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 | $2,950 |
| 1 Bedroom | $3,050 |
| 2 Bedrooms | $3,640 |
| 3 Bedrooms | $4,340 |
| 4 Bedrooms | $4,780 |
| 5 Bedrooms | $5,545 |
| 6 Bedrooms | $6,210 |
| 7 Bedrooms | $6,707 |
| 8 Bedrooms | $7,042 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $3,050 | $383,885 | 0.79% | D |
| 2BR | $3,640 | $645,226 | 0.56% | F |
| 3BR | $4,340 | $814,106 | 0.53% | F |
| 4BR | $4,780 | $1,002,063 | 0.48% | F |
| 5BR | $5,545 | $1,074,644 | 0.52% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 02451 in Waltham, Massachusetts, reveals some interesting dynamics between federally mandated Fair Market Rent (FMR) and the local market conditions. To start, let's annualize the figures provided: the 2BR FMR for FY 2024 is $3220 per month, which translates to an annual rent of $38,640. The ZORI (Zillow Observed Rent Index) for a 2BR unit stands at $3,158 monthly, equating to an annual market rent of $37,896.
Using the median home value of $812,666 as our investment basis, we can calculate the implied gross yield for both the FMR and ZORI scenarios. For the FMR scenario, the gross yield is approximately 4.75%, calculated as $38,640 divided by $812,666. In contrast, the ZORI scenario yields a slightly lower gross return of about 4.66%, calculated as $37,896 divided by $812,666.
The difference in these gross yields is minimal, indicating that the federal guidelines for Section 8 rental rates closely align with the local market conditions in Waltham. However, the reality of the situation must be considered through the lens of the city's 40.7% renter density. This figure suggests that while a significant portion of residents are renters, the majority still own their homes. This ownership trend might imply a competitive rental market where landlords could potentially negotiate higher rents outside of Section 8, depending on demand.
The N/A-day DOM (Days On Market) statistic indicates that there isn't sufficient data to determine how long properties typically stay on the market before being rented, which could mean that rentals move quickly once listed, or it could reflect a lack of comprehensive data. Given the high median home value and the relatively low renter density, it's reasonable to assume that landlords might prefer to avoid the limitations of the Section 8 program in favor of market-rate tenants who could pay closer to the ZORI or even above it.
In conclusion, while the gross yields for both the FMR and ZORI scenarios are nearly identical at around 4.75% and 4.66% respectively, the local context of Waltham, with its high median home values and moderate renter density, suggests that market-rate rents are likely more attainable and preferable for landlords and small-portfolio investors. This preference would naturally lead them away from the strictures of Section 8 and toward the flexibility of renting at market rates.
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.