Location: Houston-The Woodlands-Sugar Land, TX | Metro: Houston-The Woodlands-Sugar Land, TX 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 | $1,350 |
| 1 Bedroom | $1,380 |
| 2 Bedrooms | $1,640 |
| 3 Bedrooms | $2,210 |
| 4 Bedrooms | $2,740 |
| 5 Bedrooms | $3,178 |
| 6 Bedrooms | $3,559 |
| 7 Bedrooms | $3,844 |
| 8 Bedrooms | $4,036 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,380 | $99,691 | 1.38% | A |
| 2BR | $1,640 | $147,544 | 1.11% | B |
| 3BR | $2,210 | $290,203 | 0.76% | D |
| 4BR | $2,740 | $401,549 | 0.68% | D |
| 5BR | $3,178 | $498,076 | 0.64% | D |
U.S. Census Bureau data (2024)
The Section 8 cap-rate picture for ZIP code 77069 in Houston, TX, reveals two distinct rental income scenarios based on the Fair Market Rent (FMR) and the market rent rates. For a two-bedroom unit, the annualized FMR rate is $1440 multiplied by 12, totaling $17,280. The Zillow Observed Rental Index (ZORI) for the same unit type is $1,210 per month, which annualizes to $14,520.
To derive the gross yield, we divide these annual rental incomes by the median home value of $330,496. Using the FMR rate, the implied gross yield is approximately 5.23%, calculated as follows: $17,280 / $330,496 = 0.0523. Conversely, applying the market rent rate yields a gross yield of about 4.40%, computed by: $14,520 / $330,496 = 0.0440.
Given that 41.0% of the population in ZIP 77069 are renters and the days on market (DOM) average at 73 days, it suggests a moderate demand for rental properties. This information implies that while the FMR rate might be attainable through the Section 8 program, the market rent rate is more reflective of actual rental income potential outside of government subsidies.
The higher DOM indicates a competitive rental market where properties take longer to lease, suggesting that landlords might have to offer rents closer to the market rate to attract tenants promptly. Therefore, the market rent rate scenario of a 4.40% gross yield is likely more realistic for most landlords and small-portfolio investors operating in this area.
In conclusion, while the Section 8 program offers a gross yield of 5.23%, the typical market conditions suggest that investors should expect a gross yield closer to 4.40%. This assessment provides a clearer understanding of the financial landscape for rental investments in ZIP 77069, guiding decisions on whether to participate in the Section 8 program or aim for market rents.
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.