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 | $1,010 |
| 1 Bedroom | $1,100 |
| 2 Bedrooms | $1,360 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,260 |
| 5 Bedrooms | $2,622 |
| 6 Bedrooms | $2,937 |
| 7 Bedrooms | $3,172 |
| 8 Bedrooms | $3,331 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,870 | $681,025 | 0.27% | F |
U.S. Census Bureau data (2024)
The classification of ZIP code 95374 hinges on its financial metrics, specifically focusing on rental yields and market stability. The Fair Market Rent (FMR) for the area in fiscal year 2024 is set at $1,360, which is notably higher than the current market rent of $1,192. This indicates a potential for high rental yields if properties can be leased at or near the FMR. However, the median home value of $651,267 suggests that the capital investment required for acquiring properties in this ZIP is substantial.
Regarding stability, the ZIP code has a significant portion of its residents as renters, with 44.7% of the population renting their homes. While this percentage is not low, it does not necessarily correlate with stability in rental income. The lack of data on days on market (DOM) makes it challenging to assess how quickly properties can be rented out once they become available. Lastly, the median household income in the area is $57,538, which provides insight into the economic base supporting rental payments but does not directly indicate stability.
Given these figures, ZIP 95374 leans towards being a steady-cashflow zone rather than a high-yield/low-stability flip-style market. The relatively high rental yield is tempered by the need for significant upfront capital to purchase homes, and the strong rental population suggests a stable demand for housing. However, the absence of DOM data introduces an element of uncertainty regarding the speed at which rental units can be filled, which is crucial for cash flow consistency.
To summarize, the primary drivers for this classification are the disparity between FMR and market rent, the high median home value, and the substantial percentage of renters. These factors collectively suggest a market where landlords and small-portfolio investors can expect reasonable yields and stable cash flows, albeit with considerable initial investment.
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.