Location: Stockton-Lodi, CA | Metro: Sacramento--Roseville--Arden-Arcade, 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 | $1,520 |
| 1 Bedroom | $1,570 |
| 2 Bedrooms | $1,930 |
| 3 Bedrooms | $2,530 |
| 4 Bedrooms | $2,930 |
| 5 Bedrooms | $3,399 |
| 6 Bedrooms | $3,807 |
| 7 Bedrooms | $4,112 |
| 8 Bedrooms | $4,318 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,930 | $437,099 | 0.44% | F |
| 3BR | $2,530 | $493,590 | 0.51% | F |
| 4BR | $2,930 | $589,156 | 0.5% | F |
| 5BR | $3,399 | $689,372 | 0.49% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for ZIP 95632 (Galt, CA) reveals a significant difference between the federally determined Fair Market Rent (FMR) and the actual market rents. For a two-bedroom unit, the annualized FMR for FY 2024 is $1890, while the Zillow Observed Rent Index (ZORI) stands at $2,493 per month.
To calculate the implied gross yield, we first need to annualize these figures. The annualized FMR for a two-bedroom unit would be $1890 multiplied by 12, equating to $22,680 annually. In contrast, the ZORI annualizes to $2,493 multiplied by 12, totaling $29,916 annually.
Given the median home value in Galt, CA, at $533,003, the implied gross yield using the FMR is approximately 4.25%. This is calculated by dividing the annualized FMR ($22,680) by the median home value ($533,003). On the other hand, using the ZORI, the implied gross yield increases to about 5.61%, derived from dividing the annualized ZORI ($29,916) by the median home value ($533,003).
The 23.9% renter density indicates that a considerable portion of the population is already renting, suggesting a potentially competitive rental market. However, the 24-day Days on Market (DOM) implies that properties are selling relatively quickly, which could mean a strong demand for housing overall.
Considering the renter density and the DOM, it is more realistic to base the gross yield on the ZORI rather than the FMR. The FMR represents a government-set standard that might not reflect the true market conditions, especially in areas where competition for rentals is high. Therefore, an investor should expect a gross yield closer to the 5.61% implied by the ZORI, rather than the 4.25% based on the FMR.
In summary, the cap rate picture for ZIP 95632 suggests a higher potential return when considering actual market rents over the federally set FMR. This aligns with the observed market dynamics, making the ZORI-based yield the more practical estimate for investment purposes.
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.