Location: Phoenix-Mesa-Chandler, AZ | Metro: Phoenix-Mesa-Chandler, AZ 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 | $1,560 |
| 1 Bedroom | $1,680 |
| 2 Bedrooms | $1,950 |
| 3 Bedrooms | $2,590 |
| 4 Bedrooms | $2,870 |
| 5 Bedrooms | $3,329 |
| 6 Bedrooms | $3,728 |
| 7 Bedrooms | $4,026 |
| 8 Bedrooms | $4,227 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,680 | $343,046 | 0.49% | F |
| 2BR | $1,950 | $437,792 | 0.45% | F |
| 3BR | $2,590 | $570,407 | 0.45% | F |
U.S. Census Bureau data (2024)
A skeptical investor looking into ZIP 85004 in Phoenix, AZ, might raise several concerns regarding the feasibility of investing in Section 8 properties. Let's address these objections directly with the available data.
Will Fair Market Rent (FMR) of $2170 cover the mortgage on a $425,409 home?
The FMR of $2170 for ZIP 85004 in fiscal year 2024 is an important figure, but it does not fully capture whether it will cover the mortgage on a property priced at $425,409. The average mortgage payment for a home in this price range can vary widely depending on interest rates, down payments, and other factors. For instance, if we consider a typical 30-year fixed-rate mortgage at an average rate of 5%, a down payment of 20%, the monthly mortgage payment would be around $1,750. In this case, the FMR of $2170 would indeed cover the mortgage payment and provide additional income for maintenance and management costs. However, if interest rates rise or the down payment is less, the mortgage payment could exceed the FMR. Thus, while the FMR is sufficient under certain conditions, the actual coverage depends on the specifics of the mortgage.
Is there enough renter demand at 78.9%?
The rental vacancy rate of 78.9% suggests that the majority of units are occupied, indicating a strong demand for rentals in ZIP 85004. This high occupancy rate supports the idea that there is ample demand for both market-rate and Section 8 rentals. Landlords and small-portfolio investors can expect steady tenant interest, which reduces the risk of prolonged vacancies and ensures consistent cash flow. Moreover, the combination of low vacancy and high demand typically leads to a competitive rental market, where maintaining occupancy becomes easier even with Section 8 tenants.
Will vouchers keep pace with $1,776 market rents?
The question of whether vouchers will keep up with market rents of $1,776 is critical. According to the data, the FMR of $2170 for ZIP 85004 exceeds the current market rent, suggesting that vouchers should adequately cover the cost of renting a unit at market value. However, the data does not provide a direct comparison between the increase in voucher amounts and the increase in market rents over time. To ensure long-term viability, investors must monitor changes in both voucher amounts and market rents. If market rents continue to rise faster than voucher amounts, it could pose a challenge for covering expenses. Conversely, if voucher amounts adjust in line with or above market rents, the investment remains sound.
In summary, while the data indicates that ZIP 85004 presents opportunities for Section 8 investments, particularly with strong renter demand and FMRs that exceed market rents, investors must remain vigilant about mortgage conditions and the future trajectory of voucher amounts relative to market rents.
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.