Location: Whitley County, KY | Metro: Clay County, KY
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 | $670 |
| 1 Bedroom | $860 |
| 2 Bedrooms | $940 |
| 3 Bedrooms | $1,220 |
| 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: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $940 | $106,572 | 0.88% | C |
| 3BR | $1,220 | $170,864 | 0.71% | D |
| 4BR | $1,560 | $208,129 | 0.75% | D |
U.S. Census Bureau data (2024)
The Section 8 thesis for ZIP code 40906, centered around Barbourville, KY, highlights a significant gap between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2026, the FMR stands at $920, while the Census ACS reports an average market rent of $693. This discrepancy amounts to a $227 difference, or approximately a 32.7% premium for landlords who accept Section 8 vouchers.
In this scenario, where the FMR exceeds the market rent, landlords can capitalize on the yield play offered by Section 8 tenants. By accepting vouchers, property owners can charge closer to the FMR rate of $920, which is notably higher than the prevailing market rent of $693. This strategy allows landlords to increase their rental income without having to compete with lower-priced market rentals. The FMR is set by the U.S. Department of Housing and Urban Development (HUD) to reflect the average market rent for a given area, adjusted for size, type, and location of the unit, ensuring that it covers the majority of rental units in the area.
The context of Barbourville, KY, with 36.3% of residents being renters, a median home value of $156,231, and a median income of $23,375, further supports the attractiveness of Section 8 vouchers. Given the relatively low median income, many residents may find it challenging to afford housing at market rates, making them prime candidates for Section 8 assistance. Accepting vouchers can provide a stable and reliable source of income for landlords, as the federal government guarantees payment up to the FMR amount. However, landlords must also be aware of the potential for increased administrative burden and compliance requirements associated with the Section 8 program.
To summarize, the $227 or 32.7% gap between FMR and market rent in ZIP 40906 presents a clear opportunity for landlords to enhance their rental yields by participating in the Section 8 program. This is particularly beneficial in a region where a significant portion of the population relies on rental housing and where median incomes are lower compared to the cost of living. Landlords should weigh the benefits of higher guaranteed rents against the additional responsibilities of managing Section 8 properties.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.