The Experience of OOH in the United States Michael Hayes Technical Workshop on Owner-Occupied Housing Astana, Kazakhstan December 3, 2014
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 2
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 3
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 4
OOH Derivation U.S. uses owner-equivalent rent approach Imputation is the product of units, rents, and changes in quality 5
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 6
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 7
Imputed Mean Rent Rent-to-value ratio Unpublished Census estimates Mid-point of available rent intervals (12 or 8) 8
Estimated Rent-to-Value Ratios 9
Quality Adjustment Owner- and tenant-occupied rent differential Based on inflation-adjusted value of assets (CPI for residential rent) 10
Estimated Rent-to-Value Ratios 11
Intermediate Expenses Mortgage interest Effective rate of interest Maintenance and repair, insurance, taxes Other expenses Acquisition 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 12
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
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) 14
Comparison of Units, Housing–Based Versus Population-Based Weights 15
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 rule 16