Location: Colorado Springs, CO | Metro: Colorado Springs, CO 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 | $840 |
| 1 Bedroom | $1,030 |
| 2 Bedrooms | $1,210 |
| 3 Bedrooms | $1,680 |
| 4 Bedrooms | $1,920 |
| 5 Bedrooms | $2,227 |
| 6 Bedrooms | $2,494 |
| 7 Bedrooms | $2,694 |
| 8 Bedrooms | $2,829 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,030 | $331,567 | 0.31% | F |
| 2BR | $1,210 | $411,900 | 0.29% | F |
| 3BR | $1,680 | $610,134 | 0.28% | F |
| 4BR | $1,920 | $680,119 | 0.28% | F |
| 5BR | $2,227 | $781,885 | 0.28% | F |
U.S. Census Bureau data (2024)
A skeptical investor looking into Manitou Springs, CO (ZIP 80829), might have several concerns regarding the viability of investing in rental properties under Section 8. Let's address these points directly using the available data.
Objection 1: Will the Fair Market Rent (FMR) of $1320 cover the mortgage on a $545,512 home?
The FMR for ZIP 80829 is set at $1320 for fiscal year 2024. This figure represents the maximum amount that HUD will pay for a unit in this area. However, the cost of a typical home priced at $545,512 is significantly higher. To determine if the FMR can cover the mortgage, we need to calculate the monthly mortgage payment based on prevailing interest rates. Assuming a 30-year fixed-rate mortgage at an average rate of 5%, the monthly principal and interest payment would be approximately $2950. Clearly, the FMR of $1320 is insufficient to cover this mortgage payment, leaving a significant shortfall.
Objection 2: Is there enough renter demand at 34.6%?
The percentage of renter-occupied housing units in ZIP 80829 is 34.6%. This means that less than a third of the homes in the area are rented out. While this indicates a moderate level of rental activity, it is important to consider the local rental market conditions. A lower percentage of renters might suggest a tighter market, but without additional data on vacancy rates and tenant turnover, it's challenging to fully assess the demand. The key here is understanding the balance between supply and demand; if the number of available rentals is low relative to the number of potential tenants, then demand could still be strong despite the overall percentage being relatively modest.
Objection 3: Will vouchers keep pace with $1,275 market rents?
The market rent for a two-bedroom apartment in ZIP 80829 is reported to be around $1,275. The FMR of $1320 is designed to align closely with market rents to ensure that voucher holders can find suitable housing. In this case, the FMR is slightly above the market rent, which suggests that vouchers should generally keep pace with market conditions. However, it's crucial to note that individual vouchers can vary based on family size and income, so while the FMR provides a guideline, actual payments may differ. Additionally, landlords must be approved to accept Section 8 vouchers, and there can be administrative challenges associated with this program.
In summary, while the FMR of $1320 does not cover the mortgage on a $545,512 home, it is sufficient to meet market rents of $1,275 for a two-bedroom apartment. The 34.6% renter-occupied rate indicates a moderate rental market, but further analysis is needed to confirm the strength of demand. Investors should carefully weigh these factors against their investment goals and risk tolerance.
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.