Section 8 Fair Market Rent (FMR) for ZIP 98023 - 2027

Investment Score for ZIP 98023

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	$1,920
1 Bedroom	$2,000
2 Bedrooms	$2,340
3 Bedrooms	$3,050
4 Bedrooms	$3,630
5 Bedrooms	$4,211
6 Bedrooms	$4,716
7 Bedrooms	$5,093
8 Bedrooms	$5,348

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$2,000	$242,644	0.82%	C
2BR	$2,340	$331,812	0.71%	D
3BR	$3,050	$573,164	0.53%	F
4BR	$3,630	$683,820	0.53%	F
5BR	$4,211	$767,047	0.55%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98023 (Federal Way, WA) #### Section 8 Voucher Dynamics In ZIP code 98023, the Fair Market Rent (FMR) for a two-bedroom apartment is set at $2320 per month for 2026. This represents 26.5% of the median household income of $104,893. However, it is important to note that the actual rental market price for a two-bedroom unit, according to Zillow, is $327,052, which translates to an average monthly rent of approximately $2725 when considering a typical mortgage payment scenario. The price-to-FMR ratio is 11.7x, indicating that the actual market prices are significantly higher than the FMR. This disparity creates several constraints for voucher holders. The $2320 FMR is likely insufficient to cover the actual market rent of $2725, meaning that voucher holders would need to find properties willing to accept the lower FMR rate. Additionally, landlords may be hesitant to accept vouchers due to the higher actual market rates, potentially limiting the availability of units for voucher holders. #### Affordability & Renter Profile ZIP code 98023 has a population of 50,448, with 34.4% of residents being renters. The occupancy rate stands at 95.6%, suggesting a relatively tight rental market. Given the median household income of $104,893, the majority of residents are likely able to afford market-rate rentals. However, the 34.4% who are renters might face affordability challenges, especially those relying on Section 8 vouchers. The high occupancy rate indicates that there is little excess capacity in the rental market, making it competitive for both renters and landlords. This tightness can lead to upward pressure on rents, further complicating the situation for voucher holders and low-income renters. #### Investor Angle From an investor perspective, the ZIP code 98023 offers mixed opportunities. The FMR for a two-bedroom unit is $2320, while the actual market rent is around $2725. If an investor were to purchase a property at the median price of $327,052 and aim to rent it out at the FMR, they would likely face financial challenges. A typical mortgage payment for a property priced at $327,052 would be approximately $1,500 per month, assuming a 30-year fixed-rate mortgage at 5%. Adding property taxes, insurance, maintenance, and other expenses could easily push the total cost above the FMR. Given these factors, the investment grade for this ZIP code is moderate to low for Section 8-focused investors. The gap between FMR and actual market rent suggests that properties rented at FMR would struggle to generate positive cash flow, especially when factoring in the costs associated with owning and maintaining a property. #### Specific Actionable Insights 1. **Focus on Lower-Rent Properties**: Investors should consider focusing on one-bedroom or zero-bedroom units where the FMR is closer to the actual market rent. For example, the FMR for a one-bedroom unit is $1990, which is more aligned with potential market rents. This could provide a better chance of achieving positive cash flow. 2. **Seek Out Affordable Neighborhoods Within Federal Way**: While the overall median home price in Federal Way is high, there may be pockets within the ZIP code where housing prices are lower. Identifying these areas could help investors find properties that are more affordable and thus more likely to generate positive cash flow when rented at FMR. 3. **Consider Alternative Rental Assistance Programs**: Given the high price-to-FMR ratio, investors might want to explore alternative rental assistance programs that offer higher subsidies. These programs could provide a better match between the actual market rent and the subsidy received by tenants, thereby improving the likelihood of positive cash flow. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 98023 is to **skip** this area unless they can identify specific lower-cost neighborhoods or alternative rental assistance programs. The significant gap between FMR and actual market rent makes it challenging to achieve positive cash flow, especially given the high occupancy rate and limited excess capacity in the rental market. Investors looking to enter the Federal Way market should carefully evaluate their options and consider diversifying into other types of rental assistance programs or targeting smaller units where the FMR is closer to market rates.

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.