Location: Salem, OR | Metro: Salem, OR 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 | $1,090 |
| 1 Bedroom | $1,090 |
| 2 Bedrooms | $1,430 |
| 3 Bedrooms | $1,980 |
| 4 Bedrooms | $2,170 |
| 5 Bedrooms | $2,517 |
| 6 Bedrooms | $2,819 |
| 7 Bedrooms | $3,045 |
| 8 Bedrooms | $3,197 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,430 | $316,770 | 0.45% | F |
| 3BR | $1,980 | $382,237 | 0.52% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate analysis for Falls City, Oregon (ZIP 97344) provides insight into the potential investment returns for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a 2-bedroom apartment in Falls City for fiscal year 2024 is set at $1340 per month, while the Census ACS reports the average market rent at $1,086 per month.
To calculate the implied gross yield, we annualize these figures. For the FMR scenario, the annual rent would be $1340 multiplied by 12, resulting in $16,080. Dividing this by the median home value of $357,123 gives an implied gross yield of approximately 4.5%. In contrast, the market rent of $1,086 per month annualizes to $13,032, which when divided by the median home value yields about 3.6%.
The gross yield based on the FMR ($16,080) is higher than that based on the market rent ($13,032), implying a stronger financial performance if Section 8 tenants occupy the property. However, the reality of rental markets must be considered alongside these figures. Falls City has a relatively low renter density at 23.3%, suggesting that there might be limited demand for rental properties overall, including those under the Section 8 program.
The Days on Market (DOM) figure being listed as N/A indicates incomplete data, which could mean either a very efficient or inefficient rental market, depending on the context. This lack of specificity makes it difficult to draw conclusions regarding the speed at which rental units are filled.
In light of the 23.3% renter density, it's important to recognize that the higher gross yield derived from the FMR scenario assumes full occupancy with Section 8 tenants. Given the lower renter density, achieving such occupancy might be challenging. Therefore, while the theoretical gross yield from the FMR is 4.5%, the more realistic expectation for landlords and small-portfolio investors should align closer to the market rent yield of 3.6%, factoring in the possibility of vacancies and the competitive nature of the local housing market.
Investors should also consider the administrative aspects of managing Section 8 properties, such as the application process and compliance requirements, which can affect the net operating income (NOI) even if the gross yield appears favorable. Despite the higher gross yield, the practical considerations of the local rental market suggest that the actual performance may hover around the lower market rent yield.
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.