Section 8 Fair Market Rent (FMR) for ZIP 57106 - 2027

Investment Score for ZIP 57106

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	$1,000
1 Bedroom	$1,110
2 Bedrooms	$1,300
3 Bedrooms	$1,790
4 Bedrooms	$2,170
5 Bedrooms	$2,517
6 Bedrooms	$2,819
7 Bedrooms	$3,045
8 Bedrooms	$3,197

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,300	$262,518	0.5%	F
3BR	$1,790	$314,674	0.57%	F
4BR	$2,170	$363,267	0.6%	F
5BR	$2,517	$483,842	0.52%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 57106 (Sioux Falls, SD) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 57106 in Sioux Falls, SD, is set by HUD for 2026. The FMR for a two-bedroom unit is $1200, which represents 18.6% of the median household income of $77,580. This indicates that the cost of renting a two-bedroom unit is relatively affordable compared to the average income in the area. However, the actual rent for a two-bedroom unit on Zillow is listed at $259,171, which is significantly higher than the FMR. The price-to-FMR ratio for a two-bedroom unit is 18.0x, meaning that the market rent is 18 times the FMR. This suggests that the actual rental market is much more expensive than what is covered by the Section 8 voucher program. For voucher holders, the constraints are substantial. They can only afford units up to the FMR, which means they would be limited to properties priced around $1200 per month for a two-bedroom unit. Given the high market rent, it is likely that many landlords will not accept Section 8 vouchers due to the discrepancy between the FMR and the market rent. This could lead to a shortage of available units for voucher holders, making it difficult for them to find suitable housing. #### Affordability & Renter Profile ZIP code 57106 has a population of 51,907, with 41.2% of residents being renters. The occupancy rate is 98.0%, indicating that the rental market is very tight. With such a high percentage of renters and nearly full occupancy, there is a strong demand for rental properties. However, the affordability of these rentals is a significant concern. The median household income is $77,580, but the FMR for a two-bedroom unit is only $1200, which is just 18.6% of the median income. This implies that the majority of renters in this area are likely to be low-income individuals who rely heavily on subsidies like Section 8 vouchers to afford housing. Given the high market rent and the relatively low FMR, it is clear that the rental market is oversupplied with expensive units that are beyond the reach of most voucher holders. This creates a challenging environment for low-income renters, as they may struggle to find affordable housing options. Additionally, the tight occupancy rate suggests that there is little room for new rental units to enter the market without putting upward pressure on rents. #### Investor Angle From an investor perspective, the ZIP code 57106 is not cash-flow positive at the FMR. The FMR for a two-bedroom unit is $1200, while the market rent is $259,171. This means that if an investor were to purchase a property at the median price of $259,171 and attempt to rent it out at the FMR, they would face significant financial losses. The price-to-FMR ratio of 18.0x indicates that the market is extremely overvalued relative to the FMR, making it difficult for investors to generate positive cash flow. In terms of investment grade, the ZIP code 57106 would be considered a poor investment for Section 8-focused investors. The high market rent and the tight occupancy rate suggest that the market is already saturated with expensive units, and there is little opportunity for investors to find properties that can be rented out at the FMR and still provide a reasonable return on investment. #### Specific Actionable Insights 1. **Focus on Affordable Units**: Investors should focus on acquiring properties that are priced closer to the FMR. For example, a two-bedroom unit priced at $1200 per month would be more attractive to voucher holders and potentially easier to manage financially. This might involve looking for older or less desirable units that are priced lower than the median market rent. 2. **Consider Smaller Units**: Given the high market rent for larger units, investors might want to consider smaller units such as one-bedroom or studio apartments. The FMR for a one-bedroom unit is $1020, which is still a fraction of the median income. This could provide better opportunities for positive cash flow, especially if the investor can find units priced below the median market rent. 3. **Evaluate Location-Specific Opportunities**: Investors should evaluate the specific neighborhoods within ZIP code 57106 to identify areas where rents are more aligned with the FMR. Some neighborhoods may have lower market rents due to factors such as proximity to public transportation, schools, or other amenities that are important to low-income renters. #### Bottom Line Based on the provided data, the recommendation for Section 8-focused investors is to **skip** this ZIP code. The high market rent and the tight occupancy rate make it difficult to find properties that can be rented out at the FMR and still provide a reasonable return on investment. Additionally, the significant gap between the FMR and the market rent suggests that there is little opportunity for positive cash flow, even with the high demand for rental properties. Investors should look for ZIP codes with more favorable price-to-FMR ratios and lower market rents to ensure better financial outcomes.

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.