Location: Rowan County, KY | Metro: Carter County, KY 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 | $680 |
| 1 Bedroom | $760 |
| 2 Bedrooms | $940 |
| 3 Bedrooms | $1,210 |
| 4 Bedrooms | $1,560 |
| 5 Bedrooms | $1,810 |
| 6 Bedrooms | $2,027 |
| 7 Bedrooms | $2,189 |
| 8 Bedrooms | $2,298 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $940 | $158,720 | 0.59% | F |
| 3BR | $1,210 | $214,544 | 0.56% | F |
| 4BR | $1,560 | $283,507 | 0.55% | F |
| 5BR | $1,810 | $315,440 | 0.57% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 40351, centered around Morehead, Kentucky, reveals a significant gap between the Fair Market Rent (FMR) and the Zillow Observed Rent Index (ZORI). For fiscal year 2024, the FMR is set at $930, while the market rent stands at $1,253. This results in a gap of $323, or approximately 25.4%, between the two figures.
Given that the FMR is lower than the market rent, landlords and small-portfolio investors must consider the implications of accepting housing vouchers. The difference means that landlords will be renting properties to voucher tenants at a rate below what the open market demands. This can lead to reduced profitability compared to market-rate rentals.
In Morehead, where 37.6% of residents are renters, the median home value is $183,790 and the median household income is $51,835. These economic factors suggest that a substantial portion of the population may rely on Section 8 vouchers to afford housing. As such, landlords who accept these vouchers are effectively subsidizing the rental market, which can be seen as a social contribution but also comes with financial trade-offs.
The cost of housing voucher tenants below open-market rates includes not only the direct loss of potential rental income but also the administrative burden of participating in the Section 8 program. Landlords must ensure compliance with HUD regulations, which can involve regular inspections and maintenance checks, thus impacting the overall yield of their investment properties.
Despite these costs, some landlords may still find value in the Section 8 program due to the guaranteed income from the government, which reduces the risk of vacancy and non-payment. However, the decision to participate should be weighed against the potential for higher yields through market-rate rentals, especially considering the relatively high median home value and income levels in Morehead.
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.