Location: Pittsburgh, PA | Metro: Pittsburgh, PA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $940 |
| 1 Bedroom | $1,000 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,540 |
| 4 Bedrooms | $1,680 |
| 5 Bedrooms | $1,949 |
| 6 Bedrooms | $2,183 |
| 7 Bedrooms | $2,358 |
| 8 Bedrooms | $2,476 |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 15679 reveals an interesting dynamic between federal market rents (FMRs) and market rents. For a two-bedroom apartment, the annualized FMR for FY 2024 stands at $1020, while the Census ACS reports a market rent of $904. These figures can be used to calculate the implied gross yield for properties in this area.
Using the median home value of $176,331 as a basis, we first calculate the gross yield based on the FMR. The annual rent of $1020 translates into a gross yield of approximately 5.8% ($1020 / $176,331 * 100). In contrast, the market rent of $904 implies a gross yield of about 5.1% ($904 / $176,331 * 100).
The difference between these yields is significant, indicating that properties rented through Section 8 could potentially offer a higher return compared to those rented at market rates. However, it's important to consider the broader context of the rental market in ZIP 15679.
The renter density in this area is relatively low at 8.1%. This suggests that the majority of housing units are owner-occupied, which might limit the pool of potential tenants for Section 8 properties. Additionally, the lack of data on days on market (DOM) makes it challenging to assess how quickly properties can be leased under either scenario.
Given the low renter density, the higher gross yield implied by the FMR might not be as realistic as it initially appears. Landlords and small-portfolio investors should be cautious about relying solely on the higher FMR to estimate returns. Market conditions, tenant demand, and the specific terms of Section 8 contracts will all play crucial roles in determining actual performance.
In conclusion, while the Section 8 program offers a slightly better gross yield at 5.8%, the overall market dynamics suggest that achieving this yield consistently may be difficult. Investors should conduct thorough due diligence and consider the unique challenges of the ZIP 15679 rental market before making investment decisions.
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.