Section 8 Fair Market Rent (FMR) for ZIP 94121 - 2027

Investment Score for ZIP 94121

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	$2,240
1 Bedroom	$2,680
2 Bedrooms	$3,250
3 Bedrooms	$4,150
4 Bedrooms	$4,350
5 Bedrooms	$5,046
6 Bedrooms	$5,652
7 Bedrooms	$6,104
8 Bedrooms	$6,409

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$2,680	$862,409	0.31%	F
2BR	$3,250	$1,454,752	0.22%	F
3BR	$4,150	$1,870,174	0.22%	F
4BR	$4,350	$2,398,752	0.18%	F
5BR	$5,046	$3,036,778	0.17%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 94121, San Francisco, CA #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 94121 in San Francisco, California, is set by HUD for 2026 as follows: - 0BR: $2050 - 1BR: $2510 - 2BR: $2990 (which is 26.9% of the median household income) - 3BR: $3730 - 4BR: $3960 Actual rents in this area are significantly higher than these FMRs. For instance, the Zillow median price for a 2BR unit is $1,359,998, which translates into a monthly rent of approximately $11,333 based on typical rental rates derived from home values. This means that the price-to-FMR ratio for a 2BR unit is 37.9x, indicating that actual rents are much higher than the FMRs set by HUD. This discrepancy places significant constraints on voucher holders. The FMRs are designed to reflect what is considered affordable housing, but they fall far short of covering the actual cost of renting in this ZIP code. A voucher holder would likely struggle to find a property that accepts their voucher without substantial out-of-pocket expenses, given the high actual rents compared to the FMRs. #### Affordability & Renter Profile ZIP code 94121 has a population of 41,995, with 56.1% of residents being renters. The occupancy rate is quite high at 92.1%, suggesting that the market is tight and there is strong demand for rental properties. Given the median household income of $133,358, it is clear that the majority of residents can afford the high rents, but those relying solely on Section 8 vouchers face considerable challenges. The affordability gap is stark. For example, a 2BR unit’s FMR is $2990, while the actual median rent is around $11,333. This implies that renters must either have additional income sources beyond the voucher or be willing to pay a large portion of their income towards rent. The fact that 2BR units represent 26.9% of the median income highlights how unaffordable the housing is for low-income households. Given the high percentage of renters and the tight occupancy rate, it is evident that the market is highly competitive. There is a strong demand for rental properties, but the supply is limited, leading to higher rents. This makes it difficult for voucher holders to find suitable accommodation, as landlords often prefer tenants who can pay the full market rent. #### Investor Angle From an investor perspective, the ZIP code 94121 presents a challenging scenario. The FMRs are significantly lower than the actual market rents, making it unlikely that an investor would achieve positive cash flow by renting properties at the FMR levels. For instance, a 2BR unit with an FMR of $2990 would generate a gross rental income of $35,880 per year. However, the actual median rent of $11,333 would result in a gross rental income of $136,000 per year. The difference is substantial, and it suggests that investors would need to charge market rates to cover costs and generate profit. The investment grade for this ZIP code is mixed. On one hand, the strong demand for rental properties and the high occupancy rate indicate a robust market. On the other hand, the reliance on market rents rather than FMRs to achieve profitability means that investors must consider the broader economic conditions and the ability of residents to pay such high rents. #### Specific Actionable Insights 1. **Focus on Larger Units**: Given the high FMR for larger units (e.g., 3BR and 4BR), investors might consider developing or purchasing larger units. For example, a 4BR unit with an FMR of $3960 would still generate a gross rental income of $47,520 per year, which is more than the $35,880 generated by a 2BR unit. Although this is still below market rates, it provides a better opportunity for cash flow. 2. **Consider Mixed-Income Developments**: Investors could explore mixed-income developments where some units are rented at market rates and others are rented at FMR levels. This approach can help balance the financial impact of renting at lower rates while still benefiting from the overall high demand for rental properties in the area. 3. **Evaluate Long-Term Trends**: Despite the current tight market, it is important to evaluate long-term trends. If there is a potential for increased supply or a downturn in the local economy, investors should be cautious about overpaying for properties. Additionally, understanding the potential for changes in government subsidies or regulations affecting Section 8 vouchers could provide valuable insights. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 94121 is to **Skip**. The FMRs are far below the actual market rents, making it difficult to achieve positive cash flow. Additionally, the high demand and limited supply suggest that most landlords will prefer tenants who can pay market rates, reducing the attractiveness of this ZIP code for investors relying on Section 8 vouchers. Instead, investors should look for areas where the FMRs are closer to market rents or where there is a greater acceptance of Section 8 vouchers among landlords.

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.