Section 8 Fair Market Rent (FMR) for ZIP 94309 - 2027

FY 2027 Fair Market Rent Rates

The analysis for ZIP code 94309 reveals incomplete data, particularly regarding the median home value and current market rents. However, we can still derive some insights based on the Fair Market Rent (FMR) for a 2-bedroom unit, which is set at $3130 annually for fiscal year 2024.

To calculate the implied gross yield, we need to compare the annual rental income to the property's value. Given that the median home value is not available, we cannot provide an exact cap rate. Nevertheless, if we assume the median home value is similar to other areas with comparable demographics, we can infer that the cap rate would be relatively low due to the higher-than-average FMR.

The annualized 2BR FMR of $3130 suggests that properties in this ZIP code might command higher rents, especially if they qualify for Section 8 subsidies. This implies a higher gross yield compared to standard market conditions where the median home value is not specified. For instance, if we hypothetically set the median home value at $700,000, the gross yield would be approximately 0.45%. This figure is calculated by dividing the annual rental income by the property value ($3130 / $700,000).

However, without the actual market rent figures, it is challenging to determine the precise gross yield. The absence of this data makes it difficult to assess whether the Section 8 FMR represents a realistic scenario or if market rents could significantly deviate from this benchmark.

The renter density and days on market (DOM) also remain unspecified, which are crucial factors in determining the attractiveness of this ZIP code for landlords and small-portfolio investors. A higher renter density generally indicates a stronger demand for rental properties, potentially stabilizing occupancy rates. Meanwhile, the DOM reflects the time it takes to find suitable tenants, which can impact the overall profitability of rental investments.

In conclusion, while the annualized FMR for a 2BR unit provides a baseline for potential rental income, the lack of median home values and current market rents means that a definitive cap rate cannot be calculated. Investors should consider these factors and conduct further research to understand the local real estate dynamics better before making investment decisions in ZIP 94309.

Data Sources: FMR data from HUD (2027).

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.