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 | $2,270 |
| 1 Bedroom | $2,340 |
| 2 Bedrooms | $2,800 |
| 3 Bedrooms | $3,340 |
| 4 Bedrooms | $3,680 |
| 5 Bedrooms | $4,269 |
| 6 Bedrooms | $4,781 |
| 7 Bedrooms | $5,163 |
| 8 Bedrooms | $5,421 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,340 | $382,773 | 0.61% | D |
| 2BR | $2,800 | $475,100 | 0.59% | F |
| 3BR | $3,340 | $615,546 | 0.54% | F |
| 4BR | $3,680 | $679,790 | 0.54% | F |
| 5BR | $4,269 | $845,899 | 0.5% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 02150, Chelsea, MA, reveals some interesting insights when comparing the Federal Market Rent (FMR) and the Zillow Observed Rent Index (ZORI).
Based on the Fair Market Rent for a 2-bedroom apartment at $2390 per month, the annualized rent would be $28,680. When compared to the median home value of $525,536, this implies a gross yield of approximately 5.46%. On the other hand, using the ZORI figure of $2,596 per month, the annualized rent increases to $31,152, resulting in a gross yield of about 5.93%.
To determine which scenario is more realistic, consider the local rental market dynamics. Chelsea has a high renter density of 74.0%, indicating a strong demand for rental properties. However, the N/A-day DOM (Days on Market) suggests that the exact time it takes for properties to rent out is unclear, which could impact the speed at which investors see returns.
The higher gross yield derived from the ZORI figure is more reflective of the current market conditions, given the robust rental environment in Chelsea. While the FMR provides a benchmark for government-assisted housing programs, it often underestimates the actual market rents, especially in areas with high demand like Chelsea. Therefore, for investment purposes, the gross yield of 5.93% based on the ZORI is a more accurate representation of potential returns.
This analysis shows that while the Section 8 program can provide a steady stream of income, investors should also consider the broader market trends to gauge the true earning potential of their investments. The gross yield difference between the two scenarios highlights the importance of understanding both government-set rates and market-driven rents.
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.