Location: St. Louis, MO | Metro: St. Louis, MO-IL 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 | $850 |
| 1 Bedroom | $880 |
| 2 Bedrooms | $1,080 |
| 3 Bedrooms | $1,390 |
| 4 Bedrooms | $1,600 |
| 5 Bedrooms | $1,856 |
| 6 Bedrooms | $2,079 |
| 7 Bedrooms | $2,245 |
| 8 Bedrooms | $2,357 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,080 | $102,669 | 1.05% | B |
| 3BR | $1,390 | $152,523 | 0.91% | C |
| 4BR | $1,600 | $149,965 | 1.07% | B |
| 5BR | $1,856 | $195,964 | 0.95% | C |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 62024, East Alton, Illinois, provides a clear picture of the potential returns for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom apartment in fiscal year 2024 is set at $1020 annually, while the market rent based on Census ACS data stands at $895 annually.
To derive the gross yield, we must first annualize these figures. For the FMR scenario, an annual rent of $1020 implies a gross yield of approximately 7.96%. This calculation is derived by dividing the annual rent ($1020) by the median home value ($128,209).
In contrast, using the market rent figure of $895, the gross yield drops to about 6.98%. Again, this is calculated by dividing the annual market rent ($895) by the median home value ($128,209).
Given that only 27.1% of residents in East Alton are renters, it suggests that there might be limited demand for rental properties. However, the N/A-day DOM (Days On Market) indicates that the data for how long homes take to sell is incomplete, which could mean that either the market is robust, or there is insufficient data to make a definitive statement.
Considering these factors, the FMR-based gross yield of 7.96% appears more optimistic and less likely to materialize in a realistic scenario due to the lower renter density. The market rent-based gross yield of 6.98%, while lower, aligns better with the actual rental market dynamics and is thus more plausible. Landlords should prepare for a cap rate closer to the market rent scenario unless they can secure Section 8 tenants, which would push yields towards the higher end of the spectrum.
In summary, the gross yield implications are stark: a difference of nearly 1% between the two scenarios. Given the local rental market conditions, a gross yield around 6.98% seems more grounded in reality, despite the potential allure of higher returns offered by the FMR.
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.