Location: Philadelphia-Camden-Wilmington, PA | Metro: Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 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 | $1,320 |
| 1 Bedroom | $1,430 |
| 2 Bedrooms | $1,710 |
| 3 Bedrooms | $2,040 |
| 4 Bedrooms | $2,250 |
| 5 Bedrooms | $2,610 |
| 6 Bedrooms | $2,923 |
| 7 Bedrooms | $3,157 |
| 8 Bedrooms | $3,315 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $2,040 | $356,332 | 0.57% | F |
| 4BR | $2,250 | $406,562 | 0.55% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate picture for ZIP code 08097 reveals some interesting dynamics between government-subsidized rents and market rents. For fiscal year 2024, the Fair Market Rent (FMR) for a two-bedroom apartment in ZIP 08097 is set at $1,540 per month. Meanwhile, the market rent for a similar unit, based on Census ACS data, stands at $1,325 monthly.
To derive the gross yield for both scenarios, we annualize these figures and compare them against the median home value of $366,345. The annualized FMR for a two-bedroom apartment is $18,480 ($1,540 x 12 months), while the annualized market rent is $15,900 ($1,325 x 12 months).
The gross yield when using the FMR is approximately 5.04%. This is calculated by dividing the annualized FMR ($18,480) by the median home value ($366,345). In contrast, the gross yield based on market rent is around 4.34%, derived by dividing the annualized market rent ($15,900) by the same median home value ($366,345).
Given the 4.5% renter density in ZIP 08097, it's evident that the market is relatively tight, favoring homeowners over renters. However, the data does not provide a Days on Market (DOM) figure, making it difficult to assess how quickly rental properties turn over in this area. Despite this, the higher gross yield associated with FMR suggests that participating in the Section 8 program could be more lucrative for landlords and small-portfolio investors compared to market rent.
It's important to note that the higher FMR-based gross yield doesn't automatically translate into a better investment scenario. Landlords must consider the administrative overhead and potential challenges associated with the Section 8 program. However, for those willing to navigate these complexities, the 5.04% gross yield offers a tangible advantage over the 4.34% gross yield from market rents.
In conclusion, while the market rent provides a more realistic outlook given the current demand, the FMR presents a higher gross yield, indicating a potentially more profitable venture for those who can manage the intricacies of the Section 8 program. Investors should weigh these factors carefully before making decisions.
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.