Location: Scranton--Wilkes-Barre, PA | Metro: Scranton--Wilkes-Barre, PA 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 | $890 |
| 1 Bedroom | $1,040 |
| 2 Bedrooms | $1,280 |
| 3 Bedrooms | $1,680 |
| 4 Bedrooms | $1,840 |
| 5 Bedrooms | $2,134 |
| 6 Bedrooms | $2,390 |
| 7 Bedrooms | $2,581 |
| 8 Bedrooms | $2,710 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,680 | $246,704 | 0.68% | D |
| 4BR | $1,840 | $313,472 | 0.59% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap rate for ZIP code 18644 reveals interesting insights into the potential rental income scenarios for landlords and small-portfolio investors. To start, we annualize the Fair Market Rent (FMR) for a two-bedroom unit, which stands at $970 per month for fiscal year 2024, resulting in an annual rent of $11,640. Using the median home value of $235,541, the implied gross yield for a property rented under Section 8 would be approximately 4.94%. This calculation is derived by dividing the annualized FMR ($11,640) by the median home value ($235,541).
In contrast, the market rent for a similar property is reported at $922 per month according to the Census ACS, leading to an annual market rent of $11,064. When this figure is used to calculate the gross yield against the same median home value, it comes out to about 4.70%. This is found by dividing the annual market rent ($11,064) by the median home value ($235,541).
Given the 31.3% renter density in ZIP 18644, the higher gross yield associated with Section 8 rental income appears more favorable. However, the reality of achieving this yield must consider the dynamics of the local housing market, including the vacancy rate indicated by the N/A-day days on market (DOM). The absence of a specific DOM figure suggests either a very active market with quick turnovers or a less transparent market condition.
Despite the slightly higher gross yield from Section 8, the actual performance could be influenced by various factors such as maintenance costs, tenant turnover rates, and compliance with HUD regulations. For a landlord or investor, the decision between accepting Section 8 tenants or relying on market rents should weigh these considerations. The difference in gross yields, while notable, does not fully capture the complexity of managing properties in a mixed-income area like ZIP 18644.
Ultimately, the choice between Section 8 and market rents depends on the investor's risk tolerance and strategic goals. While Section 8 provides a stable, government-backed income source, market rents offer the potential for higher returns if the property can be quickly leased and maintained at competitive rates. Given the data, the gross yield from Section 8 is approximately 4.94%, compared to 4.70% from market rents, making Section 8 slightly more attractive purely from a yield perspective. However, the overall investment strategy should also account for the broader economic conditions and individual property management challenges.
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.