Location: Oakland-Fremont, 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 | $2,600 |
| 1 Bedroom | $2,850 |
| 2 Bedrooms | $3,490 |
| 3 Bedrooms | $4,470 |
| 4 Bedrooms | $5,290 |
| 5 Bedrooms | $6,136 |
| 6 Bedrooms | $6,872 |
| 7 Bedrooms | $7,422 |
| 8 Bedrooms | $7,793 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,850 | $341,702 | 0.83% | C |
| 2BR | $3,490 | $441,967 | 0.79% | D |
| 3BR | $4,470 | $691,973 | 0.65% | D |
| 4BR | $5,290 | $870,958 | 0.61% | D |
| 5BR | $6,136 | $967,553 | 0.63% | D |
U.S. Census Bureau data (2024)
The Section 8 real estate thesis in ZIP code 94547, which encompasses Hercules, CA, is centered around the discrepancy between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR stands at $3320, while the Zillow Observed Rent Index (ZORI), a measure of market rent, is $2852. This indicates that the FMR is higher than the market rent by $468, or approximately 16.4%. Such a gap makes it a compelling yield play for landlords and small-portfolio investors.
The higher FMR means that landlords can potentially charge more for Section 8 voucher tenants compared to what they would typically receive from open-market renters. In a market where only 20.8% of residents are renters, the competition for rental properties is relatively low, making it easier for landlords to attract voucher holders. The median home value in Hercules is $754,548, indicating a generally high-value neighborhood. However, the median income of $129,397 suggests that many residents might find it challenging to afford homeownership, thus creating a demand for affordable rentals.
The disparity between the FMR and ZORI highlights the economic reality of Hercules: despite the high median home values, the median income is not sufficient to cover the cost of living in the area. Therefore, landlords who accept Section 8 vouchers can benefit from the government subsidy that bridges the gap between the actual rent and the tenant's contribution, ensuring a steady and predictable income stream. This is particularly advantageous given the relatively low percentage of renters in the area, as it allows landlords to leverage a government program to fill their vacancies without significantly undercutting 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.