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 | $1,360 |
| 1 Bedroom | $1,670 |
| 2 Bedrooms | $1,960 |
| 3 Bedrooms | $2,710 |
| 4 Bedrooms | $3,110 |
| 5 Bedrooms | $3,608 |
| 6 Bedrooms | $4,041 |
| 7 Bedrooms | $4,364 |
| 8 Bedrooms | $4,582 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,960 | $335,811 | 0.58% | F |
| 3BR | $2,710 | $423,790 | 0.64% | D |
| 4BR | $3,110 | $493,684 | 0.63% | D |
| 5BR | $3,608 | $559,619 | 0.64% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 80923 in Colorado Springs, CO, reveals two distinct scenarios based on the Fair Market Rent (FMR) and market rent figures. Using the annualized 2BR FMR of $2340 for FY 2024, the implied gross yield is calculated as follows:
$2340 / $468,345 = 0.50%, or 5.0% annually.
Conversely, using the Zillow Observed Rental Index (ZORI) of $1,913, the implied gross yield drops significantly:
$1,913 / $468,345 = 0.41%, or 4.1% annually.
The disparity between these yields highlights the financial implications of participating in the Section 8 program versus renting at market rates. Given that 32.0% of residents are renters and properties take an average of 24 days to sell (DOM), it's important to consider which scenario is more realistic for investment purposes.
The higher gross yield under the FMR scenario suggests that Section 8 properties can offer a better return compared to market rents. However, the lower gross yield under the ZORI scenario reflects the reality faced by many landlords who must compete with market conditions. The 24-day DOM indicates a relatively quick turnover in property listings, which could imply that rental demand is robust enough to support market rates.
Given the data, landlords and small-portfolio investors should weigh the benefits of the guaranteed income from Section 8 against the potentially higher gross yields from market rentals. While Section 8 provides stability and a fixed income source, the market rent scenario offers a slightly lower but still competitive gross yield, particularly if the area's strong rental demand continues to attract tenants willing to pay market rates.
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.