Location: Newark, NJ | Metro: Middlesex-Somerset-Hunterdon, 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 | $2,210 |
| 1 Bedroom | $2,410 |
| 2 Bedrooms | $2,980 |
| 3 Bedrooms | $3,600 |
| 4 Bedrooms | $4,060 |
| 5 Bedrooms | $4,710 |
| 6 Bedrooms | $5,275 |
| 7 Bedrooms | $5,697 |
| 8 Bedrooms | $5,982 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 4BR | $4,060 | $1,402,571 | 0.29% | F |
| 5BR | $4,710 | $2,334,961 | 0.2% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 07931 reveals a stark contrast between the federal market rent (FMR) and the actual market rent, leading to two distinct gross-yield scenarios. The annualized FMR for a 2-bedroom property in ZIP 07931 for FY 2024 is $2760, while the Census ACS reports an average market rent of $3501.
To derive the gross yield, we compare these rental figures to the median home value of $1,410,271. For the FMR scenario, the gross yield is calculated as follows:
This represents a very low gross yield of approximately 0.2%. In contrast, using the market rent figure:
The gross yield based on market rent is approximately 0.25%, which is slightly higher but still very modest compared to typical investment returns.
Given the 17.1% renter density in ZIP 07931, it's important to note that the FMR scenario is likely less realistic. This is because the lower FMR may not reflect the true market conditions where rents are higher, as indicated by the Census ACS data. The N/A-day DOM (days on market) suggests that there is either a very active market or a significant amount of off-market transactions, making it difficult to gauge the exact time properties spend on the market. However, this also implies that properties in this area can be rented out relatively quickly, supporting the use of market rent figures for a more accurate analysis.
In conclusion, while the FMR provides a conservative estimate, the market rent offers a more practical view of potential income, yielding a gross return of about 0.25% annually. Landlords and small-portfolio investors should consider the higher market rent when evaluating the potential of Section 8 investments in ZIP 07931, as it better aligns with the actual rental environment.
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.