Location: Worcester County, MD | Metro: Salisbury, MD 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 | $1,020 |
| 1 Bedroom | $1,030 |
| 2 Bedrooms | $1,310 |
| 3 Bedrooms | $1,720 |
| 4 Bedrooms | $1,740 |
| 5 Bedrooms | $2,018 |
| 6 Bedrooms | $2,260 |
| 7 Bedrooms | $2,441 |
| 8 Bedrooms | $2,563 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,720 | $308,906 | 0.56% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 cap-rate scenario for ZIP code 21822 reveals distinct gross yields based on Fair Market Rent (FMR) and market rent figures. Using the annualized 2BR FMR of $1030 for fiscal year 2024, the implied gross yield is calculated by dividing the annual rental income by the median home value. This results in a gross yield of approximately 3.8%, calculated as ($1030 * 12) / $321,574 = 3.8%. In contrast, when using the market rent figure of $1,614, the gross yield increases significantly to about 5.9%, calculated as ($1,614 * 12) / $321,574 = 5.9%.
Given the 17.9% renter density in ZIP 21822, it's important to note that while the higher gross yield from market rent appears attractive, the reality of tenant demand and vacancy rates must be considered. The FMR-based gross yield of 3.8% reflects the government-subsidized rental rate, which ensures steady occupancy but at a lower return. On the other hand, the market rent gross yield of 5.9% indicates a potential for higher returns but also implies greater risk due to the lower renter density and the unknown Days on Market (DOM).
The N/A-day DOM suggests there might be insufficient data on how quickly properties are rented out at market rates, which could indicate either strong demand or difficulty in finding tenants willing to pay the higher market rate. However, with only 17.9% of residents being renters, landlords should be cautious about relying solely on market rents, as the pool of potential tenants is relatively small. Therefore, the FMR-based gross yield of 3.8% offers a more stable and predictable income stream, aligning better with the actual rental market dynamics in ZIP 21822.
In conclusion, while the market rent gross yield of 5.9% is appealing, the FMR gross yield of 3.8% provides a more realistic expectation for landlords and small-portfolio investors considering the Section 8 program in ZIP 21822. The lower gross yield ensures a reliable tenant base, reducing the risk of vacancies and providing a steady cash flow, which is crucial for long-term investment stability.
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.