Location: Pittsburgh, PA | Metro: Pittsburgh, PA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,430 |
| 1 Bedroom | $1,530 |
| 2 Bedrooms | $1,850 |
| 3 Bedrooms | $2,360 |
| 4 Bedrooms | $2,560 |
| 5 Bedrooms | $2,970 |
| 6 Bedrooms | $3,326 |
| 7 Bedrooms | $3,592 |
| 8 Bedrooms | $3,772 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 15217 in Pittsburgh, PA, provides a clear view into the potential returns for landlords and small-portfolio investors. To begin, let's annualize the Fair Market Rent (FMR) for a 2-bedroom apartment, which is set at $1460 per month for FY 2024. This equates to an annual rent of $17,520. When compared to the median home value of $452,837, the implied gross yield for a property rented under Section 8 is approximately 3.87%. This is calculated by dividing the annual rent by the median home value.
Next, consider the market rent, represented by the Zillow Observed Rent Index (ZORI), which stands at $1,649 per month. This translates to an annual market rent of $19,788. Using the same median home value, the implied gross yield for a property rented at market rates is roughly 4.37%. This calculation also involves dividing the annual market rent by the median home value.
The difference between these two yields highlights the trade-off landlords face when participating in the Section 8 program versus renting at market rates. The gross yield from renting at market rates ($4.37%) is higher than that from renting under Section 8 ($3.87%). However, the decision to participate in Section 8 should also take into account the stability of rental income and the lower vacancy risk associated with the program.
Given the 47.1% renter density in ZIP 15217, it suggests a significant portion of the population relies on rental housing. While the Days on Market (DOM) is listed as N/A, which typically indicates either very low turnover or that the data is not available, the high renter density implies a steady demand for rental properties. In such a scenario, the stability offered by the Section 8 program might outweigh the slightly lower gross yield, especially for landlords who prioritize consistent cash flow over maximizing short-term returns.
In summary, while the gross yield from renting at market rates is higher, the Section 8 program offers a more predictable and stable income stream, which can be particularly appealing in a market with high renter density. Landlords and investors must weigh these factors carefully to determine the most suitable approach for their investment strategy.
Data Sources: FMR data from HUD (2027). 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.