Section 8 Fair Market Rent (FMR) for ZIP 94850 - 2027

FY 2027 Fair Market Rent Rates

To determine if you should invest in ZIP 94850 for Section 8 properties, follow this decision tree:

1) Does the Fair Market Rent (FMR) of $2600 cover your debt service?

• Yes: If the FMR can comfortably exceed your debt service, proceed to the next question. This means that the rental income from a Section 8 tenant will be sufficient to meet your mortgage payments and other expenses.
• No: If the FMR of $2600 does not cover your debt service, investing in ZIP 94850 would not be financially viable under the Section 8 program. The rental income would be insufficient to support the property's costs.
• It depends: If the FMR is close to covering your debt service, consider the stability of the housing market and any potential for additional income sources before making a decision. The closeness of the FMR to your debt service level can indicate whether there is room for slight fluctuations without jeopardizing financial stability.

2) How does the market rent compare to the FMR?

• Above: If the market rent is higher than the FMR, it suggests strong demand for rentals in ZIP 94850. However, this also means that Section 8 tenants might find it challenging to afford non-subsidized housing, potentially leading to lower occupancy rates.
• At: If the market rent equals the FMR, the ZIP code presents an average investment opportunity. There is neither significant advantage nor disadvantage in terms of rental pricing.
• Below: If the market rent is below the FMR, this indicates a favorable environment for Section 8 investments, as landlords could charge closer to the FMR and still attract tenants.

3) Is the demand sufficient based on the percentage of renters and days on the market (DOM)?

• Adequate Demand: If the percentage of renters is high and the DOM is low, this points to a robust demand for rentals in ZIP 94850. High renter percentages suggest a preference for renting over owning, while low DOM indicates that properties are being rented quickly, which is beneficial for turnover and maintaining occupancy.
• Limited Demand: If the percentage of renters is low and DOM is high, this signals weak demand. Properties may take longer to rent out, and the pool of potential tenants might be smaller, making it harder to fill vacancies with Section 8 tenants.
• It depends: If the demand indicators are mixed, consider the broader economic conditions and job market in ZIP 94850. Strong employment opportunities can drive up the number of renters despite initial indicators suggesting otherwise.

Note: Specific figures for market rent and the percentage of renters plus DOM were not provided. These factors are crucial for making a final decision and should be researched for ZIP 94850.

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.