Owners' Equivalent Rent - OER
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Definition of 'Owners' Equivalent Rent - OER'
The amount of rent that could be paid to substitute a currently owned house for an equivalent rental property. Owners' equivalent rent (OER) is a dollar amount that is published by the U.S. Bureau of Labor Statistics to measure the change in implicit rent, which is the amount a homeowner would pay to rent or would earn from renting his or her home in a competitive market.
Owners' equivalent rent is obtained by directly asking sampled homeowners 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?" It is also referred to as rental equivalence.
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Investopedia explains 'Owners' Equivalent Rent - OER'
When evaluating housing and shelter, owners' equivalent rent of a primary residence is one of the two main components of the Consumer Price Index (CPI), which measures the average change over time in the prices paid by consumers for a market basket of goods and services. The other component is rent of a primary residence.
Homeownership equivalents attempt to include monetary factors such as prevailing interest rates, property taxes, available mortgage products and insurance to estimate changes in shelter costs.
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