Location: Los Angeles-Long Beach-Glendale, CA | Metro: Los Angeles-Long Beach-Glendale, CA HUD Metro FMR Area
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 | $3,230 |
| 1 Bedroom | $3,610 |
| 2 Bedrooms | $4,450 |
| 3 Bedrooms | $5,650 |
| 4 Bedrooms | $6,320 |
| 5 Bedrooms | $7,331 |
| 6 Bedrooms | $8,211 |
| 7 Bedrooms | $8,868 |
| 8 Bedrooms | $9,311 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $3,610 | $558,711 | 0.65% | D |
| 2BR | $4,450 | $993,085 | 0.45% | F |
| 3BR | $5,650 | $1,819,733 | 0.31% | F |
| 4BR | $6,320 | $2,328,895 | 0.27% | F |
| 5BR | $7,331 | $2,968,186 | 0.25% | F |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $3,820 for ZIP 90036 in fiscal year 2024 will sufficiently cover the mortgage on a home valued at $1,845,904. This concern is valid given that mortgage payments can be substantial. However, the FMR represents the maximum amount that a household earning up to 50% of the area median income can pay for rent and still have sufficient funds for other basic needs. In ZIP 90036, this figure is indeed high, suggesting strong rental potential. To accurately assess if it covers the mortgage, one would need the interest rate and term length of the loan. Assuming a typical 30-year fixed-rate mortgage at an average interest rate, the monthly payment on such a home would likely be around $7,500 to $9,000, depending on down payment and interest rate. Thus, the FMR of $3,820 alone does not cover the mortgage but can contribute significantly when combined with other income sources.
The rental demand at 86.3% occupancy is another point of contention. This percentage indicates that there is robust demand for rental properties in the area, with nearly nine out of ten units occupied. High occupancy rates are generally favorable for landlords and investors, as they suggest a healthy rental market and lower vacancy risks. However, the exact number of renters versus homeowners is also critical. If the majority of residents are homeowners, this could impact the long-term sustainability of rental demand. The data provided does not specify the ratio of renters to homeowners, so while the occupancy rate is promising, further investigation into the local housing market dynamics is advised.
The third objection revolves around whether Housing Choice Vouchers will keep pace with market rents, which are currently at $2,979. While the voucher program aims to provide affordable housing options, the gap between the voucher amounts and market rents is significant. The average voucher payment in the area is typically much lower than $2,979, making it challenging for landlords to cover their expenses. This issue is particularly pertinent in areas with high housing costs like ZIP 90036. However, landlords can benefit from the increased demand for subsidized housing, which often leads to a steady stream of tenants despite the lower rent. Additionally, voucher holders are generally reliable tenants due to the strict eligibility criteria and oversight by the housing authority.
In summary, while the FMR of $3,820 in ZIP 90036 won't fully cover the mortgage on a $1,845,904 home, it can still play a crucial role in supporting rental income. The occupancy rate of 86.3% suggests strong rental demand, though more detailed analysis of the local housing mix is recommended. Lastly, the disparity between voucher amounts and market rents of $2,979 presents a challenge but also an opportunity for landlords who can navigate the complexities of the voucher system effectively.
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.