Section 8 Fair Market Rent (FMR) for ZIP 85323 - 2027

Investment Score for ZIP 85323

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	$1,450
1 Bedroom	$1,560
2 Bedrooms	$1,810
3 Bedrooms	$2,390
4 Bedrooms	$2,650
5 Bedrooms	$3,074
6 Bedrooms	$3,443
7 Bedrooms	$3,718
8 Bedrooms	$3,904

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	$1,810	$255,185	0.71%	D
3BR	$2,390	$364,346	0.66%	D
4BR	$2,650	$400,103	0.66%	D
5BR	$3,074	$475,889	0.65%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85323 (Avondale, AZ) #### Section 8 Voucher Dynamics In ZIP code 85323, the Fair Market Rent (FMR) for a two-bedroom unit is set at $1,890 per month for 2026. This amount represents 27.3% of the median household income of $83,120, indicating that it is a reasonable rent for those receiving Section 8 vouchers. However, the actual rental market dynamics show that the average rent for a two-bedroom unit is higher than the FMR. The Zillow median price for a two-bedroom rental property in this area is $258,397, which translates to a monthly rent of approximately $1,143 based on a typical mortgage payment scenario. This implies that the actual rental rates are significantly above the FMR, creating a challenge for voucher holders who might find it difficult to secure housing within their budget. The constraints for voucher holders include finding landlords willing to accept Section 8 vouchers, given that the actual rent is often higher than the FMR. Additionally, the occupancy rate of 95.6% suggests a competitive market where there is limited availability of units, making it even harder for voucher recipients to find suitable housing. #### Affordability & Renter Profile With 40.6% of the population being renters, Avondale has a substantial rental market. Given the median household income of $83,120, the affordability of housing is a critical issue. The FMR for a two-bedroom unit at $1,890 is already a significant portion of the median income, and the actual rental rates are even higher. This indicates that the market is tight, with many renters potentially struggling to find affordable housing options. The high occupancy rate of 95.6% further supports the notion that the market is competitive. This means that most available units are quickly occupied, leaving little room for new entrants or those looking to move into the area. The median household income also suggests that the majority of residents are middle-class, and the high rent-to-income ratio indicates that they might be spending a large portion of their earnings on housing. #### Investor Angle From an investor perspective, the ZIP code 85323 presents both opportunities and challenges. The price-to-FMR ratio of 11.4x indicates that the cost of purchasing a rental property is relatively high compared to the expected rental income. For example, a two-bedroom unit priced at $258,397 would generate a monthly rent of about $1,143 if financed through a typical mortgage. However, the actual market rent for a two-bedroom unit is closer to $1,890, which is the FMR. To determine whether this ZIP code is cash-flow positive at FMR, we need to consider the potential rental income against the costs of ownership, including mortgage payments, property taxes, insurance, maintenance, and other expenses. Assuming a mortgage rate of 4.5%, the monthly mortgage payment for a $258,397 property would be around $1,290. Adding typical property taxes (about 1% of the property value annually), insurance ($100/month), and maintenance ($100/month) brings the total monthly expense to approximately $1,590. This leaves a small margin of about $300 per month above the FMR, suggesting that while it is possible to achieve positive cash flow, the margins are tight. Given these factors, the investment grade for this ZIP code would be moderate. While there is demand for rental properties, the high purchase price relative to the FMR means that investors should carefully assess their financial situation and risk tolerance before entering this market. #### Specific Actionable Insights 1. **Focus on Units Below FMR**: Investors should consider targeting units that are priced below the FMR to ensure positive cash flow. For instance, a two-bedroom unit priced at $200,000 would have a lower monthly mortgage payment of around $1,000, allowing for a higher profit margin when rented at the FMR of $1,890. 2. **Negotiate with Landlords**: Given the high occupancy rate, negotiating with existing landlords to accept Section 8 vouchers could be a viable strategy. Offering incentives such as property management services or renovations might encourage them to participate in the program. 3. **Consider Smaller Units**: The FMR for smaller units (one-bedroom and zero-bedroom) is lower, at $1,630 and $1,500 respectively. Investing in these types of units could provide better cash flow opportunities, especially if the market rent for these units is also lower than for larger units. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 85323 is to **Hold**. While there is a strong demand for rental properties, the high purchase price relative to the FMR means that achieving positive cash flow will be challenging. Investors should carefully evaluate the specific units they are considering and ensure that they can manage the property effectively to maintain profitability. Additionally, the tight market conditions suggest that securing long-term tenants might be easier, but the competition for units is fierce, making it important to focus on units that offer the best balance between purchase price and potential rental income.

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.