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 | $2,810 |
| 1 Bedroom | $3,150 |
| 2 Bedrooms | $3,920 |
| 3 Bedrooms | $4,970 |
| 4 Bedrooms | $5,530 |
| 5 Bedrooms | $6,415 |
| 6 Bedrooms | $7,185 |
| 7 Bedrooms | $7,760 |
| 8 Bedrooms | $8,148 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $3,150 | $452,230 | 0.7% | D |
| 2BR | $3,920 | $1,103,279 | 0.36% | F |
| 3BR | $4,970 | $2,008,568 | 0.25% | F |
| 4BR | $5,530 | $2,713,199 | 0.2% | F |
| 5BR | $6,415 | $3,640,574 | 0.18% | F |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $3,820 for ZIP 90274 in fiscal year 2024 will sufficiently cover the mortgage on a home priced at $2,533,631. This concern arises because the median home value in Rolling Hills Estates, CA, is significantly higher than the average rental income. However, it's important to note that the FMR is designed to reflect the affordability threshold for housing in the area. A $2,533,631 home is likely a high-end property, and the typical mortgage payment for such a property would be beyond the scope of what the FMR aims to cover. For a more accurate assessment, one should consider the average price range of homes that are typically rented in the area.
The investor may also doubt the strength of renter demand given that only 13.9% of households in ZIP 90274 are renters. This percentage suggests a relatively low demand compared to areas with higher percentages of renters. However, the local real estate market has seen steady growth, and the presence of rental properties indicates that there is still a viable market for landlords. The key to success in this environment is to target the niche market of renters who are willing to pay premium rents for high-quality living spaces. Additionally, the limited number of renters means that competition among landlords could be less intense, potentially leading to higher occupancy rates and better tenant retention.
Another objection is whether voucher holders can keep up with the market rents, which stand at $5,842. The FMR is set at $3,820, which is notably lower than the market rent. This discrepancy raises concerns about the ability of voucher recipients to afford market-rate rentals. While the data does not provide a direct answer to this question, it's worth noting that the Housing Choice Voucher program adjusts its payments annually based on changes in the local housing market. Landlords should be aware that voucher payments might not always cover the full market rent but can provide a stable source of income. To attract voucher holders, landlords may need to offer competitive pricing or negotiate with local housing authorities to ensure timely and adequate compensation.
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.