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Imputed Mean Rent  Rent-to-value ratio  Unpublished Census estimates  Mid-point of available rent intervals (12 or 8) 8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