Section 8 Fair Market Rent (FMR) for ZIP 53704 - 2027

Investment Score for ZIP 53704

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,150
1 Bedroom	$1,340
2 Bedrooms	$1,530
3 Bedrooms	$2,020
4 Bedrooms	$2,260
5 Bedrooms	$2,622
6 Bedrooms	$2,937
7 Bedrooms	$3,172
8 Bedrooms	$3,331

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,340	$227,662	0.59%	F
2BR	$1,530	$326,117	0.47%	F
3BR	$2,020	$404,024	0.5%	F
4BR	$2,260	$488,457	0.46%	F
5BR	$2,622	$625,207	0.42%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 53704 (Madison, WI) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 53704 in Madison, WI, indicate that the cost of renting varies based on the number of bedrooms. For a two-bedroom unit, the FMR is set at $1610 per month, which represents 26.1% of the median household income of $74,034. However, the actual rental market in this area is significantly higher, with Zillow reporting a median price of $316,503 for a two-bedroom home. This translates into a price-to-FMR ratio of 16.4x, meaning that the actual median rent for a two-bedroom unit would be approximately $26,384 per year if it were priced at the same ratio as the median home price. Given these figures, it is clear that the actual rents in the area far exceed the FMRs set by HUD. For instance, a two-bedroom unit priced at $316,503 would likely have an annual rent of around $26,384, or about $2,199 per month. This means that a voucher holder with a $1610 monthly payment would face a significant shortfall of $589 per month, making it difficult for them to secure housing without additional financial support. #### Affordability & Renter Profile ZIP code 53704 has a population of 46,730, with 47.8% of residents being renters. The occupancy rate stands at 95.3%, indicating a very tight rental market. With nearly half of the population renting and such a high occupancy rate, there is strong demand for rental properties. However, the affordability issue is stark. The median household income of $74,034 suggests that many residents are middle-class, but the high price-to-FMR ratio indicates that the rental market is not aligned with typical incomes. For example, a two-bedroom unit at the FMR of $1610 per month would consume 26.1% of the median household income, which is already a substantial portion. In reality, the average rent is much higher, putting significant pressure on the budget of typical renters. This tight market and high rents mean that many residents, especially those relying on Section 8 vouchers, struggle to find affordable housing. #### Investor Angle From an investor perspective, the ZIP code 53704 presents both opportunities and challenges. The high occupancy rate and strong demand for rental properties suggest that there could be good potential for cash flow. However, the disparity between actual rents and FMRs poses a constraint for Section 8-focused investors. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the typical expenses associated with owning and managing rental properties. Assuming a conservative estimate of 50% of the FMR for operating costs (including mortgage, maintenance, property taxes, insurance, etc.), the net income for a two-bedroom unit would be: \[ \text{Net Income} = \text{FMR} - \text{Operating Costs} \] \[ \text{Net Income} = \$1610 - (\$1610 \times 0.5) \] \[ \text{Net Income} = \$1610 - \$805 \] \[ \text{Net Income} = \$805 \] This net income of $805 per month is relatively low compared to the actual rental market prices. Therefore, while there is strong demand, the investment grade for Section 8-focused properties in this ZIP code is moderate due to the limited cash flow potential at FMR levels. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units like one-bedroom apartments. The FMR for a one-bedroom unit is $1410, which is still below the actual market rates but offers better cash flow potential compared to larger units. A one-bedroom unit might be easier to rent out at FMR levels because the gap between FMR and market rates is less pronounced. 2. **Consider Mixed-Income Developments**: To balance the tight rental market and the affordability constraints, investors could consider developing mixed-income housing projects. These projects can include a mix of Section 8 units and market-rate units, allowing for better overall cash flow while still providing affordable housing options. 3. **Engage with Local Housing Authorities**: Investors should engage closely with local housing authorities to understand any subsidies or incentives available for landlords who accept Section 8 vouchers. This can help mitigate some of the financial pressures associated with lower rents. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 53704 is to **Hold**. While the demand for rental properties is strong, the high price-to-FMR ratio makes it challenging to achieve positive cash flow at FMR levels. Investors should carefully evaluate their portfolio mix and consider strategies such as focusing on smaller units or developing mixed-income projects to improve profitability. Engaging with local housing authorities can also provide additional support and incentives to make Section 8 investments more viable.

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.