE LOCAL PAYMENT STANDARDS
BACKGROUND ON THE HUD FMR AND CHALLENGES
Using guidelines set by the U.S. Department of Housing and Urban Development (HUD),
the maximum subsidy—or payment standards—for units leased under the HCV program
are set as a percentage of the applicable Fair Market Rent (FMR). The assumption is that
the FMR is a reasonable estimate of private-market rents for the voucher program, plus or
minus 10 percent. The methodology used by HUD in establishing FMRs has been
examined by various entities, including the National Association of Housing and
Redevelopment Officials, the Government Accountability Office, academic researchers, and
HUD itself. Many of these reviews have centered around two issues. First, the FMR areas
as defined by HUD are too large and encompass a variety of submarkets with varying rent
levels. Second, the data sources used by HUD in developing FMRs do not provide reliable
information on the local housing market, especially at the submarket level.
For HACSB, the applicable FMR is the Riverside-San Bernardino-Ontario, California
Metropolitan Statistical Area (MSA). The FMRs then reflect market rents for both Riverside
and San Bernardino counties as a single entity, rather than reflecting rents for cities, towns,
and other submarket areas. The more than 70 incorporated and unincorporated
communities in the county all fall under one set of FMRs. The area has substantial
geographic diversity, which includes urban areas, rural desert areas, and forests. In its 25
years of experience, AREA has found that the most reliable method for determining market
rents is to review market data at a submarket level. In some cases, the submarket may be
as large as an entire city. In other cases, the submarkets may be as small as two or three
Census tracts.
To develop the FMR, HUD uses several data sources, including the decennial United
States Census, the American Community Survey, random-digit dialing (RDD) telephone
surveys, PHA-supplied rental housing market surveys, and the Consumer Price Index.
Although these are the most readily available data sources for locations across the nation,
they are not the most accurate, particularly at the local level.
HUD has allowed housing authorities to provide rental housing market surveys as a rebuttal
to inaccurate FMRs. The methodology used in the surveys is to repeat the use of RDD
telephone surveys but with a larger sample from the PHA’s jurisdiction. However, RDD
surveys do not provide reliable data, independent of sample size. The information is
obtained from renters who provide their current rent, which is not necessarily the same rent
the landlord would charge a new renter. In addition, RDD surveys do not capture the true
value of rents because different respondents may interpret questions differently. In addition,
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the rents are obtained at a countywide level and do not take into account the different
markets that exist within a geographic area.
ALTERNATIVE LOCAL PAYMENT STANDARDS
The following alternative local payment standards were developed using the methodology
presented in Sections I and II. These standards provide ranges for rents for unsubsidized
units by submarket area and bedroom size for the County of San Bernardino. Although
these ranges were developed through extensive analysis, they are meant to serve as an
estimate of general market rents for a given area.
There is a great amount of disparity in each submarket: housing units vary not only block
by block but also unit by unit. There may be some units in the market area with a high level
of amenities that are in better condition than the majority of the units surrounding it that
would command a rent exceeding the stated ranges. In other cases, there may be units
that have limited amenities and are inferior to the neighboring units that would command
a rent below the stated ranges. Determining whether or not a rent requested for a particular
unit is a true market rent requires identifying specific comparable units within the same
submarket.
The following notes should be taken into consideration when reviewing the rental ranges
in Exhibit 4 on page 17:
# Higher Rental Ranges. Our research found that the higher rental markets in the
county are in the valley (Submarket Areas 7, 8, and 9, and in the northern part of the
city of San Bernardino (Submarket Area 5).
# Lower Rental Ranges. The Desert submarket area has significantly lower rents in
comparison with the rest of the county for two reasons. First, this submarket area
has a small rental housing stock and the units that are available for rent tend to be
of a poor quality. Second, the submarket area has limited market appeal as a result
of the desert environment, limited area amenities, and limited employment
opportunities.
# Larger unit sizes. The larger unit sizes (three and four bedrooms) tend to include
more single-family homes. Most of the submarkets did not have a large number of
three and four bedroom units in multifamily complexes. The market place has a
limited number of rental units that are larger than four bedrooms. While the real
estate industry generally does not have a set formula for calculating rents for larger
unit sizes, HACSB could use the method set by HUD for the FMRs. In this method,
in order approximate the payments standards for units that have five bedrooms or
more, a 15 percent premium on the four bedroom rent is added for each bedroom.
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APPLIED REAL ESTATE ANALYSIS, INC.
For example, the rent for a six-bedroom unit would be 130 percent of the rent for the
four-bedroom unit.
# Submarket Area 4. This submarket has a large number of vacation and second
homes that currently have one-year rental terms. As a result, the larger unit sizes
have significantly higher prices. In many cases, the amenities for these units and
their market rents make them unaffordable for HCV program participants.
# Submarket Area 3. There is a significant difference in rent between the three and
four bedroom units because of the smaller number of larger unit sizes available.
# Submarket Areas 5 and 6. The rents are higher in Submarket Area 5 due to the
presence of the University. The rents for the two bedroom units in the submarkets
are closer most likely as a result of the large inventory of two-bedroom units.
# Comparison to Fair Market Rents. We found the market rents were generally
lower than the final 2010 FMRs. Exceptions are units in Submarket Areas 7 and 8
and the four bedroom units in Submarket Area 4.
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APPLIED REAL ESTATE ANALYSIS, INC.
Exhibit 4.
Alternative Local Payment Standards
Submarket Area
Studio 1 Bedroom 2 Bedrooms
3 Bedrooms
4 Bedrooms
5 Bedrooms
6 Bedrooms
7 Bedrooms
1-Desert
$200-300
$375-500
$450-550
$550-615
$650-735
$750-$850
$845-$960
$945-$1,070
2-Victor Valley/Barstow
$425-525
$500-600
$650-700
$950-1,100
$1,350-1,700
$1,555-$1,955
$1,755-$2,210
$1,960-$2,465
3-Morongo Valley/Twentynine Palms
$500-600
$500-650
$600-800
$800-1,200
$1,500-2,100
$1,725-$2,415
$1,950-$2,730
$2,175-$3,045
4-Mountains
$450-550
$500-600
$550-800
$950-1,500
$1,400-3,000
$1,610-$3,450
$1,820-$3,900
$2,030-$4,350
5-San Bernardino North
$600-675
$735-895
$775-995
$1,125-1,395
$1,225-1,435
$1,410-$1,655
$1,595-$1,870
$1,780-$2,085
6-San Bernardino South
$500-600
$550-695
$725-895
$850-950
$1,000-1,200
$1,150-$1,380
$1,300-$1,560
$1,450-$1,740
7-East Valley
$640-840
$750-920
$850-1,070
$1,350-1,550
$1,450-1,700
$1,670-$1,955
$1,885-$2,210
$2,105-$2,465
8-West Valley
$875-925
$900-1,200 $1,200-1,500
$1,500-1,750
$1,775-1,900
$2,045-$2,185
$2,310-$2,470
$2,575-$2,755
9-Central Valley
$585-700
$995-1,125
$1,300-1,500
$1,495-$1,725
$1,690-$1,950
$1,885-$2,175
$700-785
$885-1,000
Source: Applied Real Estate Analysis
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A PPLIED R EAL E STATE A N ALYSIS , IN C .
SECTION IV.
NEXT STEPS
UPDATES TO THE ANALYSIS
The short-term rental market outlook for the county indicates that rents will stay stable or
decrease slightly. In the long term, as the economy and employment improve, both the
owner and rental housing market will stabilize and eventually improve, as real estate trends
are cyclical.
In most communities, rents do not change significantly enough to justify a review more than
annually. In some submarkets, rents may change only slightly over the course of a year.
Consequently, we recommend an annual review of the submarket area definitions as well
as the rents in each submarket.
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APPLIED REAL ESTATE ANALYSIS, INC.