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 | $1,440 |
| 1 Bedroom | $1,450 |
| 2 Bedrooms | $1,870 |
| 3 Bedrooms | $2,340 |
| 4 Bedrooms | $2,670 |
| 5 Bedrooms | $3,097 |
| 6 Bedrooms | $3,469 |
| 7 Bedrooms | $3,747 |
| 8 Bedrooms | $3,934 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,450 | $250,292 | 0.58% | F |
| 2BR | $1,870 | $396,704 | 0.47% | F |
| 3BR | $2,340 | $544,202 | 0.43% | F |
| 4BR | $2,670 | $663,890 | 0.4% | F |
| 5BR | $3,097 | $771,739 | 0.4% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 01609 in Worcester, MA, reveals two distinct scenarios based on the Fair Market Rent (FMR) and the market rent. Using the annualized 2BR FMR of $1600 for FY 2024, the implied gross yield can be calculated. With a median home value of $538,912, the annual rental income of $19,200 translates into a gross yield of approximately 3.56%. This calculation is straightforward: divide the annual rental income by the property value.
However, when comparing this to the market rent, represented by the ZORI figure of $1,884 per month, the gross yield increases significantly. The annual rental income here would be $22,608, resulting in a gross yield of about 4.19%. This higher yield reflects the premium landlords might expect from market rents compared to the government-set FMRs.
To determine which scenario is more realistic, consider the local rental market dynamics. ZIP 01609 has a high renter density of 59.9%, indicating a strong demand for rental properties. However, the N/A-day DOM (days on market) suggests that either data is incomplete or the market moves quickly, making it difficult to assess how long properties typically remain available before being rented out. Despite this uncertainty, the higher market rent scenario appears more plausible due to the significant rental demand in the area.
While the Section 8 program provides stability and a guaranteed tenant through federal subsidies, the lower gross yield of 3.56% may not be attractive to all landlords, especially those looking for higher returns. On the other hand, the market rent scenario offers a more appealing gross yield of 4.19%, aligning better with the potential for higher rental income driven by strong local demand.
In conclusion, while both the FMR and market rent scenarios provide insights into the potential returns, the higher gross yield from market rents seems more realistic for ZIP 01609. Landlords should carefully weigh the benefits of program stability against the potential for higher returns in a robust rental market.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.