Section 8 Fair Market Rent (FMR) for ZIP 96734 - 2027

Investment Score for ZIP 96734

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$2,640
1 Bedroom	$2,810
2 Bedrooms	$3,660
3 Bedrooms	$5,070
4 Bedrooms	$6,120
5 Bedrooms	$7,099
6 Bedrooms	$7,951
7 Bedrooms	$8,587
8 Bedrooms	$9,016

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$2,810	$757,979	0.37%	F
2BR	$3,660	$899,275	0.41%	F
3BR	$5,070	$1,419,247	0.36%	F
4BR	$6,120	$1,695,089	0.36%	F
5BR	$7,099	$1,949,391	0.36%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 96734 (Kailua, HI) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 96734 (Kailua, HI) in 2026 are as follows: - 0BR: $2560 - 1BR: $2760 - 2BR: $3610 - 3BR: $5020 - 4BR: $6060 Comparing these FMRs to the actual rents in Kailua, we see that the Zillow median price for a 2BR unit is $898,991, which translates into a monthly rent of approximately $7,491 based on typical mortgage payments and property management costs. This results in a Price-to-FMR ratio of about 20.8x, indicating that actual rents are significantly higher than the FMRs set by HUD. For voucher holders, this means that they face substantial constraints. The FMR for a 2BR unit is only $3610, which is less than half of the actual rent ($7,491). Therefore, tenants using Section 8 vouchers would struggle to find properties that accept their vouchers due to the high cost of living in Kailua. Additionally, landlords might be hesitant to participate in the Section 8 program because the rent they receive would be much lower than what the market demands. #### Affordability & Renter Profile The median household income in Kailua is $132,782, and the FMR for a 2BR unit represents 32.6% of this income. Given that 37.2% of the population are renters, it suggests that the rental market is relatively tight, with a significant portion of the population relying on rental housing. However, the high median income indicates that many residents can afford higher rents, making the rental market competitive and potentially less accessible for low-income families. The occupancy rate of 92.4% further supports the idea that the rental market is tight. With such a high occupancy rate, there is little room for additional units, and any new supply could quickly be absorbed by the demand. This tightness also implies that there is a strong need for affordable housing options, but the current market dynamics do not favor affordability. #### Investor Angle From an investor's perspective, the ZIP code 96734 is challenging when considering cash flow based solely on FMRs. For instance, a 2BR unit renting at the FMR of $3610 would generate significantly less income compared to the market rent of around $7,491. This disparity makes it difficult for landlords to cover expenses and maintain profitability. To assess the investment grade, we must consider the overall financial viability of properties in this area. While the median home value is high, the rental market is similarly expensive. An investor who can secure a property at a reasonable price and manage it effectively might still achieve positive cash flow, but this would require careful consideration of operating costs and potential vacancy rates. Given the high Price-to-FMR ratio, it is clear that the investment grade for Section 8-focused properties in Kailua is low. The gap between FMR and market rent is too wide to make these properties financially attractive for most investors. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Since the FMR for smaller units (0BR and 1BR) is closer to the median income percentage, investors might consider focusing on these types of units. A 1BR unit renting at $2760 would represent about 20.8% of the median income, making it more feasible for low-income families to afford. 2. **Consider Mixed-Income Developments**: Investors could explore developing mixed-income properties where some units are rented at market rates and others are rented at FMRs. This approach can help balance the financial burden and provide a mix of affordability and profitability. 3. **Engage with Local Housing Authorities**: To navigate the challenges of the high Price-to-FMR ratio, investors should engage with local housing authorities to understand any subsidies or incentives available for landlords who participate in the Section 8 program. This can help offset some of the financial losses associated with renting below market rates. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 96734 (Kailua, HI) is to **Skip** this market. The high Price-to-FMR ratio and the tight rental market make it unfeasible for investors to achieve positive cash flow while adhering to the FMR guidelines. Additionally, the limited availability of properties willing to accept Section 8 vouchers further complicates the investment landscape. Investors looking to focus on Section 8 properties should consider other areas with more favorable market conditions.

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.