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 | $990 |
| 1 Bedroom | $1,020 |
| 2 Bedrooms | $1,250 |
| 3 Bedrooms | $1,600 |
| 4 Bedrooms | $1,850 |
| 5 Bedrooms | $2,146 |
| 6 Bedrooms | $2,404 |
| 7 Bedrooms | $2,596 |
| 8 Bedrooms | $2,726 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,020 | $106,624 | 0.96% | C |
| 2BR | $1,250 | $143,438 | 0.87% | C |
| 3BR | $1,600 | $208,063 | 0.77% | D |
| 4BR | $1,850 | $244,735 | 0.76% | D |
| 5BR | $2,146 | $334,205 | 0.64% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate picture for ZIP 62234 (Collinsville, IL) can be derived using the provided figures. The Fair Market Rent (FMR) for a two-bedroom apartment in FY 2024 is set at $1160 per month, while the market rent, as indicated by ZORI (Zillow Observed Rent Index), stands at $1178 per month. To calculate the gross yield, we first annualize these monthly rents. For the FMR, this amounts to $13,920 annually ($1160 * 12 months), and for the market rent, it totals $14,136 annually ($1178 * 12 months).
Given the median home value of $192,527 in Collinsville, the implied gross yield for the FMR scenario is approximately 7.24%. This is calculated by dividing the annualized FMR rent of $13,920 by the median home value of $192,527. For the market rent scenario, the gross yield is slightly higher at 7.34%, derived from the annualized rent of $14,136 divided by the same median home value.
Evaluating these figures against the local rental market conditions, a 30.1% renter density suggests a moderate demand for rental properties. Additionally, the 16-day Days on Market (DOM) indicates that properties are rented relatively quickly, which supports the market rent figure as a more realistic expectation. However, the difference between the FMR and market rent yields is minimal, suggesting that the potential returns from Section 8 properties in Collinsville are modest compared to other investment opportunities.
In conclusion, the gross yield for a Section 8 property in ZIP 62234 based on the FMR is 7.24%, while the gross yield based on the market rent is 7.34%. Given the quick turnover rate and moderate renter population, the market rent scenario appears more likely to reflect actual performance. Nonetheless, the returns are not particularly high, so investors should consider these yields carefully when deciding whether to invest in this area.
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.