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 | $2,080 |
| 1 Bedroom | $2,240 |
| 2 Bedrooms | $2,600 |
| 3 Bedrooms | $3,430 |
| 4 Bedrooms | $3,800 |
| 5 Bedrooms | $4,408 |
| 6 Bedrooms | $4,937 |
| 7 Bedrooms | $5,332 |
| 8 Bedrooms | $5,599 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $3,430 | $435,138 | 0.79% | D |
| 4BR | $3,800 | $485,715 | 0.78% | D |
| 5BR | $4,408 | $566,103 | 0.78% | D |
U.S. Census Bureau data (2024)
A skeptical investor analyzing ZIP code 85355 might have several concerns regarding the feasibility of investing in properties that participate in the Section 8 housing voucher program. Let's address these concerns directly with the available data.
Objection 1: Will Fair Market Rent (FMR) of $2600 for ZIP 85355 in fiscal year 2024 be sufficient to cover the mortgage on a home valued at $496,393?
The FMR of $2600 in ZIP 85355 for fiscal year 2024 must be compared against the typical mortgage payments for a property of that value. Assuming a standard 30-year fixed-rate mortgage with an interest rate of 4%, the monthly payment on a $496,393 home would be approximately $2,400. This calculation shows that the FMR is slightly below the expected mortgage payment. However, it's important to note that this does not account for potential down payments or other financial strategies that could reduce the mortgage amount.
Objection 2: Is there enough renter demand at 8.4%?
The rental vacancy rate of 8.4% in ZIP 85355 suggests that there is moderate demand for rental properties. A lower vacancy rate indicates higher demand, but 8.4% is not unusually high. It means that roughly 92 out of every 100 rental units are occupied. To put this into perspective, a vacancy rate under 5% is generally considered strong, while rates above 10% can indicate weak demand. Therefore, while the demand is not exceptionally strong, it is still reasonable and likely sustainable for a landlord participating in the Section 8 program.
Objection 3: Will vouchers keep pace with market rents of $2,325?
The current market rent of $2,325 in ZIP 85355 is slightly above the FMR set for the Section 8 program. The FMR is designed to reflect the average market rent for a standard unit in the area. If the market rent continues to rise, there is a risk that the voucher amounts will not cover the full cost. However, the Housing Authority typically adjusts the FMR annually based on changes in the local market conditions. While the data does not provide future projections, the historical trend has been for adjustments to occur, ensuring that vouchers remain relevant to the market.
In conclusion, while the FMR of $2600 is close to covering the mortgage on a $496,393 home and the rental vacancy rate of 8.4% suggests moderate demand, there remains a need for caution regarding the potential mismatch between voucher amounts and rising market rents. These factors should be carefully considered before making any investment decisions in ZIP 85355.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.