Location: Merced, CA | Metro: Merced, CA MSA
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 | $1,470 |
| 1 Bedroom | $1,550 |
| 2 Bedrooms | $1,860 |
| 3 Bedrooms | $2,560 |
| 4 Bedrooms | $3,040 |
| 5 Bedrooms | $3,526 |
| 6 Bedrooms | $3,949 |
| 7 Bedrooms | $4,265 |
| 8 Bedrooms | $4,478 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,860 | $279,007 | 0.67% | D |
| 3BR | $2,560 | $385,370 | 0.66% | D |
| 4BR | $3,040 | $442,373 | 0.69% | D |
| 5BR | $3,526 | $510,346 | 0.69% | D |
U.S. Census Bureau data (2024)
To integrate ZIP 95348, located in Merced, CA, into a Section 8 portfolio strategy, it is essential to analyze its financial metrics and market conditions. This area serves as a cash-flow anchor within a broader investment strategy due to the favorable spread between the Fair Market Rent (FMR) and the market rental rates.
The FMR for ZIP 95348 in fiscal year 2024 is set at $1,620, which is notably lower than the market rate of $1,847. This discrepancy means that landlords can potentially secure higher rents from non-Section 8 tenants while still having a solid base of guaranteed income from Section 8 participants. The difference of $227 per unit between the FMR and the market rate provides a significant cushion for cash flow stability.
In addition to the rental rate spread, the median home value in ZIP 95348 is $417,744. This figure suggests that the property values are relatively stable and not subject to rapid appreciation, making it suitable for long-term holding strategies focused on steady rental income rather than speculative gains from property value increases.
The 0.2% price-cut share and a 38-day Days on Market (DOM) indicate a competitive but not overheated rental market. Landlords should be prepared to offer slight discounts to attract tenants, but the relatively short DOM period implies that properties will not remain vacant for extended periods, contributing to consistent cash flow.
ZIP 95348 also has a 48.7% renter share, indicating a substantial portion of the population relies on renting, including a significant number who might qualify for Section 8 assistance. With a median income of $64,944, there is a reasonable economic foundation supporting the demand for affordable housing, which aligns well with the Section 8 program's tenant base.
Given these factors, ZIP 95348 is best positioned as a cash-flow anchor within a Section 8 portfolio. It offers reliable income streams through the guaranteed nature of Section 8 contracts, complemented by the potential to achieve slightly higher rents from non-Section 8 tenants. This balance ensures that the portfolio remains financially robust and less susceptible to market volatility.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.