Location: Sioux Falls, SD | Metro: Sioux Falls, SD 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 | $1,010 |
| 1 Bedroom | $1,120 |
| 2 Bedrooms | $1,320 |
| 3 Bedrooms | $1,820 |
| 4 Bedrooms | $2,210 |
| 5 Bedrooms | $2,564 |
| 6 Bedrooms | $2,872 |
| 7 Bedrooms | $3,102 |
| 8 Bedrooms | $3,257 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,320 | $258,969 | 0.51% | F |
| 3BR | $1,820 | $324,181 | 0.56% | F |
| 4BR | $2,210 | $365,374 | 0.6% | D |
| 5BR | $2,564 | $592,829 | 0.43% | F |
U.S. Census Bureau data (2024)
The median income in ZIP code 57107, located in Sioux Falls, SD, stands at $74,141. At first glance, the market rate for rent, which is $1,354 (ZORI), seems high. However, when considering the median income, it becomes evident that a significant portion of households could feasibly cover this expense without undue financial strain. A household earning the median income would allocate approximately 38.5% of their gross monthly income towards rent at the market rate.
In contrast, the Housing Choice Voucher Program (commonly known as Section 8) sets a Fair Market Rent (FMR) standard at $1,100 for ZIP 57107 in fiscal year 2024. This means that voucher holders can afford up to $1,100 per month for rent, significantly below the market rate. The difference between the ZORI and the FMR represents an affordability gap that affects both tenants and landlords.
With 34.5% of the 12,605 residents being renters, competition among landlords in ZIP 57107 is notable. The affordability gap suggests that landlords who accept vouchers might have a steady stream of tenants but will also be limited to the lower FMR rate. On the other hand, landlords who cater to the market rate can potentially command higher rents but must compete for tenants who can afford the premium.
The takeaway for landlords is clear: accepting vouchers guarantees occupancy but caps rental income at $1,100 per month. To maximize revenue, landlords should consider the balance between voucher tenants and those paying cash at the market rate. Given the median income and the proportion of renters, there is a viable market for both approaches, but landlords should weigh the benefits of guaranteed tenancy against the potential for higher rental income.
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.