Section 8 Fair Market Rent (FMR) for ZIP 94546 - 2027

Investment Score for ZIP 94546

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	$2,260
1 Bedroom	$2,480
2 Bedrooms	$3,040
3 Bedrooms	$3,890
4 Bedrooms	$4,610
5 Bedrooms	$5,348
6 Bedrooms	$5,990
7 Bedrooms	$6,469
8 Bedrooms	$6,792

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	$2,480	$502,826	0.49%	F
2BR	$3,040	$720,711	0.42%	F
3BR	$3,890	$1,020,591	0.38%	F
4BR	$4,610	$1,275,928	0.36%	F
5BR	$5,348	$1,498,784	0.36%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 94546 (Castro Valley, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 94546, as per HUD’s 2026 guidelines, is set at $3000 for a two-bedroom unit. However, this figure needs to be compared against the actual rental market to understand how it impacts Section 8 voucher holders. According to the provided data, the Zillow median price for a two-bedroom home in Castro Valley is $720,618, which translates to a price-to-FMR ratio of approximately 24 times the FMR. This suggests that the actual rental market is significantly higher than the FMR, creating a substantial gap between what voucher holders can afford and the market rates. For instance, if we consider a typical two-bedroom apartment renting for $3000, the voucher holder would only be able to pay up to $3000, which is 28.0% of the median household income ($128,385). This means landlords must accept a lower rent than the market rate to accommodate Section 8 tenants. The constraints for voucher holders include limited bargaining power due to the fixed FMR and the necessity to find properties willing to accept these vouchers. #### Affordability & Renter Profile Castro Valley has a population of 44,855, with 33.7% being renters. Given the occupancy rate of 95.9%, it indicates a robust demand for rental properties, suggesting a tight market. The median household income of $128,385 is relatively high, implying that most residents have the financial capability to afford market-rate rentals. However, the 28.0% of median income allocated for a two-bedroom unit under FMR highlights the affordability challenges faced by lower-income households. The high median income and tight market conditions suggest that the majority of renters are likely middle to upper-middle class individuals who can afford market rates. Lower-income households, particularly those relying on Section 8 vouchers, face significant challenges in finding affordable housing. The disparity between the FMR and the actual market rates makes it difficult for voucher holders to secure housing without landlords willing to accept below-market rents. #### Investor Angle From an investor perspective, the ZIP code 94546 presents both opportunities and challenges. The FMR for a two-bedroom unit is $3000, while the Zillow median price for such units is $720,618. Assuming a typical rental yield of 5% (which is conservative given the high property values), the expected monthly rental income would be around $3002.61. However, this calculation is based on market rates, not FMR. Given that landlords need to accept the FMR of $3000 to participate in the Section 8 program, the cash flow potential for investors is limited. Additionally, the high median property value and tight rental market indicate that investors might struggle to find enough Section 8 tenants to fill their properties. The investment grade for this ZIP code is moderate, considering the high property values and the limited pool of potential Section 8 tenants. #### Specific Actionable Insights 1. **Focus on Below-Market Properties**: Investors should focus on acquiring properties that are already renting below market rates. For example, a two-bedroom unit renting for $3000 or less would be ideal for attracting Section 8 tenants. This strategy would ensure that the property remains cash-flow positive even when accepting Section 8 vouchers. 2. **Consider Multi-Family Units**: Given the higher FMR for larger units (e.g., three-bedroom at $3840 and four-bedroom at $4550), multi-family units could offer better cash flow potential. These larger units are more likely to attract families who might prefer the stability and security offered by Section 8 vouchers. 3. **Engage with Local Real Estate Agents**: To navigate the tight rental market, investors should work closely with local real estate agents who have experience with Section 8 tenants. These agents can provide valuable insights into which areas within Castro Valley have a higher concentration of voucher holders and help in identifying properties that are more likely to be rented out through the Section 8 program. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 94546 is to **Skip** this market. The high property values and tight rental market make it challenging to find properties that can be rented out at the FMR levels required by the Section 8 program. Additionally, the limited percentage of median income allocated for housing under FMR creates a significant barrier for lower-income households, reducing the pool of potential Section 8 tenants. While there are some opportunities, they are outweighed by the risks and challenges associated with this 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.