Owners' Equivalent Rent - OER
What is '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.
BREAKING DOWN '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.