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 | $2,800 |
| 1 Bedroom | $3,130 |
| 2 Bedrooms | $3,860 |
| 3 Bedrooms | $4,900 |
| 4 Bedrooms | $5,480 |
| 5 Bedrooms | $6,357 |
| 6 Bedrooms | $7,120 |
| 7 Bedrooms | $7,690 |
| 8 Bedrooms | $8,075 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $3,130 | $551,697 | 0.57% | F |
| 2BR | $3,860 | $776,475 | 0.5% | F |
| 3BR | $4,900 | $1,032,468 | 0.47% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 91101 in Pasadena, CA, reveals an interesting picture when comparing Federal Market Rent (FMR) and Zillow's Observed Rent Index (ZORI).
Based on the Fair Market Rent (FMR) for a two-bedroom apartment, which stands at $3340 annually for fiscal year 2024, the implied gross yield would be approximately 0.43%. This is calculated by taking the annualized FMR ($3340) and dividing it by the median home value ($783,478).
In contrast, using the ZORI figure of $2,847 for the market rent, the implied gross yield drops to about 0.36%. This calculation is derived similarly by annualizing the ZORI ($2,847 * 12 months = $34,164 annually) and then dividing that amount by the median home value ($783,478).
Given the high renter density of 84.8% in the area, it is more likely that the ZORI-based scenario reflects a more realistic gross yield. The high density suggests a strong demand for rental properties, which could support higher rental rates. However, the lack of data on days on market (DOM) makes it challenging to assess the liquidity and speed at which properties can be leased, particularly under Section 8.
The difference between the two yields—0.43% based on FMR and 0.36% based on ZORI—is significant. It implies that landlords and small-portfolio investors should consider the ZORI figure as a baseline for their investment calculations, while the FMR provides a slightly more optimistic outlook.
Investors must also factor in the local housing market dynamics. With a median home value significantly higher than the annual rent, the gross yield alone does not fully capture the potential long-term appreciation of property values in Pasadena. However, for immediate cash flow considerations, the lower gross yield implied by the ZORI is a prudent starting point.
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.