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 | $940 |
| 1 Bedroom | $1,150 |
| 2 Bedrooms | $1,350 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,140 |
| 5 Bedrooms | $2,482 |
| 6 Bedrooms | $2,780 |
| 7 Bedrooms | $3,002 |
| 8 Bedrooms | $3,152 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,150 | $294,552 | 0.39% | F |
| 2BR | $1,350 | $333,080 | 0.41% | F |
| 3BR | $1,870 | $391,830 | 0.48% | F |
| 4BR | $2,140 | $453,437 | 0.47% | F |
| 5BR | $2,482 | $507,160 | 0.49% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 80907, located in Colorado Springs, CO, centers around the discrepancy between the Fair Market Rent (FMR) and the actual market rent. The FMR for ZIP 80907 in fiscal year 2024 is set at $1,430, whereas the Zillow Observed Rent Index (ZORI) indicates a market rent of $1,612. This represents a gap of $182, or approximately 12.7%, between what voucher holders can afford and the open-market rental rate.
In the broader context of Colorado Springs, where 44.1% of residents are renters, and the median home value stands at $401,223 with a median income of $74,402, landlords and small-portfolio investors must consider the implications of this disparity. When the FMR is lower than the market rent, as it is here, accepting Section 8 vouchers means renting properties at rates that are below the prevailing market conditions. This can result in lower yields for investors compared to the potential earnings from market-rate rentals.
The cost of housing voucher tenants below open-market rates includes the opportunity cost of not charging market rates. For instance, if an investor has a property that could command a market rent of $1,612 but opts to accept a Section 8 voucher tenant paying $1,430, they are foregoing $182 per month in potential revenue. Over the course of a year, this amounts to $2,184 less per unit. However, the stability and reliability of Section 8 tenants can offset these costs, providing consistent cash flow and reduced vacancy rates.
To summarize, the gap between the FMR and market rent in ZIP 80907 presents a trade-off for landlords and small-portfolio investors. While the lower FMR means accepting a slightly reduced rent, the benefits of stable tenancy and government-backed payments can still make this a worthwhile investment strategy, especially given the high proportion of renters and the relatively high median home values in Colorado Springs.
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.