Section 8 Fair Market Rent (FMR) for ZIP 01059 - 2027

FY 2027 Fair Market Rent Rates

The analysis for ZIP code 01059 in Massachusetts reveals some limitations due to incomplete data, particularly concerning the median home value and specific market rental rates. However, using the provided Fair Market Rent (FMR) for a two-bedroom apartment, which stands at an annualized figure of $25,560 ($2,130 per month), we can infer certain trends.

To calculate the implied gross yield, we would typically divide the annual rental income by the property's value. In this case, since the median home value is not available, we must rely on other indicators to provide context. The FMR is set by HUD and represents the maximum amount that a landlord can charge for a rental unit under the Section 8 program.

In a scenario where the market rent is unknown, it's prudent to assume that the actual market rent could be higher than the FMR, potentially leading to a better gross yield for landlords participating in the Section 8 program. This assumption is based on historical trends where market rents often exceed FMRs, especially in areas with a high cost of living.

The implied gross yield using the FMR can be calculated once the median home value is known. For example, if the median home value were hypothetically $300,000, the gross yield would be 8.52% ($25,560 / $300,000 * 100). If the market rent were higher, say $2,500 per month, or $30,000 annually, the gross yield would improve to 10% ($30,000 / $300,000 * 100).

Without precise figures for median home values and market rents, it's challenging to give a definitive cap rate for ZIP 01059. However, the trend suggests that landlords might see a slightly lower gross yield compared to the market rent when relying solely on the FMR. This difference highlights the importance of understanding local rental dynamics and considering factors such as renter density and days on market (DOM).

The lack of specific renter density and DOM figures further complicates a detailed analysis. Typically, a higher renter density and shorter DOM indicate a robust rental market, which could support higher rents above the FMR. Conversely, lower density and longer DOM periods might suggest a softer market where rents closer to the FMR are more common.

Given these considerations, landlords should aim to secure properties with values that allow for a reasonable gross yield even at the FMR level. This ensures profitability while participating in the Section 8 program, which is crucial for maintaining a stable investment portfolio in ZIP 01059.

Data Sources: FMR data from HUD (2027).

About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.