Section 8 Fair Market Rent (FMR) for ZIP 85037 - 2027

Investment Score for ZIP 85037

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,430
1 Bedroom	$1,530
2 Bedrooms	$1,780
3 Bedrooms	$2,350
4 Bedrooms	$2,600
5 Bedrooms	$3,016
6 Bedrooms	$3,378
7 Bedrooms	$3,648
8 Bedrooms	$3,830

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,780	$278,481	0.64%	D
3BR	$2,350	$348,116	0.68%	D
4BR	$2,600	$387,659	0.67%	D
5BR	$3,016	$442,265	0.68%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85037 (Phoenix, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 85037 in Phoenix, Arizona, are set by HUD for the year 2026. The FMRs are as follows: - 0BR: $1500 - 1BR: $1630 - 2BR: $1890 (which is 27.0% of the median household income) - 3BR: $2520 - 4BR: $2800 To understand how these FMRs compare to actual rents, we need to consider the typical rental prices in the area. The Zillow median for a 2BR home in this ZIP code is $280,650, which translates to a monthly rent of approximately $1,169 if we assume a 5% cap rate. This is significantly lower than the FMR of $1890 for a 2BR unit. However, the price-to-FMR ratio for a 2BR unit is 12.4x, indicating that the purchase price of a property is much higher than what it can be rented for under the Section 8 program. This suggests that there is a significant gap between the FMR and the actual market rent, which could limit the utility of Section 8 vouchers for tenants seeking housing in this ZIP code. #### Affordability & Renter Profile ZIP code 85037 has a population of 54,608, with 40.1% of residents being renters. The occupancy rate is quite high at 96.9%, suggesting a tight rental market where demand exceeds supply. Given the median household income of $84,016, the 2BR FMR of $1890 represents 27.0% of the median income, which is within the affordable range for many households. However, the high occupancy rate indicates that there might be limited availability of units that fit within the FMR guidelines. The high proportion of renters and the tight market suggest that competition for rental properties is fierce. This means that landlords have considerable leverage over setting rent prices, which can lead to rents being set above the FMR levels. For those relying on Section 8 vouchers, this could make finding suitable housing challenging due to the limited number of units that accept vouchers and the potential for rents exceeding the FMR. #### Investor Angle From an investor perspective, the ZIP code 85037 presents a mixed picture. While the median household income is relatively high at $84,016, the price-to-FMR ratio of 12.4x for a 2BR unit is concerning. This ratio implies that the purchase cost of a property is far greater than the rental income it can generate under the Section 8 program. For example, a 2BR property priced at $280,650 would generate a monthly rent of about $1,169 at a 5% cap rate. This is well below the FMR of $1890, meaning that the investor would likely have to rent the property at a higher rate to achieve positive cash flow. However, the FMR constraint means that the investor cannot charge more than $1890 per month for a 2BR unit under the Section 8 program, leading to potential losses. Given the high purchase price relative to the FMR, the investment grade for this ZIP code is low for Section 8-focused investors. The tight market and high occupancy rates also indicate that there is a risk of vacancies if the property is not competitive in terms of amenities and location. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Investors should focus on smaller units such as 0BR or 1BR apartments, which have lower FMRs ($1500 and $1630 respectively). These units are more likely to be rented out at or near their FMR without significant financial strain. For instance, a 1BR unit priced at $1630 would be easier to manage financially compared to a 2BR unit priced at $1890. 2. **Consider Non-Section 8 Rentals**: Given the high price-to-FMR ratio, investors might find it more profitable to target non-Section 8 rentals. The median household income of $84,016 suggests that there is a substantial number of residents who can afford higher rents. By renting properties outside the Section 8 program, investors can potentially achieve better returns. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 85037 is to **skip**. The high price-to-FMR ratio and tight rental market make it difficult to achieve positive cash flow while adhering to the FMR guidelines. Investors looking to maximize returns should consider other ZIP codes with more favorable ratios or explore non-Section 8 rental opportunities in this area.

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.