Location: Washington-Arlington-Alexandria, DC | Metro: Washington-Arlington-Alexandria, DC-VA-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 | $2,520 |
| 1 Bedroom | $2,630 |
| 2 Bedrooms | $2,910 |
| 3 Bedrooms | $3,710 |
| 4 Bedrooms | $4,370 |
| 5 Bedrooms | $5,069 |
| 6 Bedrooms | $5,677 |
| 7 Bedrooms | $6,131 |
| 8 Bedrooms | $6,438 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,630 | $408,898 | 0.64% | D |
| 2BR | $2,910 | $826,054 | 0.35% | F |
| 3BR | $3,710 | $1,072,110 | 0.35% | F |
| 4BR | $4,370 | $1,470,451 | 0.3% | F |
| 5BR | $5,069 | $1,888,549 | 0.27% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 22301 in Alexandria, VA, reveals a clear disparity between the federally mandated Fair Market Rent (FMR) and the actual market rents. For a two-bedroom property, the FMR set by the government for fiscal year 2024 is $2400 per month. Annualizing this figure gives us an annual rental income of $28,800. Against the median home value of $1,066,585, this translates into an implied gross yield of approximately 2.7%. In contrast, the Zillow Observed Rental Index (ZORI) indicates that the market rent for a similar unit is $2,671 per month, resulting in an annual rental income of $32,052. This yields an implied gross yield of about 3.0%.
Evaluating these yields in the context of Alexandria's real estate market, it becomes evident that the market rent scenario is more realistic. The city has a renter density of 43.8%, suggesting a significant demand for rental properties. Additionally, the average days on market (DOM) of 7 days indicates a competitive and fast-moving rental market where properties can quickly be leased at higher rates. While the FMR provides a baseline for subsidized housing, the actual market conditions in Alexandria support higher rental incomes, making the 3.0% gross yield more reflective of potential returns for landlords and small-portfolio investors.
To summarize, the gross yield derived from the FMR of $2400 per month is 2.7%, whereas the market rent of $2,671 per month implies a gross yield of 3.0%. Given the robust rental market in Alexandria, characterized by high renter density and rapid leasing times, the latter scenario is more likely to represent the true earning potential of rental properties in this area.
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.