Location: Newark, NJ | Metro: Newark, NJ 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 | $1,650 |
| 1 Bedroom | $1,860 |
| 2 Bedrooms | $2,250 |
| 3 Bedrooms | $2,810 |
| 4 Bedrooms | $3,210 |
| 5 Bedrooms | $3,724 |
| 6 Bedrooms | $4,171 |
| 7 Bedrooms | $4,505 |
| 8 Bedrooms | $4,730 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $2,810 | $699,761 | 0.4% | F |
| 4BR | $3,210 | $761,497 | 0.42% | F |
U.S. Census Bureau data (2024)
A landlord considering investing in ZIP code 07027 for Section 8 purposes must follow a structured decision-making process based on financial metrics and market conditions.
Step 1: Evaluate if the Fair Market Rent (FMR) of $2,200 can cover the debt service on a property valued at $682,410. This requires calculating the monthly mortgage payment. Assuming a typical 30-year fixed-rate mortgage at an interest rate of 4%, the monthly principal and interest payment would be approximately $3,300. Given that the FMR does not clear this amount, the initial answer is No. However, if the landlord plans to purchase a property at a lower price point or secure a loan with a lower interest rate, they should proceed to Step 2.
Step 2: Compare the ZORI (Zillow Observed Rent Index) of $2,200 against the FMR. In this case, the ZORI is exactly at the FMR. This indicates that the rental market is aligned with Section 8 rates, which means that landlords will neither gain nor lose significant ground in terms of rental income when compared to the broader market. The answer here is It Depends. Landlords must consider their long-term goals and whether they are willing to accept market parity without premium or discount.
Step 3: Assess the demand for rentals. With 45.6% of the population being renters, there is a notable level of demand. However, the data provided does not include the days on market (DOM), which is crucial for understanding how quickly properties are rented out. Without this information, it's challenging to determine if the rental vacancy rate is acceptable. If the DOM is low, indicating quick leasing, then the answer is Yes, there is sufficient demand. Conversely, if the DOM is high, suggesting slow leasing, the answer shifts to No.
In summary, a landlord should not invest in ZIP 07027 if the primary goal is to use Section 8 to cover debt service on a $682,410 property, as the FMR of $2,200 falls short of the required $3,300. If the landlord is willing to accept market parity and has identified a property with a lower value, they must then evaluate the speed at which properties are leased. Low DOM values would support a positive investment decision, while high DOM values would discourage it.
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.