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 | $3,370 |
| 1 Bedroom | $3,480 |
| 2 Bedrooms | $4,160 |
| 3 Bedrooms | $4,960 |
| 4 Bedrooms | $5,470 |
| 5 Bedrooms | $6,345 |
| 6 Bedrooms | $7,106 |
| 7 Bedrooms | $7,674 |
| 8 Bedrooms | $8,058 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $4,160 | $1,116,646 | 0.37% | F |
| 3BR | $4,960 | $1,493,331 | 0.33% | F |
| 4BR | $5,470 | $2,119,024 | 0.26% | F |
| 5BR | $6,345 | $3,066,737 | 0.21% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 02481, which encompasses Wellesley, Massachusetts, highlights a significant gap between the Fair Market Rent (FMR) set by HUD and the actual market rents. For fiscal year 2024, the FMR stands at $4240, while the market rent, as measured by Zillow's ZORI index, is $3475. This indicates that the FMR is higher than the market rent by $765, or approximately 22%. In this context, landlords and small-portfolio investors can leverage this gap to create a yield play.
The reason voucher tenants can make this a yield play is due to the guaranteed income stream provided by the Section 8 program. Even though the market rent in Wellesley is lower than the FMR, landlords who accept Section 8 vouchers will receive the higher FMR rate, which compensates them for the difference. Given that only 12.7% of residents are renters, and the median home value is $2,206,938 with a median income of $250,001, it suggests that Wellesley is predominantly a homeowner community with relatively high property values and incomes. Therefore, the influx of Section 8 voucher holders can be seen as an opportunity to tap into a government-backed rental subsidy that exceeds the local market rates.
Landlords should be aware that accepting housing vouchers comes with certain responsibilities and regulations. However, the financial benefit of receiving a higher rent payment through the Section 8 program compared to the open-market rates makes it a compelling option for maximizing yields. The key is understanding the local rental dynamics and how the Section 8 rates interact with the broader housing market in Wellesley, where the majority of residents are homeowners and the rental segment is smaller but potentially lucrative when aligned with government assistance programs.
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.