Section 8 Fair Market Rent (FMR) for ZIP 92078 - 2027

Investment Score for ZIP 92078

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	$2,480
1 Bedroom	$2,640
2 Bedrooms	$3,190
3 Bedrooms	$4,230
4 Bedrooms	$5,110
5 Bedrooms	$5,928
6 Bedrooms	$6,639
7 Bedrooms	$7,170
8 Bedrooms	$7,529

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
2BR	$3,190	$690,270	0.46%	F
3BR	$4,230	$905,571	0.47%	F
4BR	$5,110	$1,281,742	0.4%	F
5BR	$5,928	$1,645,454	0.36%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 92078 (San Marcos, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 92078 is set by HUD for 2026. For a two-bedroom unit, the FMR is $3380 per month. This figure represents 33.7% of the median household income in the area, which is $120,268. However, the actual rental market in San Marcos is significantly higher. The Zillow median price for a two-bedroom home is $704,324, translating to a monthly rent of approximately $3357 if we assume a typical rent-to-price ratio of 0.5%. This means that the actual rent for a two-bedroom unit is likely much higher than the FMR, given the high price-to-FMR ratio of 17.4x. This disparity creates significant constraints for voucher holders. Landlords are less inclined to accept vouchers due to the high cost of living in the area and the limited coverage provided by the FMR. As a result, voucher holders often struggle to find units that accept their vouchers, especially for larger units like three or four-bedroom homes, where the FMR is $4500 and $5460 respectively, but the actual rental costs could be far above these figures. #### Affordability & Renter Profile The population of San Marcos is 53,605, with 28.0% of residents being renters. This indicates a relatively small rental market compared to the overall population. The occupancy rate of 95.8% suggests that the rental market is quite tight, with few vacant units available. Given the high median household income of $120,268, it is reasonable to infer that the majority of renters are likely to be middle to upper-middle class individuals who can afford the high rental rates. The high price-to-FMR ratio of 17.4x further underscores the tightness of the market. It implies that landlords can charge well above the FMR without difficulty, making it challenging for low-income households to secure housing. The high median income also suggests that there is a strong demand for rental properties, but this demand is primarily driven by those who can afford higher rents. Therefore, the rental market in San Marcos is highly competitive and favors those with higher incomes. #### Investor Angle From an investor perspective, the ZIP code 92078 presents a mixed picture. While the high median income and occupancy rate indicate a robust rental market, the extremely high price-to-FMR ratio poses challenges. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the potential rental income versus the mortgage payment or other carrying costs. Assuming a typical mortgage payment for a two-bedroom property at $3357 (based on the Zillow median price), the FMR of $3380 would barely cover the mortgage payment. In reality, investors would likely face additional costs such as property taxes, insurance, maintenance, and management fees, which would make it difficult to achieve positive cash flow solely based on FMR. Given the high price-to-FMR ratio, the investment grade for this ZIP code would be considered low for Section 8-focused investors. The market dynamics suggest that landlords would have to rely heavily on non-voucher tenants to achieve profitability, as the FMR is not sufficient to cover the actual costs of owning a property in this area. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units, particularly one-bedroom apartments. The FMR for a one-bedroom unit is $2770, which is still a significant portion of the median income (23.0%). While this might not fully cover the mortgage payment, it could be more manageable when combined with other revenue sources like parking fees or laundry services. 2. **Consider Non-Voucher Tenants**: Due to the tight rental market and high median income, investors should consider targeting non-voucher tenants. These tenants are more likely to pay market rates, which are substantially higher than the FMR. For example, a two-bedroom unit could realistically command a rent of $3357 or more, providing better cash flow and return on investment. 3. **Evaluate Property Management Costs**: Investors should carefully evaluate the total costs associated with property management, including taxes, insurance, and maintenance. These costs can significantly impact the feasibility of achieving positive cash flow at FMR levels. If the total carrying costs exceed the FMR, it may be necessary to seek alternative financing or consider other markets with a lower price-to-FMR ratio. #### Bottom Line Based on the provided data, the recommendation for Section 8-focused investors in ZIP code 92078 is to **skip** this market. The extremely high price-to-FMR ratio and the tight rental market make it challenging to achieve positive cash flow solely through Section 8 vouchers. Investors would likely need to rely on non-voucher tenants to generate sufficient returns, which goes against the primary focus of Section 8 investments. Therefore, this ZIP code is not ideal for investors looking to capitalize specifically on Section 8 vouchers.

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.