Section 8 Fair Market Rent (FMR) for ZIP 85042 - 2027

Investment Score for ZIP 85042

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	$1,350
1 Bedroom	$1,450
2 Bedrooms	$1,690
3 Bedrooms	$2,230
4 Bedrooms	$2,470
5 Bedrooms	$2,865
6 Bedrooms	$3,209
7 Bedrooms	$3,466
8 Bedrooms	$3,639

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	$1,690	$281,048	0.6%	D
3BR	$2,230	$389,524	0.57%	F
4BR	$2,470	$453,581	0.54%	F
5BR	$2,865	$546,751	0.52%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85042 (Phoenix, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 85042 in Phoenix, AZ, indicate that the rent for a two-bedroom unit is set at $1780 per month. This amount represents 24.1% of the median household income of $88,717, which suggests that it is relatively affordable for households earning around the median income. However, when comparing these FMRs to actual rents, we see a significant discrepancy. The Zillow median price for a two-bedroom property is $285,083, which translates to a monthly mortgage payment of approximately $1,330 based on a 4.5% interest rate over a 30-year term. When factoring in property taxes, insurance, and maintenance costs, the total monthly cost can easily exceed the FMR. For instance, if we estimate an additional $500 for these expenses, the total monthly cost would be $1,830, which is already above the FMR for a two-bedroom unit. This means that voucher holders face strict constraints in finding suitable housing within their budget. They must locate properties where the landlord is willing to accept the Section 8 voucher and the rent does not exceed the FMR. Given the high price-to-FMR ratio of 13.3x, it is evident that the actual rental market is significantly more expensive than the FMR, making it challenging for voucher holders to find affordable housing. #### Affordability & Renter Profile ZIP code 85042 has a population of 45,903, with 32.4% being renters. The occupancy rate of 96.0% indicates a tight rental market, where most available units are occupied. This high occupancy rate suggests that there is strong demand for rental properties, but the supply may be limited. The median household income of $88,717 provides some context on the economic status of residents, but it is important to note that the FMR for a two-bedroom unit is only 24.1% of this median income. This implies that the majority of renters in this area are likely earning below the median income, making them particularly sensitive to rental prices. Given the tight market conditions and the high proportion of renters, it is clear that the demand for rental properties is robust. However, the affordability issue arises due to the significant gap between the FMR and the actual rental prices. This could lead to a situation where many potential tenants are unable to secure housing without assistance, such as through Section 8 vouchers. #### Investor Angle From an investor perspective, the ZIP code 85042 presents both opportunities and challenges. The FMRs provide a benchmark for what the government considers a reasonable rent for subsidized housing. However, the actual rental market is much more expensive, with the Zillow median price for a two-bedroom property being $285,083. This translates to a monthly mortgage payment of about $1,330, plus additional costs like property taxes, insurance, and maintenance, totaling around $1,830. To determine whether this ZIP code is cash-flow positive at FMR, we need to consider the net operating income (NOI) and the total monthly expenses. If the NOI is higher than the total monthly expenses, then the investment is cash-flow positive. In this case, the NOI would be the FMR minus the total monthly expenses. For a two-bedroom unit, the NOI would be $1780 - $1830 = -$50, indicating a negative cash flow. This suggests that investing in rental properties in this ZIP code at the FMR level would not be financially viable without additional subsidies or other revenue sources. The investment grade for this ZIP code would be considered low due to the tight market conditions and the high price-to-FMR ratio. Investors should be cautious about entering this market without a thorough understanding of the local rental dynamics and the availability of Section 8 vouchers. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors might want to focus on smaller units such as one-bedroom or studio apartments. The FMR for a one-bedroom unit is $1530, which is still lower than the estimated total monthly expenses for a two-bedroom unit. While the NOI for a one-bedroom unit would also be negative ($1530 - $1830 = -$300), the gap is smaller, and there may be more flexibility in negotiating with landlords who are willing to accept Section 8 vouchers. 2. **Consider Alternative Subsidies**: Since the FMR is significantly lower than the actual rental market prices, investors should explore alternative subsidies or programs that can help bridge the gap. For example, the Housing Choice Voucher program (Section 8) often allows for some flexibility in rent amounts, especially if the landlord agrees to accept the voucher. Additionally, investors could look into other federal or state housing assistance programs that might offer higher subsidy levels. 3. **Evaluate Property Management Costs**: Investors should carefully evaluate the costs associated with property management, including maintenance, utilities, and any other operational expenses. These costs can vary widely depending on the condition of the property and the quality of the tenant. By minimizing these costs, investors can potentially achieve a positive NOI even at the FMR level. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 85042 is to **Skip** this market. The high price-to-FMR ratio and the tight rental market make it difficult to find properties that are both affordable for voucher holders and profitable for investors. The negative cash flow at the FMR level for two-bedroom units, combined with the limited supply of smaller units, suggests that the risks outweigh the potential rewards. Investors looking to enter the Section 8 market in Phoenix should consider ZIP codes with a more favorable price-to-FMR ratio and a larger supply of affordable rental units.

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.