Location: Philadelphia-Camden-Wilmington, PA | Metro: Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 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 | $1,420 |
| 1 Bedroom | $1,540 |
| 2 Bedrooms | $1,840 |
| 3 Bedrooms | $2,190 |
| 4 Bedrooms | $2,420 |
| 5 Bedrooms | $2,807 |
| 6 Bedrooms | $3,144 |
| 7 Bedrooms | $3,396 |
| 8 Bedrooms | $3,566 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,840 | $283,125 | 0.65% | D |
| 3BR | $2,190 | $321,001 | 0.68% | D |
| 4BR | $2,420 | $348,092 | 0.7% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 19154 in Philadelphia, PA, reveals two distinct scenarios based on the Fair Market Rent (FMR) and the Zillow Observed Rent Index (ZORI).
The annualized FMR for a 2-bedroom property in ZIP 19154 for FY 2024 is set at $1800 per month. This translates to an annual rental income of $21,600. Given the median home value of $321,033, the implied gross yield for this scenario is approximately 6.7%. The calculation is straightforward: divide the annual rental income by the median home value.
In contrast, the market rent, as indicated by the ZORI, stands at $1,651 per month. When annualized, this amounts to $19,812 in yearly rental income. Using the same median home value, this scenario yields a gross rental yield of about 6.2%. Again, the calculation involves dividing the annual rental income by the median home value.
Given that only 19.6% of residents in ZIP 19154 are renters, it's important to consider how this impacts the attractiveness of Section 8 properties. Despite the lower renter density, the average days on market (DOM) is just 7 days, indicating strong demand for rental units. This suggests that while the overall rental market might be less saturated, there is a high level of interest in the available rental properties, including those in the Section 8 program.
Between the two scenarios, the FMR-based gross yield of 6.7% appears more realistic for Section 8 properties in ZIP 19154. The higher yield reflects the government-subsidized rent structure, which aims to cover the landlord's costs and provide a modest profit margin. While the market rent scenario offers a slightly lower yield, it does not account for the guaranteed payment structure and reduced risk associated with Section 8 tenancy.
For landlords and small-portfolio investors, the decision to participate in the Section 8 program should be based on the guaranteed income stream and the security of long-term tenants rather than the gross yield alone. However, understanding the gross yield helps in comparing potential returns across different investment options.
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.