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7.5.13.2 Effective Demand

HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021) · 2026 edition · updated 2026-10-05 · United States

A. The estimate of "effective demand" is the pool of households with sufficient income and/or applicable household size that would be expected to demand such housing during the forecast period, including the income levels and rent- to-income ratio(s) assumed in the study. Evaluation of Effective Demand includes an analysis of Capture Rate and Penetration Rate:

  1. Renter Capture Rate is defined as the percentage of qualified potential renter households in the PMA that the property must capture to fill the units and achieve stabilized occupancy. Qualified Renter Households is defined as households that meet any applicable age and household size restrictions and are within any limiting income eligibility band, such as LIHTC Income Limits, and who have sufficient minimum income to pay the proposed rent without being rent overburdened. The Renter Capture

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Chapter 7 Valuation & Market Analysis 7.5 Content and Format of the Market Study

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Rate is calculated by dividing the total number of units at the property by the total number of renter households that meet the applicable age and any income band requirements.

  1. Penetration Rate is defined as the percentage of Qualified Renter Households in the PMA that the property and similar existing and proposed competing properties must capture to fill all units and achieve stabilized occupancy. The Penetration Rate is calculated by dividing the total number of units in the competitive inventory (including the subject property, current competitive properties, and proposed relevant competitive properties) by the total number of renter households that meet the applicable age and income eligibility band requirements.

  2. For communities with subsidized units, affordability and penetration rate sensitivity analyses should be conducted both with and without project-based rental assistance.

  3. The capture and penetration rate analysis must be completed for each unit type at the subject property.

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▸Contents — HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021)
HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021)

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