Location: Sacramento--Roseville--Arden-Arcade, 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 | $2,080 |
| 1 Bedroom | $2,140 |
| 2 Bedrooms | $2,630 |
| 3 Bedrooms | $3,450 |
| 4 Bedrooms | $3,980 |
| 5 Bedrooms | $4,617 |
| 6 Bedrooms | $5,171 |
| 7 Bedrooms | $5,585 |
| 8 Bedrooms | $5,864 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,140 | $498,271 | 0.43% | F |
| 2BR | $2,630 | $612,231 | 0.43% | F |
| 3BR | $3,450 | $804,500 | 0.43% | F |
| 4BR | $3,980 | $1,038,777 | 0.38% | F |
| 5BR | $4,617 | $1,193,577 | 0.39% | F |
U.S. Census Bureau data (2024)
The Section 8 program's viability in ZIP code 95816, located in Sacramento, CA, is fundamentally tied to the disparity between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR is set at $2420, whereas the Zillow Observed Rent Index (ZORI) indicates an average market rent of $1722. This means that landlords can potentially receive a rent subsidy of $698 per unit above the market rate, representing a 40.5% premium over what tenants might otherwise pay.
In Sacramento, where 70.6% of residents are renters, and the median home value stands at $705,982, the financial attractiveness of participating in the Section 8 program becomes evident. The median income of $90,839 suggests that many renters may struggle to afford market rents without assistance. Consequently, the higher FMR set by the government allows landlords to capture a significant yield advantage, making it a lucrative option for those looking to maximize returns on their rental properties.
However, accepting housing vouchers comes with its own set of considerations. While the FMR provides a substantial cushion above the current market rent, landlords must weigh the benefits against the potential costs. These include the administrative burden of managing voucher tenants, potential delays in rent payments, and compliance with HUD regulations. Despite these challenges, the financial incentive of renting at FMR levels rather than the lower market rates makes the Section 8 program an attractive proposition for landlords in 95816.
Small-portfolio investors should also take note of the broader economic context. With a high percentage of renters and a relatively low median income compared to the median home value, the demand for affordable housing is likely to remain strong. This makes the Section 8 program a reliable source of stable income, even if it requires navigating additional bureaucratic processes. In conclusion, the gap between the FMR and market rent in 95816 presents a clear opportunity for landlords to leverage the Section 8 program for enhanced yields, while also providing much-needed affordable housing options in a city where such needs are pronounced.
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.