Location: Seattle-Bellevue, WA | Metro: Seattle-Bellevue, WA HUD Metro FMR Area
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 | $2,700 |
| 1 Bedroom | $2,810 |
| 2 Bedrooms | $3,290 |
| 3 Bedrooms | $4,290 |
| 4 Bedrooms | $5,100 |
| 5 Bedrooms | $5,916 |
| 6 Bedrooms | $6,626 |
| 7 Bedrooms | $7,156 |
| 8 Bedrooms | $7,514 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $3,290 | $1,050,186 | 0.31% | F |
| 3BR | $4,290 | $1,189,220 | 0.36% | F |
| 4BR | $5,100 | $1,766,264 | 0.29% | F |
| 5BR | $5,916 | $2,119,140 | 0.28% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 98053, located in Redmond, WA, provides a clear picture of the potential returns for landlords and small-portfolio investors. Based on the Fair Market Rent (FMR) for a two-bedroom unit at $3540 annually and the Zillow Observed Rent Index (ZORI) at $2,532 annually, we can derive the implied gross yields against the median home value of $1,470,651.
First, let's calculate the gross yield using the FMR. The annualized FMR of $3540 translates into a gross yield of approximately 0.24% when divided by the median home value. This calculation is done as follows: $3540 / $1,470,651 = 0.0024 or 0.24%. This figure represents the income generated from Section 8 housing relative to the property's value.
Next, consider the market rent scenario. Using the ZORI figure of $2,532 annually, the gross yield drops to around 0.17%. This is calculated by dividing the annual market rent by the median home value: $2,532 / $1,470,651 = 0.0017 or 0.17%. This lower gross yield reflects the typical rental income that could be expected from the property if rented at market rates.
Given the low renter density of 15.2% and the average days on market (DOM) of 16 days, it becomes evident that the FMR-based gross yield of 0.24% is more realistic. Landlords in this area should expect a higher demand for subsidized housing due to the relatively low percentage of renters and quick turnover of properties. This suggests that securing a Section 8 tenant is likely easier than finding a market-rate tenant, making the FMR-based gross yield a more accurate representation of the investment's performance.
In conclusion, while the gross yields derived from both the FMR and market rent are quite low, the 0.24% yield based on the FMR is the more practical figure for investors considering Section 8 participation in ZIP 98053. The high DOM indicates a competitive market for rental properties, further supporting the case for relying on the FMR as a more reliable income source.
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.