Section 8 Fair Market Rent (FMR) for ZIP 98118 - 2027

Investment Score for ZIP 98118

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	$1,990
1 Bedroom	$2,080
2 Bedrooms	$2,430
3 Bedrooms	$3,170
4 Bedrooms	$3,770
5 Bedrooms	$4,373
6 Bedrooms	$4,898
7 Bedrooms	$5,290
8 Bedrooms	$5,555

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	$2,080	$473,477	0.44%	F
2BR	$2,430	$603,388	0.4%	F
3BR	$3,170	$722,792	0.44%	F
4BR	$3,770	$845,111	0.45%	F
5BR	$4,373	$887,511	0.49%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98118 (Seattle, WA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 98118 in Seattle, WA, as set by HUD for 2026, is $2430 for a two-bedroom apartment. This figure represents 25.6% of the median household income in the area, which stands at $113,762. However, the actual rent for a two-bedroom apartment, according to Zillow, is significantly higher at $613,480. The price-to-FMR ratio of 21.0x indicates that the actual rental prices are much higher than the FMR, creating a significant gap between what voucher holders can afford and the market rates. This gap poses several constraints for voucher holders. For instance, a tenant with a Section 8 voucher would find it challenging to secure a two-bedroom unit at the market rate, as they would need to supplement the FMR with additional funds. This could be particularly difficult given that the FMR is already a substantial portion of the median household income. As such, voucher holders are likely limited to finding units that are either below the FMR or willing to accept the voucher amount without additional contributions from the tenant. #### Affordability & Renter Profile ZIP code 98118 has a population of 50,500, with 42.9% of residents being renters. The occupancy rate of 93.7% suggests a tight rental market where demand exceeds supply, making it difficult for renters to find affordable housing. Given the high median household income, the typical renter profile in this area is likely to include young professionals, families, and individuals who have stable employment but still struggle with the high cost of living in Seattle. The affordability issue is exacerbated by the high actual rental prices compared to the FMR. A two-bedroom apartment, which is priced at $613,480, is far beyond the reach of many low-income households who rely on Section 8 vouchers. The disparity between the FMR and the actual rental prices means that most voucher holders will have limited options, potentially leading to overcrowding or forcing them into lower-quality housing. #### Investor Angle From an investor perspective, the ZIP code 98118 presents both opportunities and challenges. The FMR for a two-bedroom unit is $2430, which is significantly lower than the actual median rental price of $613,480. However, the FMR is the maximum amount that landlords can charge tenants using Section 8 vouchers, meaning that landlords must be prepared to operate within these constraints. Given the high median household income and the tight rental market, there is potential for cash flow positivity if investors can find units that are priced close to the FMR. However, this is a challenge due to the high actual rental prices. Investors should consider the following: 1. **Cash Flow Positivity**: At the FMR, cash flow might be positive if the investor can manage expenses effectively. However, the actual rental prices suggest that there is a strong market for higher rents, which could be more profitable for those willing to cater to non-voucher tenants. 2. **Investment Grade**: The investment grade for properties in this ZIP code is mixed. While there is a high demand for rentals, the tight market and high actual prices mean that investors must carefully evaluate their costs and potential returns. Properties that can be rented at or near the FMR may be considered lower-grade investments due to the limited income potential, whereas those that can command higher rents may be more attractive. #### Specific Actionable Insights 1. **Focus on Lower-Rent Units**: Investors should focus on acquiring properties that can be rented out at or near the FMR. For example, a one-bedroom unit with an FMR of $2090 could be a viable option for cash flow positivity while still catering to voucher holders. This strategy requires careful management of property expenses to ensure profitability. 2. **Consider Mixed-Income Developments**: Given the high actual rental prices, developers and investors might consider mixed-income developments where some units are reserved for voucher holders while others are rented at market rates. This approach can help balance the financial risks and rewards associated with operating in a high-cost area. 3. **Evaluate Property Location**: Properties located in areas with higher concentrations of low-income households or near public transportation might be more attractive to voucher holders. These locations could offer better opportunities for cash flow positivity at the FMR. #### Bottom Line For Section 8-focused investors, ZIP code 98118 presents a challenging environment due to the significant gap between the FMR and actual rental prices. The high median household income and tight rental market make it difficult to find units that are affordable for voucher holders. Therefore, the recommendation for investors is to **Skip** this ZIP code unless they can find properties that are priced at or near the FMR and are strategically located to attract voucher holders. Alternatively, investors might consider a **Hold** strategy if they already own properties in the area and can manage them effectively within the FMR constraints. However, given the high actual rental prices, a **Buy** recommendation is not advisable unless the investor is willing to cater to a broader range of tenants and not solely rely on Section 8 vouchers.

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.