Location: Winston-Salem, NC | Metro: Winston-Salem, NC 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 | $1,500 |
| 1 Bedroom | $1,700 |
| 2 Bedrooms | $1,850 |
| 3 Bedrooms | $2,440 |
| 4 Bedrooms | $2,970 |
| 5 Bedrooms | $3,445 |
| 6 Bedrooms | $3,858 |
| 7 Bedrooms | $4,167 |
| 8 Bedrooms | $4,375 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,850 | $231,894 | 0.8% | D |
| 3BR | $2,440 | $308,402 | 0.79% | D |
| 4BR | $2,970 | $421,887 | 0.7% | D |
| 5BR | $3,445 | $445,859 | 0.77% | D |
U.S. Census Bureau data (2024)
The analysis for landlords and small-portfolio investors in ZIP code 27040, located in Pfafftown, North Carolina, centers around the disparity between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR is set at $1650, while the Zillow Observed Rent Index (ZORI), which reflects the market rent, stands at $2116. This creates a significant gap of $466 per month, or approximately 28%, between what the government deems fair and what the market demands.
In Pfafftown, where only 6.8% of residents are renters, landlords might find it particularly challenging to attract and retain tenants willing to pay the higher market rate. The median home value in the area is $335,163, indicating that homeownership is prevalent and potentially preferred over renting. Additionally, the median household income of $92,601 suggests that many families can afford to purchase homes rather than rent, further complicating the rental market dynamics.
The cost of housing voucher tenants below the open-market rates is a critical consideration. Accepting Section 8 vouchers means landlords will receive a fixed payment of $1650 per month, regardless of the market conditions. While this ensures a steady income, it also means landlords will miss out on the additional $466 per month that could be earned by renting to market-rate tenants. This difference represents a substantial loss in potential revenue, especially when considering the long-term financial implications for property investments.
For small-portfolio investors, the decision to accept Section 8 vouchers must be weighed against the potential for higher yields through market-rate rentals. However, the lower income levels and the preference for homeownership in Pfafftown might limit the pool of high-paying tenants. Therefore, accepting Section 8 vouchers could be a strategic move to ensure occupancy and a stable cash flow, despite the lower rents compared to the market.
To summarize, the gap between the FMR and the ZORI in ZIP 27040 highlights the trade-offs landlords face. While the $1650 FMR ensures a reliable income source, it falls short of the $2116 market rent by $466 monthly, or 28%. Investors must consider the local context of Pfafftown, where the rental market is constrained by a low percentage of renters and a strong inclination towards homeownership, when deciding whether to participate in the Section 8 program.
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.