Location: San Francisco, CA | Metro: San Francisco, 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 | $3,430 |
| 1 Bedroom | $4,010 |
| 2 Bedrooms | $4,930 |
| 3 Bedrooms | $6,440 |
| 4 Bedrooms | $7,250 |
| 5 Bedrooms | $8,410 |
| 6 Bedrooms | $9,419 |
| 7 Bedrooms | $10,173 |
| 8 Bedrooms | $10,682 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $4,010 | $761,704 | 0.53% | F |
| 2BR | $4,930 | $1,208,392 | 0.41% | F |
| 3BR | $6,440 | $1,749,239 | 0.37% | F |
| 4BR | $7,250 | $2,688,310 | 0.27% | F |
U.S. Census Bureau data (2024)
In analyzing the real estate investment potential in ZIP code 94107, located in San Francisco, CA, several key objections arise that need addressing. One major concern is whether the Fair Market Rent (FMR) of $3,830 for 2024 will sufficiently cover the mortgage payments on a home valued at $996,421. To put this into perspective, the median monthly mortgage payment for a home in this price range, assuming a 20% down payment and a 30-year fixed-rate mortgage at an average interest rate of around 5%, would be approximately $4,500. Therefore, relying solely on FMR would result in a shortfall, making it necessary for investors to consider additional sources of income or alternative financing strategies.
A second objection is the level of renter demand, which stands at 64.3%. This figure suggests a moderate demand but leaves room for improvement. However, it's important to note that San Francisco has historically been a strong rental market due to its high cost of living and limited housing stock. The demand for rentals in ZIP 94107 is likely bolstered by the area's proximity to job centers and amenities, which can help sustain occupancy rates despite the relatively lower percentage.
The final objection pertains to the adequacy of voucher coverage compared to market rents, which currently stand at $4,170. While the Housing Choice Voucher program aims to provide assistance, the maximum allowable rent in many areas often lags behind actual market rates. In ZIP 94107, the gap between the voucher amount and the market rent is significant. According to recent data, the average voucher payment is around $1,600 per month. This means that landlords accepting vouchers would receive a substantial subsidy, but it would not fully cover the market rent, leading to a financial burden. It's crucial for investors to understand that voucher programs typically do not cover the entire rent, and they must weigh this against other risks and rewards of investing in this ZIP code.
To conclude, while ZIP 94107 presents some challenges, such as the gap between FMR and mortgage payments, the demand for rentals remains steady. Investors should also be aware of the limitations of voucher coverage and plan accordingly. Despite these considerations, the overall economic strength and desirability of San Francisco as a location continue to support strong rental markets.
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.