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 | $1,490 |
| 1 Bedroom | $1,550 |
| 2 Bedrooms | $1,690 |
| 3 Bedrooms | $2,090 |
| 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 | $1,690 | $355,824 | 0.47% | F |
| 3BR | $2,090 | $487,111 | 0.43% | F |
U.S. Census Bureau data (2024)
The market analysis for Section 8 investors in ZIP code 37408, located in Chattanooga, TN, within Hamilton County and the Chattanooga, TN-GA MSA metro area, reveals a competitive rental market. The HUD Fair Market Rent (FMR) for this area in fiscal year 2024 is set at $1340. In contrast, the market rent, measured by the Zillow Observed Rental Index (ZORI), stands at $1523. This indicates that voucher tenants will only cashflow marginally at the HUD FMR rate, as it falls below the current market rent.
To further analyze the investment potential, consider the median home value in the area, which is $411,784. This yields a rent-to-price ratio of approximately 0.37%, suggesting that rental income alone may not fully cover the mortgage and other expenses for standard units. However, investors can still achieve positive cash flow with premium units that are slightly above the median home value or by securing properties at below-market rates.
The dynamics between renting and buying in this market are influenced by the low median days on market (DOM) and a negligible 0.2% share of price cuts. These factors imply that the housing market is stable, with homes selling quickly and without significant price reductions. While these metrics do not directly affect the rental market, they suggest a strong local economy and demand for housing, which can positively impact long-term investment strategies.
The strongest angle for investors in this market is stability. With a robust local economy and steady demand for both rentals and home purchases, investments in this area are likely to provide consistent returns over time, making it an attractive option for those seeking reliable cash flow and property value maintenance.
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.