Section 8 Fair Market Rent (FMR) for ZIP 90042 - 2027

Investment Score for ZIP 90042

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	$2,160
1 Bedroom	$2,410
2 Bedrooms	$2,970
3 Bedrooms	$3,770
4 Bedrooms	$4,220
5 Bedrooms	$4,895
6 Bedrooms	$5,482
7 Bedrooms	$5,921
8 Bedrooms	$6,217

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	$2,410	$625,928	0.39%	F
2BR	$2,970	$818,737	0.36%	F
3BR	$3,770	$1,088,582	0.35%	F
4BR	$4,220	$1,283,923	0.33%	F
5BR	$4,895	$1,345,271	0.36%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 90042 (Los Angeles, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 90042 in Los Angeles, California, for 2026 are as follows: - 0BR: $1860 - 1BR: $2080 - 2BR: $2590 (which is 32.6% of the median household income) - 3BR: $3280 - 4BR: $3660 These FMRs represent the maximum amount that a Section 8 voucher holder can pay for rent. However, the actual rental market in 90042 is significantly higher. For instance, the Zillow median price for a 2-bedroom unit is $861,644, which translates into a monthly rent of approximately $3,590 based on typical rental yields. This is already above the FMR for a 2BR unit by $1,000. The price-to-FMR ratio for a 2BR unit is 27.7x, indicating that the actual market rent is far beyond what the FMR covers. Given these dynamics, voucher holders face significant constraints in finding affordable housing. They would likely have to settle for units below their size preference or in less desirable locations where rents are lower. The high disparity between FMR and actual market rents suggests that landlords might be hesitant to accept vouchers unless they are willing to rent at the FMR rates, which are substantially lower than market rates. #### Affordability & Renter Profile ZIP code 90042 has a population of 56,835, with 52.6% being renters. The occupancy rate is quite high at 94.9%, suggesting a robust demand for rental properties. Given the median household income of $95,282, the affordability of housing is a critical issue. A 2BR unit priced at $2590 per month represents only 32.6% of the median income, which is within the standard affordability threshold of 30%. However, the actual median price of $861,644 translates to a monthly rent of $3,590, which is 37.7% of the median income, exceeding the affordability threshold. This indicates that the market is tight and highly competitive, particularly for those relying on Section 8 vouchers. The majority of residents who rent would need to find ways to supplement their income or seek alternative assistance programs to afford market-rate rentals. The high occupancy rate also points to limited availability of units, further exacerbating the challenge for renters. #### Investor Angle From an investor perspective, the ZIP code 90042 presents a challenging environment for cash flow positive investments at the FMR levels. With the Zillow median price for a 2BR unit at $861,644, the potential rental yield is around $3,590 per month. However, if an investor aims to cater specifically to Section 8 voucher holders, they must adhere to the FMR rates, which are much lower. For example, a 2BR unit would have to be rented out at $2,590 per month, which is significantly below the market rate. This means that investors would need to consider the cost of acquisition, maintenance, and management against these lower rents. Given the high property values and associated costs, it is unlikely that an investment at FMR would be cash flow positive without substantial subsidies or other financial incentives. The investment grade for this ZIP code would be considered low due to the high cost of entry and the limited ability to charge market rates. Investors should carefully weigh the risks and benefits, including the potential for long-term appreciation versus immediate cash flow. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high disparity between FMR and market rates, investors should focus on smaller units such as 0BR and 1BR apartments. These units have FMRs of $1860 and $2080 respectively, which are closer to the lower end of the market spectrum. This could help in attracting tenants who are using Section 8 vouchers and are constrained by the FMR limits. 2. **Consider Mixed-Income Developments**: To balance the financial viability of the investment, developers might want to consider mixed-income developments. This involves offering a portion of units at FMR rates to attract voucher holders while renting out other units at market rates. For instance, a development could allocate 30% of its units to Section 8 voucher holders at FMR rates, while the remaining 70% could be rented out at market rates, thereby achieving a better overall financial performance. #### Bottom Line For investors focusing on Section 8 vouchers, ZIP code 90042 is not recommended for new acquisitions. The high property values and the significant gap between FMR and market rates make it difficult to achieve cash flow positive investments without substantial subsidies. Existing investors in the area might benefit from holding onto their properties, especially if they are already renting units at FMR rates, but they should be prepared for lower returns compared to market-rate rentals. New investors should look for areas with a more favorable price-to-FMR ratio or consider diversifying their investment portfolio to include both Section 8 and market-rate units.

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.