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The Experience of OOH in the United States

Michael Hayes

Technical Workshop on Owner-Occupied HousingAstana, Kazakhstan

December 3, 2014

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Overview

Rental income of persons is similar in concept to corporate profits and proprietors’ income in that it measures the net income generated from the rental (actual or imputed) of property

Rental income of persons refers to the net income earned by landlords (including both actual landlords and owner-occupants) that are not sole proprietors, partnerships, or corporations

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Derivation

Rental income = gross revenue – current expenses

Gross revenue is revenue from gross rents plus revenue from other sources (such as interest receipts, current transfer receipts, and subsidies

Current expenses include mortgage interest payments, intermediate inputs, consumption of fixed capital (or depreciation), business transfer payments, and taxes on production

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Owner-Occupied Housing

Gross rental values of owner-occupied housing are imputed in the U.S. national accounts

This approach ensures that measures of GDP and national income are the same regardless of whether shelter is owned or rented

The imputation is derived using a rent-to-value ratio approach

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OOH Derivation

U.S. uses owner-equivalent rent approach

Imputation is the product of units, rents, and changes in quality

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Housing Units

Benchmarked to American Community Survey

Previously used the Decennial Census of Housing

Different definitions of vacant unit Seasonally occupied units Condominiums, townhouses,

timeshares

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Housing Units (continued)

Quarterly estimates from the Current Population Survey Housing Vacancy Survey

Removal Depreciation/consumption of fixed

capital Disasters’ impact on the capital stock

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Imputed Mean Rent

Rent-to-value ratio

Unpublished Census estimates Mid-point of available rent intervals

(12 or 8)

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Estimated Rent-to-Value Ratios

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Quality Adjustment

Owner- and tenant-occupied rent differential

Based on inflation-adjusted value of assets (CPI for residential rent)

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Estimated Rent-to-Value Ratios

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Intermediate Expenses

Mortgage interest Effective rate of interest

Maintenance and repair, insurance, taxes Other expensesAcquisition and (expected) disposal costs

(incorporated in 2013 to meet SNA guidelines) Expected ownership is twelve years Expenses moved to capital stock (impacting

CFC) Now recorded as Investment

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Source Data

Mostly Census surveys

Operating assumption of one household = one unit

Differing weighting schemes across Census surveys Table showing results of different weighting

approaches Standardization in 2016 to the Housing Vacancy

Survey 13

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Household Surveys Used

Basic CPS – Monthly labor force survey with occasional supplements (e.g., fertility, school enrollment)

CPS/ASEC – Current Population Survey Annual Social and Economic Supplement Conducted over a 3-month period Produces key income and poverty data as well as household and

family estimates

CPS/HVS – Current Population Survey Housing Vacancy Survey Conducted each month with results based on quarterly averages

ACS – American Community Survey Conducted each month with results presented on an annual basis

AHS – American Housing Survey Conducted in odd-numbered years (2007, 2009, 2011)

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Comparison of Units, Housing–Based Versus Population-Based Weights

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Comparison of units derived from housing-based weights and population-based weights(Thousands of units)

2002 housing weights 2002 population weights

Total housing units 119,297 123,318

Occupied units 104,965 108,539

Vacant units 14,332 14,779

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Source Data (cont.)

Space rent Contract rent- utilities-consumer durables Consumer price index for residential rent

Intermediate expenses Challenging because some sources no longer

available Residential Finance Survey Survey on maintenance and repairs (SOARAR)

Gradual rise of private-sector databases Mortgage data (Black Knight) Automated valuation models (AVMs) resulting

from qualifying mortgage rule16