Section 8 Fair Market Rent (FMR) for ZIP 88240 - 2027

Investment Score for ZIP 88240

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	$1,110
1 Bedroom	$1,120
2 Bedrooms	$1,330
3 Bedrooms	$1,670
4 Bedrooms	$1,830
5 Bedrooms	$2,123
6 Bedrooms	$2,378
7 Bedrooms	$2,568
8 Bedrooms	$2,696

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,330	$161,960	0.82%	C
3BR	$1,670	$243,675	0.69%	D
4BR	$1,830	$341,747	0.54%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 88240 (Hobbs, NM) #### Section 8 Voucher Dynamics In ZIP code 88240, the Fair Market Rent (FMR) for a two-bedroom unit is set at $1330 per month. This figure represents 25.2% of the median household income of $63,270, which is relatively affordable for those receiving Section 8 vouchers. However, the actual rent for a two-bedroom unit can be significantly higher, with the Zillow median price indicating a rental value of approximately $155,406. The price-to-FMR ratio of 9.7x suggests that the actual market rent is much higher than the FMR. This means that voucher holders face significant constraints in finding housing that fits within their budget, as landlords may be reluctant to accept vouchers due to the lower rent compared to market rates. #### Affordability & Renter Profile The population of Hobbs, NM, is 41,557, with 32.9% of residents being renters. This indicates a substantial rental market, but the occupancy rate of 86.9% suggests that there is some vacancy in the market, although it is not overly high. Given the median household income of $63,270, the rental market appears to be moderately tight, especially for those relying on Section 8 vouchers. The FMRs for different unit sizes range from $1070 for a zero-bedroom or one-bedroom unit to $1840 for a four-bedroom unit. These figures suggest that while the FMRs are reasonable, they may still be challenging for some low-income households, particularly those who need larger units. #### Investor Angle From an investor perspective, the ZIP code 88240 presents a mixed picture. While the FMRs provide a baseline for rental pricing, the actual market rents are substantially higher. For instance, the FMR for a two-bedroom unit is $1330, whereas the Zillow median price suggests a rental value of around $155,406. This implies that properties rented at FMR levels might struggle to attract tenants who can afford market rates, leading to potential vacancy issues. Additionally, the price-to-FMR ratio of 9.7x highlights the disparity between the subsidized rent and the market rent, which could make it difficult for investors to achieve positive cash flow if they rely solely on FMR-based rents. The investment grade for this ZIP code would likely be moderate to low, given the tightness of the rental market and the challenges in securing tenants willing to pay FMR rates. Investors should consider the broader economic context and the potential for rental rates to fluctuate based on local job markets and economic conditions. #### Specific Actionable Insights 1. **Target Larger Units**: Given the higher FMR for larger units, investors might focus on developing or acquiring three- and four-bedroom properties. The FMR for a four-bedroom unit is $1840, which is still below the Zillow median price, offering a potential opportunity to balance affordability with market demand. 2. **Consider Mixed-Income Developments**: To mitigate the risk of vacancy and ensure steady cash flow, investors could explore mixed-income developments where a portion of units are rented at market rates and others at FMR rates. This approach allows for leveraging the higher market rents to subsidize the lower FMR rents, potentially achieving a more stable financial position. 3. **Engage with Local Housing Authorities**: Building strong relationships with local housing authorities can help secure a steady stream of Section 8 voucher holders. This strategy can reduce the risk of vacancy and ensure that the property remains occupied by tenants who can reliably pay the FMR-based rent. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 88240 is to **Skip**. The high price-to-FMR ratio and the tight rental market suggest that it may be challenging to find tenants willing to pay FMR rates, leading to potential vacancy and negative cash flow issues. While there are opportunities in larger units, the overall market dynamics make it less favorable for investors primarily interested in Section 8 vouchers. Instead, investors might want to look into areas with a lower price-to-FMR ratio or higher concentrations of low-income households to better align with the goals of Section 8 programs.

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.