Location: Waterbury-Shelton, CT | Metro: Waterbury-Shelton, CT MSA
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 | $1,200 |
| 1 Bedroom | $1,310 |
| 2 Bedrooms | $1,670 |
| 3 Bedrooms | $2,090 |
| 4 Bedrooms | $2,490 |
| 5 Bedrooms | $2,888 |
| 6 Bedrooms | $3,235 |
| 7 Bedrooms | $3,494 |
| 8 Bedrooms | $3,669 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,310 | $116,040 | 1.13% | B |
| 2BR | $1,670 | $194,705 | 0.86% | C |
| 3BR | $2,090 | $295,629 | 0.71% | D |
| 4BR | $2,490 | $304,781 | 0.82% | C |
| 5BR | $2,888 | $345,062 | 0.84% | C |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 06704 in Waterbury, CT, reveals two distinct scenarios based on the Fair Market Rent (FMR) and market rent figures. Using the annualized 2BR FMR of $1300 for fiscal year 2024, the implied gross yield is calculated as follows: ($1300 * 12) / $257,710 = 6.1%. This represents the rental income generated from the federal housing assistance program relative to the median home value.
In contrast, using the Zillow Observed Rent Index (ZORI) figure of $1,529 per month, the implied gross yield is significantly higher at ($1,529 * 12) / $257,710 = 7.1%. This calculation reflects the potential rental income based on current market conditions against the same median home value.
Given the 54.7% renter density in the area, it's important to consider how this affects the realism of these gross-yield scenarios. A high renter density suggests strong demand for rental properties, which generally supports higher market rents. However, the N/A-day Days on Market (DOM) indicates incomplete data, possibly due to rapid turnover or low inventory, making it challenging to assess the typical time frame for property leasing.
The 6.1% gross yield derived from the FMR is more conservative and directly tied to government-set rates. It is a guaranteed income stream for landlords participating in the Section 8 program, though it does not account for potential market fluctuations or landlord incentives to seek higher rents. The 7.1% gross yield based on market rents is more optimistic and aligns with the observed demand, suggesting that landlords could potentially earn more by renting outside of the Section 8 program.
For investors, the choice between these yields depends on their risk tolerance and investment goals. The FMR scenario offers stability and predictability, while the market rent scenario presents an opportunity for higher returns, contingent upon securing tenants willing to pay above the subsidized rate. Given the strong rental market indicated by the high renter density, the 7.1% gross yield appears more realistic, although the lack of DOM data limits a full assessment of market dynamics.
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.