Section 8 Fair Market Rent (FMR) for ZIP 85254 - 2027

Investment Score for ZIP 85254

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	$1,710
1 Bedroom	$1,860
2 Bedrooms	$2,160
3 Bedrooms	$2,880
4 Bedrooms	$3,180
5 Bedrooms	$3,689
6 Bedrooms	$4,132
7 Bedrooms	$4,463
8 Bedrooms	$4,686

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
1BR	$1,860	$290,432	0.64%	D
2BR	$2,160	$428,524	0.5%	F
3BR	$2,880	$768,042	0.37%	F
4BR	$3,180	$1,028,649	0.31%	F
5BR	$3,689	$1,351,436	0.27%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85254 (Scottsdale, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for Scottsdale, AZ (ZIP 85254) in 2026 indicate that the rent for a two-bedroom apartment is set at $2390 per month. This figure represents 23.3% of the median household income of $123,203. However, the actual market rent for a two-bedroom apartment is significantly higher, with Zillow reporting a median price of $439,677. This translates into a price-to-FMR ratio of 15.3x, meaning that the actual market rent is approximately 15.3 times the FMR. For voucher holders, this means that they will likely face significant constraints in finding affordable housing within the ZIP code. The FMR is well below the actual market rent, making it challenging for tenants relying on Section 8 vouchers to secure housing without substantial out-of-pocket expenses. #### Affordability & Renter Profile Given the high median household income of $123,203, the population in ZIP 85254 consists primarily of affluent residents. With 28.0% of the population being renters, the rental market is relatively tight, indicating a high demand for rental properties. The occupancy rate of 89.1% suggests that there is little vacancy in the rental market, further supporting the notion that it is a competitive environment. The high price-to-FMR ratio of 15.3x implies that the rental market is not aligned with the FMR, leading to a situation where only those who can afford the higher rents are able to secure housing. This makes the market less accessible for low-income households, particularly those relying on Section 8 vouchers. #### Investor Angle From an investor perspective, the ZIP code 85254 presents a challenging scenario for cash flow positivity when considering the FMR. Given that the actual market rent for a two-bedroom apartment is $439,677, which is far above the FMR of $2390, investors would need to consider the potential for lower occupancy rates among voucher holders. The investment grade in this area is likely to be high due to the strong economic indicators and high median household income, but the alignment with Section 8 vouchers is problematic. Investors focusing on Section 8 would need to ensure that their properties are priced competitively within the FMR range to attract tenants using vouchers, which could mean operating at a loss compared to market rates. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should consider focusing on smaller units such as one-bedroom apartments. The FMR for a one-bedroom unit is $2060, which is still a fraction of the market rent. By targeting smaller units, investors can potentially achieve better occupancy rates while staying within the FMR guidelines. 2. **Location-Specific Pricing**: Investors should conduct detailed location-specific analyses to identify pockets within the ZIP code where market rents are closer to the FMR. This could involve areas with lower property values or neighborhoods with more affordable housing options. For instance, if an investor can find a two-bedroom apartment priced around $2390, they would be more likely to attract Section 8 voucher holders. #### Bottom Line For Section 8-focused investors, the ZIP code 85254 presents a difficult market due to the significant disparity between FMR and actual market rents. The recommendation would be to **skip** this ZIP code unless investors can find properties priced within the FMR range or focus on smaller units like one-bedroom apartments. The high price-to-FMR ratio and the limited number of voucher holders who can afford the actual market rents make it challenging to achieve both financial sustainability and occupancy goals. Therefore, unless there are specific opportunities to leverage lower-cost locations or smaller units, this ZIP code is not recommended for Section 8-focused investments.

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.