Location: Boston-Cambridge-Quincy, MA | Metro: Boston-Cambridge-Quincy, MA-NH HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,130 |
| 1 Bedroom | $2,230 |
| 2 Bedrooms | $2,650 |
| 3 Bedrooms | $3,180 |
| 4 Bedrooms | $3,510 |
| 5 Bedrooms | $4,072 |
| 6 Bedrooms | $4,561 |
| 7 Bedrooms | $4,926 |
| 8 Bedrooms | $5,172 |
U.S. Census Bureau data (2024)
The Section 8 cap rate scenario for ZIP 02053 (Medway, MA) can be analyzed using the Fair Market Rent (FMR) and the Zillow Observed Rent Index (ZORI). For a two-bedroom property, the annualized FMR for FY 2024 is $2380, while the market rent based on ZORI is $3,089.
To derive the gross yield, we first calculate the potential annual rental income. The FMR scenario implies an annual rental income of $2380, resulting in a gross yield of approximately 0.33%. This is calculated as follows:
$2380 / $718,565 = 0.0033 or 0.33%
In contrast, the ZORI market rent suggests a significantly higher annual rental income of $3,089, leading to a gross yield of around 0.43%. The calculation for this is:
$3,089 / $718,565 = 0.0043 or 0.43%
The difference between these two yields is substantial, reflecting the disparity between government-subsidized rents and market rates. Given the 14.1% renter density in Medway, it's important to note that the majority of homeowners are likely owner-occupiers rather than landlords. However, for those who do participate in the rental market, the 6-day days on market (DOM) indicates a strong demand for rental properties, suggesting that market rents are more achievable.
While the FMR represents the maximum amount the government will pay for a Section 8 voucher, landlords often find themselves competing with market conditions. In a competitive market such as Medway, where homes sell quickly, landlords might struggle to maintain occupancy at FMR levels. Therefore, the ZORI-based gross yield of 0.43% provides a more realistic expectation for landlords and small-portfolio investors considering the dynamics of the local rental market.
Data Sources: FMR data from HUD (2027). 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.