Location: Austin-Round Rock-San Marcos, TX | Metro: Austin-Round Rock-San Marcos, TX MSA
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 | $1,660 |
| 1 Bedroom | $1,750 |
| 2 Bedrooms | $2,080 |
| 3 Bedrooms | $2,620 |
| 4 Bedrooms | $3,080 |
| 5 Bedrooms | $3,573 |
| 6 Bedrooms | $4,002 |
| 7 Bedrooms | $4,322 |
| 8 Bedrooms | $4,538 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,080 | $283,039 | 0.73% | D |
| 3BR | $2,620 | $437,170 | 0.6% | F |
| 4BR | $3,080 | $537,072 | 0.57% | F |
| 5BR | $3,573 | $637,036 | 0.56% | F |
U.S. Census Bureau data (2024)
Austin, TX's ZIP code 78727 presents a mixed landscape for real estate investors considering the Section 8 program. Let's delve into the specifics to address common concerns.
Objection 1: Will Fair Market Rent (FMR) of $2150 for fiscal year 2024 cover the mortgage on a $458,225 home?
The FMR of $2150 is the maximum amount that HUD will pay for housing assistance in ZIP 78727. However, this does not directly translate to covering the mortgage of a $458,225 home. The mortgage payment depends on various factors including interest rates, loan terms, and down payments. With an average 30-year fixed mortgage rate around 6%, the monthly principal and interest payment on a $458,225 home could be approximately $2,750. This exceeds the FMR, indicating that additional income sources or a lower purchase price may be necessary to ensure profitability.
Objection 2: Is there enough renter demand at 57.8%?
The occupancy rate of 57.8% suggests that less than half of the rental units are occupied by Section 8 tenants. While this percentage might seem low, it indicates that there is still significant demand for affordable housing. However, the data does not provide a complete picture of the overall rental market demand, which includes non-Section 8 renters. To fully assess demand, one must consider the broader rental market trends in ZIP 78727.
Objection 3: Will vouchers keep pace with $1,452 market rents?
The average market rent of $1,452 is higher than the FMR of $2150, but it's important to note that the FMR is typically set below market rates to maintain affordability. Vouchers are designed to cover a portion of the rent, up to the FMR, leaving the tenant to pay the difference. If the voucher amount remains stagnant while market rents rise, landlords may find themselves absorbing some of the cost increase. It's crucial to monitor local housing authority policies and federal funding levels to predict future adjustments in voucher amounts.
In conclusion, while ZIP 78727 offers opportunities for real estate investment through the Section 8 program, careful consideration of the financials and market conditions is essential. The data provided highlights both potential challenges and areas where further investigation is needed to make informed decisions.
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.