Location: Detroit-Warren-Livonia, MI | Metro: Ann Arbor, MI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,420 |
| 1 Bedroom | $1,560 |
| 2 Bedrooms | $1,950 |
| 3 Bedrooms | $2,370 |
| 4 Bedrooms | $2,570 |
| 5 Bedrooms | $2,981 |
| 6 Bedrooms | $3,339 |
| 7 Bedrooms | $3,606 |
| 8 Bedrooms | $3,786 |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 48167, located in Northville, MI, reveals key insights into potential investment opportunities. For a two-bedroom property, the Fair Market Rent (FMR) set by HUD for fiscal year 2024 is $1670 per month. This annualizes to a total of $20,040. The Zillow Observed Rental Index (ZORI) for the same type of property stands at $1,675 monthly, translating to an annual rental income of $20,100.
To derive the implied gross yield, we compare these annual rental incomes against the median home value in the area, which is $490,441. For the FMR scenario, the gross yield is calculated as follows:
$20,040 / $490,441 = 0.0408 or 4.08%
For the ZORI scenario, the gross yield is:
$20,100 / $490,441 = 0.0410 or 4.10%
Given the 25.9% renter density in Northville, it suggests that a significant portion of the population is willing to pay market rates, making the ZORI figure more likely to be realized in practice. Additionally, the 23-day Days on Market (DOM) indicates a robust rental market where properties can be leased quickly, further supporting the higher market rent scenario.
The slight difference between the two yields (4.08% vs. 4.10%) is minimal, but the ZORI-based yield is more realistic considering the local rental market conditions. Investors should focus on the market rent as it reflects current demand and supply dynamics, offering a clearer picture of potential returns.
Data Sources: FMR data from HUD (2027). 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.