Location: Chattanooga, TN | Metro: Chattanooga, TN-GA 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 | $1,020 |
| 1 Bedroom | $1,070 |
| 2 Bedrooms | $1,160 |
| 3 Bedrooms | $1,430 |
| 4 Bedrooms | $1,520 |
| 5 Bedrooms | $1,763 |
| 6 Bedrooms | $1,975 |
| 7 Bedrooms | $2,133 |
| 8 Bedrooms | $2,240 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,160 | $143,634 | 0.81% | C |
| 3BR | $1,430 | $216,560 | 0.66% | D |
| 4BR | $1,520 | $250,591 | 0.61% | D |
U.S. Census Bureau data (2024)
The real estate landscape in ZIP 37406, Chattanooga, TN, presents a nuanced picture for landlords and small-portfolio investors. The median home value stands at $182,198, indicating a relatively affordable market. With only 0.3% of listings having reduced their prices, there's a strong signal that sellers maintain significant pricing power. This suggests that any price reductions are likely outliers rather than indicative of a broader trend.
The median days on market (DOM) being listed as N/A could imply that homes are selling quickly, often before a standard DOM can be calculated. This rapid turnover further supports the notion of a seller's market where demand outstrips supply, allowing homeowners and investors to command higher prices without fear of prolonged exposure on the market.
On the rental side, the Federal Market Rent (FMR) for the zip code in fiscal year 2024 is projected to be $1,050, while the market rent, measured by Zillow's Observed Rental Index (ZORI), currently sits at $1,534. This substantial gap between government estimates and actual market conditions highlights an opportunity for landlords to maintain competitive rents without significantly undercutting the local average. However, it also suggests that the rental market is robust and potentially overvalued relative to government standards.
For long-term investors, the setup implies a cautious approach to appreciation expectations. While the current market conditions favor sellers, the gap between FMR and ZORI could narrow if rental prices adjust to more closely match government estimates. This scenario would reduce the potential for capital appreciation and might necessitate a focus on cash flow and property management efficiencies to ensure profitability.
In summary, the combination of a stable median home value, minimal price reductions, and a strong rental market suggests that landlords and investors in ZIP 37406 can leverage their pricing power effectively. However, they should remain vigilant regarding the sustainability of rental prices and prepare for possible adjustments in future years.
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.