Location: Allentown-Bethlehem-Easton, PA | Metro: Allentown-Bethlehem-Easton, PA HUD Metro FMR Area
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,140 |
| 1 Bedroom | $1,330 |
| 2 Bedrooms | $1,610 |
| 3 Bedrooms | $2,030 |
| 4 Bedrooms | $2,180 |
| 5 Bedrooms | $2,529 |
| 6 Bedrooms | $2,832 |
| 7 Bedrooms | $3,059 |
| 8 Bedrooms | $3,212 |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 18063 reveals some key insights for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a 2-bedroom apartment in ZIP 18063 for FY 2024 is set at $1390 per month, while the Census ACS reports the market rent for a similar unit at $1,264 per month. These figures can be used to derive the implied gross yield for each scenario.
Starting with the Section 8 FMR, an annualized rent of $16,680 ($1390 * 12 months) is calculated based on the $1390 monthly rate. This translates into an implied gross yield of approximately 5.57% when divided by the median home value of $299,310. On the other hand, using the market rent figure of $1,264 per month, the annualized rent comes to $15,168 ($1,264 * 12 months), resulting in an implied gross yield of about 5.07% when compared to the same median home value.
Given these yields, it's important to consider the context of ZIP 18063. With a renter density of 40.7%, the market leans towards a significant portion of the population being renters. However, the N/A-day Days on Market (DOM) indicates that there is either insufficient data or a lack of recent sales activity to provide a precise DOM figure, which could affect the reliability of the median home value as a benchmark.
In terms of realism, the Section 8 FMR scenario offers a slightly higher gross yield at 5.57% compared to the market rent scenario at 5.07%. This makes the Section 8 option more attractive for investors looking to maximize their returns. However, investors should also consider the administrative requirements and potential risks associated with participating in the Section 8 program before making a decision.
To summarize, for ZIP 18063, the Section 8 FMR provides a marginally better gross yield of 5.57% versus the market rent yield of 5.07%. The higher yield from Section 8 could be a compelling reason for investors, especially considering the high renter density. Nevertheless, the absence of a specific DOM figure means that the median home value might not fully reflect the current market conditions, thus caution is advised when interpreting the gross yield figures.
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.