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 | $2,490 |
| 1 Bedroom | $2,650 |
| 2 Bedrooms | $3,450 |
| 3 Bedrooms | $4,780 |
| 4 Bedrooms | $5,770 |
| 5 Bedrooms | $6,693 |
| 6 Bedrooms | $7,496 |
| 7 Bedrooms | $8,096 |
| 8 Bedrooms | $8,501 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $3,450 | $1,348,480 | 0.26% | F |
| 3BR | $4,780 | $1,596,922 | 0.3% | F |
| 4BR | $5,770 | $2,002,035 | 0.29% | F |
| 5BR | $6,693 | $2,236,598 | 0.3% | F |
U.S. Census Bureau data (2024)
The Section 8 housing analysis for ZIP code 96821 in Honolulu, HI, highlights a significant gap between the Fair Market Rent (FMR) and the market rent as measured by Zillow's Rent Index (ZORI). The FMR for ZIP 96821 in fiscal year 2024 is set at $3340, whereas the ZORI indicates that the market rent is $4317. This discrepancy amounts to a difference of $977, which represents a 29.3% gap between the two figures.
The cost of accepting housing voucher tenants becomes evident when comparing these numbers. Landlords and small-portfolio investors might find themselves renting units at a rate that is lower than what they could charge in the open market. Specifically, the FMR is $977 less than the market rent, suggesting that landlords could potentially earn an additional $977 per month by renting without the constraints of the Section 8 program.
In the broader context of Honolulu, HI, it's important to note that only 13.9% of residents are renters, indicating a relatively low rental demand compared to other cities. Additionally, the median home value in the area is $1,812,012, and the median income is $174,938. These figures suggest that the rental market in ZIP 96821 is situated within a high-value residential area where homeownership is more common and incomes are higher than average.
Given these conditions, landlords must weigh the benefits and drawbacks of participating in the Section 8 program. While the program ensures steady rental income and government-backed support, the lower FMR compared to market rent means accepting a reduced yield. For small-portfolio investors, this decision can significantly impact overall returns. Therefore, it's crucial to consider the financial implications and local market dynamics before deciding to participate in the Section 8 program.
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.