Location: Santa Maria-Santa Barbara, CA | Metro: Santa Maria-Santa Barbara, CA MSA
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 | $3,480 |
| 1 Bedroom | $3,810 |
| 2 Bedrooms | $4,360 |
| 3 Bedrooms | $5,600 |
| 4 Bedrooms | $6,400 |
| 5 Bedrooms | $7,424 |
| 6 Bedrooms | $8,315 |
| 7 Bedrooms | $8,980 |
| 8 Bedrooms | $9,429 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $4,360 | $1,628,001 | 0.27% | F |
| 3BR | $5,600 | $2,435,409 | 0.23% | F |
| 4BR | $6,400 | $2,897,269 | 0.22% | F |
| 5BR | $7,424 | $3,533,205 | 0.21% | F |
U.S. Census Bureau data (2024)
In ZIP code 93109, located in Santa Barbara, CA, investors often have reservations about the financial viability of properties in this area. One common concern is whether the Fair Market Rent (FMR) of $3,830 for the fiscal year 2024 will be sufficient to cover the mortgage on a property valued at $2,402,668. The answer lies in understanding the local real estate market. While the FMR does not guarantee coverage for such an expensive home, it's important to note that the average price of homes in this ZIP is significantly lower. The FMR reflects the typical rental rates for modest housing units, not luxury or high-end properties.
Another objection raised by investors pertains to the level of renter demand, which stands at 44.5%. This percentage indicates that nearly half of the households in the area are renters. However, it's crucial to consider the broader context. Santa Barbara has a strong tourism industry, which can contribute to a steady stream of short-term rentals. Additionally, the area's popularity among students and young professionals further supports a robust rental market. Despite the 44.5% figure being somewhat lower than what some might prefer, it still represents a significant portion of the population.
The final concern relates to the ability of Section 8 vouchers to keep up with the market rents, which average around $5,874. The reality is that voucher amounts are typically lower than market rates, reflecting the government's aim to provide affordable housing to low-income families. In ZIP 93109, the voucher amount is set at $3,830, which is well below the market rate. This disparity means that landlords may need to subsidize the difference between the voucher amount and the actual rent charged. However, it's worth noting that the demand for subsidized housing remains high, and the stability provided by government-backed vouchers can be attractive to landlords looking for reliable tenants.
To conclude, while ZIP 93109 presents challenges in terms of covering mortgage payments with FMR, sustaining renter demand at 44.5%, and keeping pace with market rents using vouchers, the data suggests that the area's unique economic factors can mitigate these issues. Investors should carefully consider their property's value, the type of tenants they wish to attract, and the overall rental market dynamics before making investment decisions.
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.