Location: Worcester, MA | Metro: Worcester, MA HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,430 |
| 1 Bedroom | $1,440 |
| 2 Bedrooms | $1,860 |
| 3 Bedrooms | $2,300 |
| 4 Bedrooms | $2,550 |
| 5 Bedrooms | $2,958 |
| 6 Bedrooms | $3,313 |
| 7 Bedrooms | $3,578 |
| 8 Bedrooms | $3,757 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,440 | $337,075 | 0.43% | F |
| 2BR | $1,860 | $372,356 | 0.5% | F |
| 3BR | $2,300 | $459,211 | 0.5% | F |
| 4BR | $2,550 | $525,798 | 0.48% | F |
| 5BR | $2,958 | $542,517 | 0.55% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate picture for ZIP code 01562 in Spencer, Massachusetts, reveals a significant disparity between federally set rental rates and market conditions. Using the Fair Market Rent (FMR) for a two-bedroom unit at $1480 per month, the annualized figure amounts to $17,760. This translates to an implied gross yield of approximately 4.1% when compared to the median home value of $432,940.
In contrast, the market rent, as indicated by the Zillow Observed Rent Index (ZORI), stands at $2,054 per month for a similar unit. Annualizing this rate gives us $24,648, which implies a gross yield of about 5.7% relative to the median home value.
Given the 37.0% renter density in Spencer, it is evident that a substantial portion of the population relies on rental housing, including those who might qualify for Section 8 assistance. However, the N/A-day Days on Market (DOM) suggests that there is either limited data available or that properties are selling quickly, without providing a clear indication of how long they remain on the market. This lack of specificity regarding DOM makes it challenging to predict exactly how long a property might be occupied by a tenant under the Section 8 program.
The higher gross yield based on market rent reflects a more optimistic scenario for landlords and small-portfolio investors, considering the demand for rental properties in the area. While the Section 8 rate provides a guaranteed income source, it falls significantly short of market expectations, offering a lower gross yield that could impact investment returns.
Investors should consider the trade-offs between the stability offered by Section 8 tenants and the potentially higher returns from market-rate rentals. The choice depends largely on individual investment goals and risk tolerance. For those prioritizing steady cash flow over immediate high yields, the Section 8 option remains viable, albeit with a lower gross yield of 4.1%. Conversely, those aiming for a closer alignment with local market conditions can expect a gross yield of around 5.7%, reflecting the current demand and rental rates in Spencer.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). Demographics from U.S. Census (2024).
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.