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 | $1,580 |
| 1 Bedroom | $1,620 |
| 2 Bedrooms | $1,920 |
| 3 Bedrooms | $2,590 |
| 4 Bedrooms | $3,210 |
| 5 Bedrooms | $3,724 |
| 6 Bedrooms | $4,171 |
| 7 Bedrooms | $4,505 |
| 8 Bedrooms | $4,730 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,920 | $168,713 | 1.14% | B |
| 3BR | $2,590 | $225,811 | 1.15% | B |
| 4BR | $3,210 | $273,823 | 1.17% | B |
| 5BR | $3,724 | $295,530 | 1.26% | A |
U.S. Census Bureau data (2024)
The Section 8 cap-rate picture for ZIP code 77489 in Missouri City, TX, can be derived using the provided figures. For a two-bedroom unit, the Fair Market Rent (FMR) for FY 2024 is set at $1740 annually, while the Zillow Observed Rental Index (ZORI) indicates a market rent of $1,928 per month. The median home value in this area is $232,226.
To calculate the gross yield, we first need to annualize the rents. The annualized FMR for a two-bedroom unit is $1740. The annualized market rent based on ZORI would be $1,928 multiplied by 12 months, resulting in $23,136 annually.
The implied gross-yield for the FMR scenario is calculated by dividing the annual rent ($1740) by the median home value ($232,226), which gives us approximately 0.75%. For the market rent scenario, the gross-yield is $23,136 divided by $232,226, equating to about 9.96%.
Given the 22.9% renter density and an average Days on Market (DOM) of 58 days, the FMR scenario appears more realistic. The lower renter density suggests that a significant portion of the population may prefer homeownership over renting, making it challenging to secure long-term rental agreements at market rates. Additionally, the relatively short DOM indicates a competitive rental market where properties are quickly rented out, often at subsidized rates such as those offered through Section 8.
The disparity between the gross yields of these two scenarios highlights the importance of considering local market conditions and tenant preferences when evaluating investment opportunities. While the market rent scenario offers a much higher gross-yield, the realities of the local rental environment in ZIP 77489 suggest that securing tenants at the FMR rate is more likely, providing a gross-yield closer to 0.75%.
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.