Section 8 Fair Market Rent (FMR) for ZIP 08873 - 2027

Investment Score for ZIP 08873

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$2,110
1 Bedroom	$2,280
2 Bedrooms	$2,840
3 Bedrooms	$3,380
4 Bedrooms	$3,800
5 Bedrooms	$4,408
6 Bedrooms	$4,937
7 Bedrooms	$5,332
8 Bedrooms	$5,599

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$2,840	$463,549	0.61%	D
3BR	$3,380	$582,291	0.58%	F
4BR	$3,800	$710,039	0.54%	F
5BR	$4,408	$861,502	0.51%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

Market Analysis for ZIP Code 08873 (Somerset, NJ) ZIP code 08873 is located in Somerset County, New Jersey, and has a population of 56,327 residents. The area boasts a median household income of $124,972, which is significantly higher than the national average. This affluence is reflected in the high cost of living, particularly in rental markets. According to the provided data, 32.4% of the population are renters, indicating a substantial demand for rental properties. The occupancy rate stands at 97.6%, suggesting that the market is quite tight, with few vacant units available. ### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP 08873, as determined by HUD for 2026, is set at $2660 for a two-bedroom unit. However, the Zillow median price for a two-bedroom home in this ZIP code is $458,132, which translates to an estimated monthly rent of approximately $1867 based on typical mortgage-to-rent conversion rates. This results in a price-to-FMR ratio of 14.4x, meaning that the actual market rent is much lower than the FMR. This discrepancy creates significant constraints for voucher holders. While the FMR is intended to reflect the average market rent, it is substantially higher than what is actually being charged. For instance, a voucher holder might struggle to find a two-bedroom apartment that charges exactly $2660 per month, as the typical market rent is closer to $1867. This means that landlords who accept vouchers may need to charge below the FMR to attract tenants, or voucher holders might have to pay a portion of the difference out-of-pocket. ### Affordability & Renter Profile Given the median household income of $124,972, the affordability of housing is a critical issue. The FMR for a two-bedroom unit represents about 25.5% of the median income, which is within the range considered affordable by many standards. However, the actual market rent of around $1867 is only about 15% of the median income, making it relatively easier for local residents to afford housing compared to the FMR benchmark. Despite the high median income, the renter population is still a significant segment, comprising 32.4% of the total population. These renters are likely a mix of young professionals, families, and individuals who prefer renting over buying due to the high cost of homeownership. The tight market conditions, with an occupancy rate of 97.6%, indicate that there is little room for new entrants, and competition for available units is fierce. ### Investor Angle From an investor perspective, the ZIP code 08873 offers both opportunities and challenges. The FMR for a two-bedroom unit is $2660, but the actual market rent is estimated to be around $1867. This suggests that investors who purchase properties at or near the Zillow median price of $458,132 would likely face cash flow pressures if they were to rent exclusively to Section 8 voucher holders. To determine whether this ZIP code is cash-flow positive at FMR, we must consider the typical operating costs. Assuming a conservative estimate of 50% of the gross rent for expenses (including mortgage payments, property taxes, insurance, maintenance, and other costs), the net income would be approximately $1330 per month. However, if the actual market rent is $1867, the net income would drop to around $933.50 per month, which is less than half of the FMR-based net income. Therefore, the ZIP code is not cash-flow positive at the FMR level. In terms of investment grade, the high price-to-FMR ratio indicates that this market is not favorable for investors relying solely on Section 8 vouchers. The disparity between FMR and actual market rents makes it difficult to achieve positive cash flow, especially when considering the high purchase price and associated costs. ### Specific Actionable Insights 1. **Focus on Below-Market Rents**: Investors should focus on acquiring properties where the rent is below the FMR. For example, a two-bedroom unit rented at $1867 per month would be more attractive to voucher holders and could potentially yield better occupancy rates and tenant satisfaction. 2. **Consider Mixed-Income Properties**: Given the high median income and the tight market conditions, investors might consider developing mixed-income properties. This strategy involves offering a combination of market-rate and subsidized units, allowing for a balance between cash flow and social responsibility. 3. **Evaluate Property Expenses Carefully**: Before purchasing any property, investors should conduct a thorough analysis of all potential expenses. If the actual market rent is significantly lower than the FMR, it is crucial to ensure that the property can still generate a positive cash flow even at reduced rates. ### Bottom Line For Section 8-focused investors, the ZIP code 08873 presents a challenging environment due to the high price-to-FMR ratio and the tight market conditions. The recommendation is to **Skip** this ZIP code unless you can secure properties at below-market rents or develop a mixed-income strategy. The high purchase prices and limited availability of units that match the FMR make it difficult to achieve positive cash flow, and the overall market dynamics suggest that this area is not ideal for Section 8 investments.

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.