Location: Detroit-Warren-Livonia, MI | Metro: Detroit-Warren-Livonia, MI 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 | $1,240 |
| 1 Bedroom | $1,380 |
| 2 Bedrooms | $1,730 |
| 3 Bedrooms | $2,110 |
| 4 Bedrooms | $2,290 |
| 5 Bedrooms | $2,656 |
| 6 Bedrooms | $2,975 |
| 7 Bedrooms | $3,213 |
| 8 Bedrooms | $3,374 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,380 | $123,662 | 1.12% | B |
| 2BR | $1,730 | $231,834 | 0.75% | D |
| 3BR | $2,110 | $296,326 | 0.71% | D |
| 4BR | $2,290 | $413,659 | 0.55% | F |
U.S. Census Bureau data (2024)
Auburn Hills, MI, located in ZIP code 48326, presents a nuanced opportunity for landlords and small-portfolio investors interested in Section 8 properties. The decision to invest hinges on several key factors.
Step 1: Evaluate if the Fair Market Rent (FMR) of $1510 can cover the debt service on a property valued at $280,653. To determine this, consider the mortgage payment, property taxes, insurance, and maintenance costs. For a typical 30-year fixed-rate mortgage at 5%, the monthly principal and interest payment would be approximately $1,470. Adding an estimated $200 for property taxes, $50 for insurance, and $30 for maintenance brings the total monthly debt service to about $1,750. Given that the FMR is $1510, it does not fully cover the debt service, resulting in a No.
Step 2: Compare the Zillow Observed Rent Index (ZORI) of $1,599 to the FMR. In this case, the ZORI is above the FMR, indicating that the local rental market is stronger than what is supported by Section 8 payments. This suggests that landlords might be able to attract non-Section 8 tenants willing to pay more than the FMR. However, since the primary focus is on Section 8 eligibility, this point alone does not make a compelling argument for investment without addressing the first step.
Step 3: Assess the rental demand. With 48.3% of residents being renters and the days-on-market (DOM) status marked as N/A, which typically indicates low turnover and stable occupancy rates, there appears to be sufficient demand. However, this must be weighed against the ability to cover debt service with Section 8 payments.
In conclusion, based on the provided data, a landlord should not buy in ZIP 48326 for Section 8 purposes due to the inability of the FMR to cover the debt service on a property valued at $280,653. The strong rental market indicated by ZORI and the percentage of renters does not compensate for the financial shortfall when relying solely on Section 8 funding.
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.