Location: Knoxville, TN | Metro: Knoxville, TN 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 | $980 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,240 |
| 3 Bedrooms | $1,550 |
| 4 Bedrooms | $1,780 |
| 5 Bedrooms | $2,065 |
| 6 Bedrooms | $2,313 |
| 7 Bedrooms | $2,498 |
| 8 Bedrooms | $2,623 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,550 | $465,693 | 0.33% | F |
U.S. Census Bureau data (2024)
The ZIP code 37742, located within the Knoxville, TN HUD Metro FMR Area, presents a unique opportunity for inclusion in a Section 8 portfolio strategy. This area is best categorized as a cash-flow anchor. The rationale behind this classification lies in the significant spread between the Fair Market Rent (FMR) set by HUD and the current market rents, which favorably impacts the financial performance of properties managed under Section 8.
In fiscal year 2024, the HUD FMR for a one-bedroom unit in ZIP 37742 is set at $1100. In contrast, the market rent for a similar unit stands at $1,054. This means that landlords participating in the Section 8 program can expect a higher rental income compared to what they would receive from market-rate tenants. Given the high median home value of $436,795, it's evident that the rental market is relatively competitive, yet the Section 8 program provides a guaranteed income stream that exceeds market rates, ensuring steady cash flow.
Furthermore, the area's low 0.3% price-cut share and an average Days on Market (DOM) indicate that the real estate market is stable and does not require frequent price adjustments to attract buyers. This stability supports the idea of using this ZIP code as a cash-flow anchor, as it minimizes the risk of needing to reduce rents or increase vacancy rates.
The 8.1% renter share suggests that while there is a decent portion of renters, the majority of residents own their homes. This characteristic makes it less suitable as a primary diversification play, where the goal is often to target areas with a higher percentage of renters. However, the median income of $88,983 indicates a financially capable population, which could be beneficial for landlords looking to balance their portfolios with areas that have strong economic fundamentals.
While the potential for appreciation exists, the data points towards a scenario where property values are unlikely to see rapid increases. Therefore, focusing on appreciation as the primary strategy might not yield the expected returns. Instead, the emphasis should be on leveraging the favorable cash-flow dynamics provided by the Section 8 program.
In summary, ZIP 37742 serves as a cash-flow anchor within a Section 8 portfolio strategy due to the positive spread between HUD's FMR and market rents, coupled with a stable real estate market. Landlords can rely on this ZIP code to provide consistent and above-market rental income, making it a valuable component of a diversified investment portfolio.
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.