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 | $1,730 |
| 1 Bedroom | $1,740 |
| 2 Bedrooms | $2,240 |
| 3 Bedrooms | $2,810 |
| 4 Bedrooms | $3,200 |
| 5 Bedrooms | $3,712 |
| 6 Bedrooms | $4,157 |
| 7 Bedrooms | $4,490 |
| 8 Bedrooms | $4,715 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,740 | $293,438 | 0.59% | F |
| 2BR | $2,240 | $358,357 | 0.63% | D |
| 3BR | $2,810 | $458,147 | 0.61% | D |
| 4BR | $3,200 | $512,905 | 0.62% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 01604 in Worcester, MA, reveals two distinct scenarios based on the Federal Market Rent (FMR) and the Zillow Observed Rent Index (ZORI).
First, let's consider the annualized 2BR FMR of $1820 for FY 2024. This translates to an annual rental income of $21,840. Given the median home value in the area is $418,106, the implied gross yield for a property rented at the FMR would be approximately 5.22%. The calculation is straightforward: divide the annual rental income by the median home value.
Next, we look at the ZORI, which indicates a market rent of $2,203 for a 2BR unit. This results in an annual rental income of $26,436. Using the same median home value, the implied gross yield for renting at market rates is about 6.32%.
To determine which scenario is more realistic, we must consider the 55.9% renter density in the area. This high percentage suggests that there is significant demand for rental properties, potentially favoring the higher market rent scenario. However, the N/A-day DOM (Days on Market) complicates this assessment; it implies either a very quick turnover or that the data is incomplete, making it difficult to gauge how quickly a property can be rented out at market rates.
In conclusion, while the market rent scenario offers a more attractive gross yield of 6.32%, the FMR scenario provides a stable and predictable income stream with a gross yield of 5.22%. Investors should weigh these figures against the local rental market dynamics, particularly the strong tenant demand indicated by the high renter density, before making decisions.
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.