Location: Stockton-Lodi, CA | Metro: Oakland-Fremont, 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 | $2,590 |
| 1 Bedroom | $2,840 |
| 2 Bedrooms | $3,480 |
| 3 Bedrooms | $4,460 |
| 4 Bedrooms | $5,270 |
| 5 Bedrooms | $6,113 |
| 6 Bedrooms | $6,847 |
| 7 Bedrooms | $7,395 |
| 8 Bedrooms | $7,765 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $3,480 | $564,675 | 0.62% | D |
| 3BR | $4,460 | $769,854 | 0.58% | F |
| 4BR | $5,270 | $798,247 | 0.66% | D |
| 5BR | $6,113 | $857,483 | 0.71% | D |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP code 94505, Discovery Bay, California, provides a detailed look at the financial implications of participating in the program. The Fair Market Rent (FMR) for a two-bedroom unit in fiscal year 2024 is set at $3,460 annually. This translates into a monthly rental amount of approximately $288.33. When compared to the median home value of $794,987, the implied gross yield for a Section 8 rental would be about 3.7%.
In contrast, the market rent for a two-bedroom unit, as reported by the Census ACS, stands at $3,029 annually, equating to roughly $252.42 per month. Using this figure, the implied gross yield against the median home value would be around 3.2%.
To determine which scenario is more realistic, we must consider the local rental market conditions. With a renter density of only 9.8%, it suggests that the demand for rentals in Discovery Bay is relatively low. This low demand could mean that landlords might find it challenging to attract tenants willing to pay market rates, making the lower gross yield of 3.2% potentially more achievable.
However, the fact that the days on market (DOM) is listed as N/A indicates incomplete data, which could imply either an exceptionally fast or slow rental market. In a tight rental market, the higher FMR rate could be more reflective of what landlords can expect, pushing the gross yield closer to the 3.7% mark. Conversely, in a slower market, the actual rental income might align more closely with the market rent figure, resulting in a gross yield of 3.2%.
Given these figures, it's clear that the gross yields for Section 8 rentals in Discovery Bay are modest. Investors should weigh the benefits of stable, government-backed rental income against the lower yields when considering participation in the program. The choice between the two scenarios will largely depend on the landlord's ability to secure tenants and the overall health of the local rental market.
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.