Location: Boston-Cambridge-Quincy, MA | Metro: Boston-Cambridge-Quincy, MA-NH 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 | $3,350 |
| 1 Bedroom | $3,460 |
| 2 Bedrooms | $4,130 |
| 3 Bedrooms | $4,920 |
| 4 Bedrooms | $5,430 |
| 5 Bedrooms | $6,299 |
| 6 Bedrooms | $7,055 |
| 7 Bedrooms | $7,619 |
| 8 Bedrooms | $8,000 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $3,460 | $833,982 | 0.41% | F |
| 2BR | $4,130 | $1,676,610 | 0.25% | F |
| 3BR | $4,920 | $3,265,000 | 0.15% | F |
| 4BR | $5,430 | $4,943,139 | 0.11% | F |
| 5BR | $6,299 | $6,333,419 | 0.1% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate scenario for ZIP code 02116 in Boston, MA, reveals an interesting picture when comparing the Federal Market Rent (FMR) and the market rent. For a two-bedroom unit, the annualized FMR for FY 2024 is set at $4210, while the Zillow Observed Rent Index (ZORI) indicates a market rent of $3,431 per month. This translates to an annual market rent of $41,172.
To calculate the gross yield, we use the median home value of $1,352,775 as our investment basis. With the annualized FMR of $4210, the gross yield is calculated as follows:
The gross yield derived from the FMR is significantly lower compared to the gross yield based on market rent. Given the 65.0% renter density and the average Days on Market (DOM) of 19 days, it is more realistic to expect a gross yield closer to the market rent figure. The high renter density suggests strong demand for rental properties, and the low DOM implies that units are likely to be occupied quickly, reducing vacancy rates and increasing the likelihood of achieving market rents.
In conclusion, while the Section 8 program offers stability through government-subsidized rents, the actual performance of properties in ZIP 02116 would likely align more closely with market conditions, indicating a gross yield of approximately 3.04%. This higher yield reflects the robust rental market and the potential for landlords to achieve better returns by renting at market rates rather than relying solely on Section 8 subsidies.
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.