Section 8 Fair Market Rent (FMR) for ZIP 85374 - 2027

Investment Score for ZIP 85374

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	$1,600
1 Bedroom	$1,720
2 Bedrooms	$2,000
3 Bedrooms	$2,640
4 Bedrooms	$2,930
5 Bedrooms	$3,399
6 Bedrooms	$3,807
7 Bedrooms	$4,112
8 Bedrooms	$4,318

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	$1,720	$193,430	0.89%	C
2BR	$2,000	$370,297	0.54%	F
3BR	$2,640	$378,449	0.7%	D
4BR	$2,930	$410,031	0.71%	D
5BR	$3,399	$478,208	0.71%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85374 (Surprise, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 85374 is set by HUD for the year 2026. The FMRs are as follows: - 0BR: $1730 - 1BR: $1890 - 2BR: $2190 (which is 32.4% of the median household income) - 3BR: $2920 - 4BR: $3240 To understand how these FMRs compare to actual rents, we need to consider the occupancy rate and the percentage of renters in the area. With an occupancy rate of 84.4%, it suggests that there is a relatively high demand for housing units. However, only 23.1% of the population are renters, indicating that the rental market is not as large as it could be in other areas with higher percentages of renters. Given the FMRs, Section 8 voucher holders face significant constraints. For example, a 2BR unit at $2190 would be 32.4% of the median household income, which is a substantial portion. This means that voucher holders must find units that do not exceed the FMR to ensure affordability. If landlords charge above the FMR, voucher holders will struggle to afford the rent, leading to potential difficulties in securing housing. #### Affordability & Renter Profile The median household income in Surprise, AZ (ZIP 85374) is $81,201. Given that the FMR for a 2BR unit is $2190, which represents 32.4% of the median income, it indicates that the rental market is relatively affordable for those earning the median income. However, this also implies that lower-income households might find it challenging to secure housing without assistance like Section 8 vouchers. The Zillow median price for a 2BR home in this ZIP code is $379,638. This price-to-FMR ratio of 14.4x highlights the disparity between home ownership and rental costs. It suggests that while owning a home is significantly more expensive, renting remains a viable option for many residents, especially those who are constrained by income levels. Considering the relatively low percentage of renters (23.1%) and the occupancy rate (84.4%), it appears that the market is neither overly tight nor oversupplied. There is a balance between supply and demand, but the rental segment is smaller compared to the overall housing market. #### Investor Angle From an investor perspective, the key question is whether properties can generate positive cash flow at the FMR levels. To determine this, we need to look at the average rental rates and the cost of acquiring and maintaining rental properties. The FMR for a 2BR unit is $2190, which is 32.4% of the median household income. This suggests that the rental market is affordable for most residents. However, the Zillow median price for a 2BR home being $379,638 indicates that the acquisition cost is quite high. Additionally, the price-to-FMR ratio of 14.4x implies that the rental rates are much lower than the potential home values, which could affect the profitability of rental investments. To assess the investment grade, we need to consider factors such as vacancy rates, maintenance costs, and property taxes. Given the occupancy rate of 84.4%, the risk of prolonged vacancies seems low. However, the high acquisition cost and the relatively low rental rates suggest that the profit margins might be thin unless investors can manage costs effectively. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the constraints faced by voucher holders, investing in smaller units (0BR or 1BR) might yield better returns. These units have FMRs of $1730 and $1890 respectively, which are lower than the 2BR and 3BR units. Landlords can potentially attract more tenants by offering smaller units at or below the FMR. 2. **Target Affordable Neighborhoods**: While the overall median home value is high, there are likely pockets within the ZIP code where homes and rentals are more affordable. Investors should conduct thorough neighborhood research to identify areas where the rental market is more aligned with the FMRs. This could involve looking at older neighborhoods or areas with less desirable amenities. 3. **Consider Mixed-Use Developments**: Given the relatively low percentage of renters, mixed-use developments that combine residential and commercial spaces might be a more attractive proposition. This approach can help diversify revenue streams and reduce dependency solely on rental income. #### Bottom Line For Section 8-focused investors, the ZIP code 85374 presents a mixed picture. While the rental market is balanced and there is a reasonable demand for housing, the high acquisition costs and the relatively low rental rates suggest that the profit margins might be thin. Therefore, the recommendation would be to **Hold** on to existing investments if they are already generating positive cash flow, but **Skip** new investments unless they can be acquired at a discount or managed efficiently to keep costs low. In summary, the market dynamics in Surprise, AZ (ZIP 85374) indicate that while the rental market is affordable for most residents, the high acquisition costs and the constraints faced by voucher holders make it a challenging environment for new investors seeking to capitalize on Section 8 vouchers. Existing investors should continue to monitor the market closely and consider strategies to optimize their portfolio, such as focusing on smaller units or targeting more affordable neighborhoods.

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.