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 | $1,270 |
| 1 Bedroom | $1,320 |
| 2 Bedrooms | $1,440 |
| 3 Bedrooms | $1,780 |
| 4 Bedrooms | $1,890 |
| 5 Bedrooms | $2,192 |
| 6 Bedrooms | $2,455 |
| 7 Bedrooms | $2,651 |
| 8 Bedrooms | $2,784 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,440 | $331,643 | 0.43% | F |
| 3BR | $1,780 | $460,280 | 0.39% | F |
U.S. Census Bureau data (2024)
The classification of ZIP 37409 in Chattanooga, TN, hinges on its yield and stability metrics. With a Fair Market Rent (FMR) of $1,210 for fiscal year 2024, compared to a market rent of $1,341, and an average home value of $388,524, the yield potential is moderate. The FMR suggests that rental properties can be priced competitively below the market rate, still offering a decent return. However, the gap between the FMR and market rent indicates a slightly higher risk if tenants cannot find affordable housing.
On the stability axis, ZIP 37409 has a 39.0% renter occupancy rate, which is significant but not overwhelmingly high. The lack of data on days on market (DOM) means we cannot assess how quickly properties are leased. The median household income of $74,754 provides insight into the economic stability of the area; it suggests that tenants have a reasonable ability to pay rent consistently, reducing the risk of default.
To determine whether this is a high-yield/low-stability market or a steady-cashflow zone, consider the following:
Yield Potential: At $1,210 FMR versus $1,341 market rent, there is room for a landlord to offer slightly lower rents and still achieve good returns. The home value at $388,524 is relatively high, indicating that flipping homes could be profitable, though it would require a substantial investment upfront.
Economic Stability: With a median income of $74,754, tenants are likely to have stable jobs and financial situations, making them reliable payers. However, the 39.0% renter rate is not extremely high, which might suggest some competition among landlords for tenants.
Given these figures, ZIP 37409 leans towards being a steady-cashflow zone rather than a high-yield/low-stability market. The moderate yield potential combined with the relatively stable median income supports long-term investment strategies over quick flips. Landlords should focus on maintaining properties to attract and retain tenants, ensuring consistent cash flow.
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.