Location: Morristown, TN | Metro: Morristown, 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 | $900 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,390 |
| 4 Bedrooms | $1,820 |
| 5 Bedrooms | $2,111 |
| 6 Bedrooms | $2,364 |
| 7 Bedrooms | $2,553 |
| 8 Bedrooms | $2,681 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,140 | $181,797 | 0.63% | D |
| 3BR | $1,390 | $267,939 | 0.52% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 37813 in Morristown, TN, reveals an interesting picture when comparing the federal market rent (FMR) to the market rent. Using the annualized 2BR FMR of $1000 for FY 2024, the implied gross yield is approximately 4.3%. This calculation is derived from the annual rent ($1000 * 12 = $12,000) divided by the median home value ($231,846).
In contrast, using the market rent figure of $853 per month from the Census ACS, the implied gross yield drops significantly to about 3.7%. This lower yield is calculated by multiplying the monthly market rent ($853) by 12 months to get the annual rent ($10,236), and then dividing that by the median home value ($231,846).
The difference between these two yields highlights the impact of Section 8 subsidies on rental income. At 4.3%, the FMR scenario presents a higher gross yield, making it more attractive for landlords and small-portfolio investors looking to maximize returns. However, the market rent scenario at 3.7% reflects the actual rental income without subsidies, which is a more conservative estimate.
Given the 31.0% renter density in Morristown, it's important to consider the local demand for rentals. While this density suggests a moderate level of rental activity, the N/A-day DOM (days on market) indicates incomplete data, which could mean either very quick sales or a lack of recent transactions to gauge market conditions accurately.
Between the two scenarios, the market rent of $853 per month is likely more realistic for most properties in ZIP 37813. This is because the FMR represents the maximum allowable rent for Section 8 eligibility, whereas the market rent reflects what tenants are actually paying. The disparity between these figures (FMR being $12,000 annually vs. market rent at $10,236 annually) underscores the financial advantage of participating in the Section 8 program, even if the gross yield is slightly lower than potential unsubsidized rents.
In conclusion, while the Section 8 subsidy offers a gross yield of 4.3%, the actual market conditions suggest a more realistic yield of 3.7%. Investors should weigh these figures carefully against their risk tolerance and investment goals.
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.