What Is Owners' Equivalent Rent (OER)?

Owners’ equivalent rent (OER) is the amount of rent that would have to be paid in order to substitute a currently owned house as a rental property. This value is also referred to as the rental equivalent. In other words, OER figures the amount of monthly rent that would be equivalent to the monthly expenses of owning a property (e.g. mortgage, taxes🍎, etc.).

Understanding Owners' Equivalent Rent

Owners’ equivalent rent is a statistic followed by homeowners and tracked by the 澳洲幸运5官方开奖结果体彩网:Bureau of Labor Statistics. The data used to c🥀alculate it is obtained through surveys, which ask members of a household (called a consumer unit) the following question: "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished, and without utilities?"

OER is a commonly cited measure that provides a gauge for changes in 澳洲幸运5官方开奖结果体彩网:real estate market values. If OER is high, it may be more worthwhile to buy a home rather than rent it. On the othꦬer hand, if OER is low, re🍸nting might be a better prospect.

Owners’ equivalent rent typically changes with movements in the Consumer Price Index. OER increases over time and was steadily increasing up until 2022, when the economy was hit with high inflation, which saw OER increase at higher rates than before 2022.

Evaluating OER

When evaluating housing and shelter, owners' equivalent rent of a primary residence is one of the three components of the shelter category that contribute to the 澳洲幸运5官方开奖结果体彩网:Consumer Price Index (CPI). The CPI measures the average change over time in the prices paid b♎y consumers for a market ba🌞sket of goods and services.

The calculation takes into account rental values, owners’ equivalent rent, and lodging away from home. These three components drive changes in the total value of shelter. Collectively, they can be influenced by the overall real estate market environment and various monetary factors, such as prevailing interest rates, property taxes, available mortgage products, and 澳洲幸运5官方开奖结果体彩网:insurance.

For instance, in December 2024, the shelter component of the reported a 0.3% monthly increase and a 4.6% annual increase. Shelter prices were among the highest increases across the CPI the previous year, with medical care, utilities, and transportation services having the highest impact. In December 2024, the CPI’s average increase across all items was 2.9%.

In addition to serving as a component of the CPI, the Bureau of Labor Statistics also provides data on fluctuations in owners’ equivalent rent monthly. This owners' equivalent rent is a percentage change that the Bureau of Labor Statistics publishes to measure the change in implicit rent, which is the amount a homeowner would pay to rent or would earn from renting their home in a competitive market.

The Bottom Line

Owners’ equivalent rent (OER) is a metric that provides insight into the changes in the re𒉰al estate market and can help assist consumers in determining whether it is a better time to buy a property or rent a home.