Location: Sully County, SD | Metro: Hughes County, SD
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 | $900 |
| 1 Bedroom | $990 |
| 2 Bedrooms | $1,200 |
| 3 Bedrooms | $1,470 |
| 4 Bedrooms | $1,840 |
| 5 Bedrooms | $2,134 |
| 6 Bedrooms | $2,390 |
| 7 Bedrooms | $2,581 |
| 8 Bedrooms | $2,710 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,200 | $219,957 | 0.55% | F |
| 3BR | $1,470 | $273,071 | 0.54% | F |
| 4BR | $1,840 | $315,307 | 0.58% | F |
| 5BR | $2,134 | $422,058 | 0.51% | F |
U.S. Census Bureau data (2024)
In ZIP code 57501, located in Pierre, SD, investors often have several concerns regarding the feasibility of participating in the Section 8 program. The first objection is whether the Fair Market Rent (FMR) of $1,040 for the metro area in fiscal year 2026 will adequately cover the mortgage on a home priced at $294,575. To address this, let's consider the typical mortgage payment for a home in this price range. Assuming a 30-year fixed-rate mortgage with an interest rate of 4%, the monthly principal and interest payment would be approximately $1,420. This means that the FMR of $1,040 falls short by about $380 per month. However, it's important to note that property taxes and insurance can also be covered by the FMR, which could reduce the gap.
The second concern revolves around the level of renter demand, which stands at 28.0%. While this percentage might seem low, it's crucial to understand what it represents. In Pierre, SD, a 28.0% rental rate suggests that nearly one-third of the housing units are rented out. This indicates a steady demand for rentals. However, the data does not provide the total number of units available for rent or the occupancy rates, so a precise assessment of demand cannot be made solely from this figure. It's advisable to look into local rental vacancy rates and trends for a clearer picture.
A final objection pertains to the ability of Section 8 vouchers to keep pace with market rents, which currently average at $1,442. The FMR of $1,040 is significantly lower than these market rents, raising questions about the financial viability of accepting vouchers. Historically, voucher amounts have increased over time, but the data does not offer insights into future adjustments. Investors should consider the potential for rent subsidies to rise and evaluate the long-term benefits of stable, government-backed income against the short-term shortfall. Additionally, maintaining properties under Section 8 guidelines can lead to better upkeep and potentially higher resale values.
To summarize, while the FMR of $1,040 may not fully cover the mortgage on a $294,575 home, other costs such as taxes and insurance can be factored in. The 28.0% rental rate indicates a reasonable demand, though further investigation into local market conditions is recommended. Lastly, although the current FMR is below market rents, the trend towards increasing subsidies could make Section 8 participation a viable option for investors in ZIP 57501.
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.