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 | $2,070 |
| 1 Bedroom | $2,150 |
| 2 Bedrooms | $2,520 |
| 3 Bedrooms | $3,290 |
| 4 Bedrooms | $3,910 |
| 5 Bedrooms | $4,536 |
| 6 Bedrooms | $5,080 |
| 7 Bedrooms | $5,486 |
| 8 Bedrooms | $5,760 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,150 | $441,948 | 0.49% | F |
| 2BR | $2,520 | $776,879 | 0.32% | F |
| 3BR | $3,290 | $1,019,549 | 0.32% | F |
| 4BR | $3,910 | $1,352,225 | 0.29% | F |
| 5BR | $4,536 | $1,568,630 | 0.29% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 98116 in Seattle, WA, provides a clear view of potential investment returns. Using the Federal Market Rent (FMR) for a 2-bedroom unit at $2760 annually and the Zillow Observed Rent Index (ZORI) at $2,192 per month, we can derive two distinct gross-yield scenarios.
First, let's consider the FMR scenario. With an annualized rental income of $2760 for a 2BR unit, the implied gross-yield is calculated as follows:
Next, using the ZORI market rent figure, the monthly rent of $2,192 translates to an annual rent of $26,304. The implied gross-yield under this scenario is:
Given the median home value of $1,012,822, it's evident that the gross-yield based on ZORI market rent is significantly higher and more realistic. This conclusion is supported by the fact that ZIP 98116 has a 50.3% renter density, indicating a strong demand for rental properties. Additionally, the 10-day Days on Market (DOM) suggests that properties are rented quickly, minimizing vacancy rates and ensuring steady income flow.
While the FMR scenario presents a conservative gross-yield, it does not reflect the actual market conditions. Landlords and small-portfolio investors should focus on the ZORI-based gross-yield of 2.59%, which aligns better with the current rental market dynamics in ZIP 98116. This yield, although modest compared to other investment opportunities, is indicative of stable and predictable cash flows, making it a viable option for those interested in long-term, low-risk real estate investments.
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.