Location: Reading, PA | Metro: Allentown-Bethlehem-Easton, PA HUD Metro FMR Area
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 | $1,150 |
| 1 Bedroom | $1,340 |
| 2 Bedrooms | $1,670 |
| 3 Bedrooms | $2,080 |
| 4 Bedrooms | $2,220 |
| 5 Bedrooms | $2,575 |
| 6 Bedrooms | $2,884 |
| 7 Bedrooms | $3,115 |
| 8 Bedrooms | $3,271 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,670 | $260,282 | 0.64% | D |
| 3BR | $2,080 | $346,698 | 0.6% | F |
| 4BR | $2,220 | $473,530 | 0.47% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP 19539 (Mertztown, PA) reveals a stark contrast between the federal market rent (FMR) and the market rent for a two-bedroom property. The annualized FMR for a 2BR property is $1580, based on the fiscal year 2024 data. This translates into an annual rent of $18,960, implying a gross yield of approximately 5.4% when compared to the median home value of $352,304.
On the other hand, using the Census ACS data, the market rent for a 2BR property is $1,188 per month, which amounts to an annual rent of $14,256. This results in a gross yield of about 4.0% relative to the median home value. Clearly, the Section 8 FMR scenario provides a higher gross yield than the market rent scenario.
However, the reality of the situation must be considered. Mertztown has a renter density of only 5.7%, indicating that the rental market is quite limited. Additionally, the N/A-day DOM (days on market) suggests that there is insufficient data to determine how quickly properties are rented out, which could imply either a very stable market or a lack of significant turnover. Given these factors, it's more realistic to assume that the market rent scenario is closer to what landlords and small-portfolio investors can expect in terms of actual income.
The higher gross yield under the FMR scenario might seem attractive at first glance, but it does not reflect the true demand for rentals in Mertztown. With such a low renter density, securing a tenant through the Section 8 program may be challenging. Therefore, while the FMR offers a better gross yield, the market rent is likely to be more attainable and sustainable for most investors.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.