Location: Urban Honolulu, HI | Metro: Urban Honolulu, HI 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 | $1,960 |
| 1 Bedroom | $2,090 |
| 2 Bedrooms | $2,720 |
| 3 Bedrooms | $3,770 |
| 4 Bedrooms | $4,550 |
| 5 Bedrooms | $5,278 |
| 6 Bedrooms | $5,911 |
| 7 Bedrooms | $6,384 |
| 8 Bedrooms | $6,703 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,090 | $404,201 | 0.52% | F |
| 2BR | $2,720 | $808,312 | 0.34% | F |
| 3BR | $3,770 | $877,810 | 0.43% | F |
| 4BR | $4,550 | $1,117,686 | 0.41% | F |
| 5BR | $5,278 | $1,251,475 | 0.42% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 96717, Hauula, HI, reveals a unique set of conditions that impact investment decisions. To start, let's consider the annualized Fair Market Rent (FMR) for a two-bedroom property, which stands at $2400 for FY 2024. Given the median home value in this area is $849,622, the implied gross yield for a Section 8 rental would be approximately 2.82%. This calculation is derived from dividing the annualized FMR by the median home value.
In contrast, using the market rent figure of $2,250 per month from the Census ACS, the gross yield would be slightly lower at 2.65%. This figure is calculated similarly by annualizing the market rent and then dividing by the median home value.
When comparing these two yields, it's clear that the Section 8 scenario offers a marginally higher return. However, the decision to participate in the Section 8 program should not be made solely based on gross yield. In Hauula, HI, the renter density is 46.6%, indicating a substantial portion of the population rents rather than owns homes. This suggests a robust demand for rentals, including those under Section 8.
The N/A-day Days on Market (DOM) statistic implies that either rental properties are sold quickly, or there isn't enough data to provide an accurate DOM figure. Given the high median home value and the strong rental market presence, it's reasonable to assume that rental properties, especially those under government programs like Section 8, are highly sought after.
While the market rent scenario provides a slightly lower gross yield, it might offer greater flexibility and potentially higher long-term returns due to the ability to adjust rents according to market conditions. The Section 8 program, however, ensures a steady stream of income tied to the FMR, which can be particularly appealing in a high-cost area like Hauula where maintaining occupancy is crucial.
Ultimately, the choice between participating in Section 8 versus relying on market rents hinges on individual investor preferences regarding risk, return, and management. For those who prioritize stability and predictability, the Section 8 option with its 2.82% gross yield could be more attractive. For those willing to navigate the complexities of the rental market, the market rent option at 2.65% might be preferred.
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.