Section 8 Fair Market Rent (FMR) for ZIP 90275 - 2027

Investment Score for ZIP 90275

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	$2,810
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

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	$3,150	$520,923	0.6%	D
2BR	$3,920	$861,876	0.45%	F
3BR	$4,970	$1,530,150	0.32%	F
4BR	$5,530	$1,939,169	0.29%	F
5BR	$6,415	$2,317,128	0.28%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 90275 (Rancho Palos Verdes, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 90275 is set by HUD for the year 2026 as follows: - 0BR: $2790 - 1BR: $3130 - 2BR: $3900 (26.1% of median income) - 3BR: $4940 - 4BR: $5510 These figures represent the maximum rent that a Section 8 voucher holder can pay for each unit type. However, the actual rents in Rancho Palos Verdes are significantly higher. For instance, the Zillow median price for a 2BR unit is $879,227, which translates to a monthly rental cost of approximately $7327 based on a typical 1.25% cap rate. This means the actual rent for a 2BR unit is about 18.8 times the FMR, making it extremely challenging for voucher holders to find suitable housing within their budget. The disparity between FMR and actual rents imposes significant constraints on voucher holders, limiting their options to only a few units that might be available at or below the FMR. #### Affordability & Renter Profile With a median household income of $179,469, Rancho Palos Verdes is a high-income area. The relatively low renter percentage of 19.5% suggests that the majority of residents are homeowners, which aligns with the high property values. The occupancy rate of 90.8% indicates a robust demand for housing, but the tight market conditions make it difficult for renters, especially those relying on Section 8 vouchers, to secure affordable housing. Given the high median income and the limited number of renters, it is likely that the renters who do live in this area have above-average incomes, making them less dependent on government assistance programs like Section 8. #### Investor Angle From an investor perspective, the ZIP code 90275 presents a unique challenge when considering properties for Section 8 tenants. The FMR is far below the actual market rents, meaning that investors would need to accept a significantly lower rent than what the market could bear. For example, a 2BR unit with a Zillow median price of $879,227 would generate a monthly rental income of around $7327 if rented at market rates. However, if rented to a Section 8 tenant, the maximum allowable rent would be $3900, resulting in a substantial loss in potential rental income. To determine whether this ZIP code is cash-flow positive at FMR, we must consider the cost of ownership. Assuming a 1.25% cap rate, the annual rental income for a 2BR unit would be $87,922.70, or $7,327 per month. At the FMR of $3900, the annual rental income would be $46,800, which is well below the market rate. Additionally, the high property values suggest that mortgage payments, property taxes, and maintenance costs would also be elevated, further reducing the potential for positive cash flow. Given these factors, the investment grade for properties in ZIP code 90275 that are intended for Section 8 tenants would be considered low. The risk of negative cash flow and the limited pool of eligible tenants make this a challenging market for investors focusing solely on Section 8. #### Specific Actionable Insights 1. **Target Lower-Income Units**: Investors should focus on acquiring properties that are already priced at or near the FMR levels. For instance, a 2BR unit priced at $3900 would be more feasible for Section 8 tenants. This requires identifying units that are undervalued or in need of renovation, which could potentially bring them into compliance with the FMR guidelines. 2. **Consider Mixed-Income Developments**: Developing mixed-income properties where a portion of the units are reserved for Section 8 tenants while others are rented at market rates could help balance the financial risks. This approach allows investors to leverage the higher rental income from market-rate units to offset the lower income from Section 8 units. 3. **Engage with Local Housing Authorities**: Building relationships with local housing authorities can provide insights into the availability of Section 8 vouchers and any potential incentives or subsidies that might be available. This could help mitigate some of the financial risks associated with renting to voucher holders. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 90275 is to **Skip**. The high property values and the significant gap between FMR and actual market rents make it challenging to achieve positive cash flow. Additionally, the limited number of renters and the high median income indicate that the demand for affordable housing is low, and the pool of eligible Section 8 tenants is small. Therefore, investing in this ZIP code with a focus on Section 8 tenants is not advisable due to the financial risks and market conditions. --- This analysis provides a clear picture of the challenges faced by both Section 8 voucher holders and investors in ZIP code 90275. The high cost of living and the limited availability of affordable housing make it a difficult market for those seeking to utilize Section 8 vouchers. Investors looking to target this market should carefully weigh the risks and consider alternative strategies or markets that offer better opportunities for positive cash flow and a larger pool of eligible tenants.

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.