Location: Tacoma, WA | Metro: Tacoma, 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 | $1,710 |
| 1 Bedroom | $1,920 |
| 2 Bedrooms | $2,360 |
| 3 Bedrooms | $3,260 |
| 4 Bedrooms | $3,680 |
| 5 Bedrooms | $4,269 |
| 6 Bedrooms | $4,781 |
| 7 Bedrooms | $5,163 |
| 8 Bedrooms | $5,421 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,920 | $974,121 | 0.2% | F |
| 2BR | $2,360 | $671,840 | 0.35% | F |
| 3BR | $3,260 | $811,557 | 0.4% | F |
| 4BR | $3,680 | $1,046,381 | 0.35% | F |
| 5BR | $4,269 | $1,288,436 | 0.33% | F |
U.S. Census Bureau data (2024)
The Section 8 cap-rate analysis for ZIP code 98335, located in Gig Harbor, Washington, reveals important insights into the potential returns for landlords and small-portfolio investors. The Fair Market Rent (FMR) for a two-bedroom apartment in this area for fiscal year 2024 is set at $2230 per month. When annualized, this translates to an income of $26,760. In contrast, the market rent, represented by the Zillow Observed Rental Index (ZORI), stands at $2,431 per month, or $29,172 annually.
To determine the gross yield for these scenarios, we use the median home value in ZIP 98335, which is $863,360. For the FMR scenario, the gross yield is calculated as follows:
$26,760 / $863,360 = 0.031, or 3.1%
For the market rent scenario, the gross yield is:
$29,172 / $863,360 = 0.034, or 3.4%
Given the 24.1% renter density in the area, it's evident that there is a substantial demand for rental properties. However, the 18-day Days on Market (DOM) suggests that homes listed for rent are occupied relatively quickly, indicating a competitive market where tenants have multiple options. This implies that landlords might struggle to command the higher market rent consistently, especially considering the government-set FMR rates.
The gross yields derived from the FMR and market rent suggest that the actual returns for Section 8 properties in ZIP 98335 would likely be closer to the lower end of the spectrum, at around 3.1%. While the market rent scenario offers a slightly better gross yield of 3.4%, the reality of the rental market in Gig Harbor, with its quick turnover and significant number of homeowners, makes it less probable that landlords can sustainably charge above the FMR without facing challenges in tenant retention.
In summary, while both the FMR and market rent provide useful benchmarks for assessing the potential returns on investment in ZIP 98335, the lower gross yield based on the FMR is more reflective of what landlords can realistically expect when participating in the Section 8 program. The higher gross yield from market rents should be considered with caution due to the competitive nature of the local rental market and the high proportion of homeownership.
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.