Location: Salem, OR | Metro: Salem, OR MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,260 |
| 1 Bedroom | $1,390 |
| 2 Bedrooms | $1,730 |
| 3 Bedrooms | $2,380 |
| 4 Bedrooms | $2,680 |
| 5 Bedrooms | $3,109 |
| 6 Bedrooms | $3,482 |
| 7 Bedrooms | $3,761 |
| 8 Bedrooms | $3,949 |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 97342 is centered around the significant disparity between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR is set at $1130, while the market rent based on Census ACS data stands at $767. This creates a gap of $363, or approximately 47%, which is substantial and has important implications for landlords and small-portfolio investors.
In this scenario, where the FMR exceeds the market rent, voucher tenants can be seen as a yield play. The higher FMR means that landlords who accept Section 8 vouchers will receive a higher rental payment compared to what they might get from non-voucher tenants. This is particularly attractive given the local context: only 18.2% of residents are renters, indicating a relatively low competition among landlords for tenants. Moreover, the median home value in the area is $455,936, suggesting that homeownership is a significant factor in the community. With a median income of $63,125, many potential tenants might find it challenging to afford market-rate rents, making them ideal candidates for Section 8 assistance.
The cost of housing voucher tenants below open-market rates is minimal in this case. Accepting Section 8 vouchers allows landlords to tap into a reliable source of rental income that is guaranteed by the government. This stability is especially beneficial in an area where the majority of residents are homeowners, and the rental market is less saturated. Additionally, the high FMR relative to market rent means that landlords can potentially charge slightly above the market rate but still within the voucher limits, thereby increasing their yields without facing significant vacancy risks.
To summarize, the gap between the FMR and market rent in ZIP 97342 presents a strategic opportunity for landlords. By accepting Section 8 vouchers, they can achieve higher rental yields than the local market average, leveraging the government's financial backing to secure a steady income stream from tenants who might otherwise struggle to afford housing in the area.
Data Sources: FMR data from HUD (2027). 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.