Section 8 Fair Market Rent (FMR) for ZIP 98374 - 2027

Investment Score for ZIP 98374

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	$1,660
1 Bedroom	$1,870
2 Bedrooms	$2,300
3 Bedrooms	$3,170
4 Bedrooms	$3,590
5 Bedrooms	$4,164
6 Bedrooms	$4,664
7 Bedrooms	$5,037
8 Bedrooms	$5,289

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
2BR	$2,300	$416,519	0.55%	F
3BR	$3,170	$538,798	0.59%	F
4BR	$3,590	$630,240	0.57%	F
5BR	$4,164	$697,279	0.6%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98374 (Puyallup, WA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 98374 in 2026 is set at $2,230 for a two-bedroom unit. This amount represents 23.8% of the median household income of $112,662, indicating that it is a relatively affordable rent for the average household in Puyallup. However, the actual rental market dynamics reveal a different picture. The Zillow median price for a two-bedroom home in Puyallup is $417,294, which is significantly higher than the FMR. The price-to-FMR ratio for a two-bedroom unit is 15.6 times, suggesting that the actual market rents are much higher than the FMR. This disparity means that Section 8 voucher holders face significant constraints when trying to find suitable housing. The voucher amount might not be sufficient to cover the market rent for a two-bedroom unit, making it challenging for them to secure housing without additional financial support. For example, if a landlord charges the median market rent of $417,294, the voucher holder would need to pay the difference between the FMR ($2,230) and the market rent, which could be substantial. #### Affordability & Renter Profile In Puyallup, 29.5% of households are renters, indicating a moderate rental market presence. With a high occupancy rate of 96.5%, the rental market appears to be quite tight, suggesting limited availability of units and potentially higher competition among renters. Given the median household income of $112,662, most residents can afford the median market rent, but for those relying on Section 8 vouchers, the situation is more challenging. The FMR for a two-bedroom unit is only 23.8% of the median income, which implies that the typical resident can afford a two-bedroom unit without assistance. However, for low-income households, the cost of renting a two-bedroom unit at the FMR is still a significant portion of their income, especially considering other living expenses such as utilities, food, and transportation. This makes the rental market in Puyallup less accessible for lower-income individuals who rely on government assistance. #### Investor Angle From an investor perspective, the ZIP code 98374 presents both opportunities and challenges. The FMR for a two-bedroom unit is $2,230, which is considerably lower than the median market rent of $417,294. This suggests that landlords who participate in the Section 8 program might struggle to achieve positive cash flow, especially if they are financing their properties at market rates. To determine whether the ZIP code is cash-flow positive at FMR, we need to consider the typical mortgage payments, property taxes, insurance, and maintenance costs. Assuming a mortgage payment of approximately $1,800 per month (based on a 4% interest rate and a 30-year loan term), property taxes of around $200 per month, insurance of about $100 per month, and maintenance costs of roughly $100 per month, the total monthly expenses would be around $2,200. At the FMR of $2,230, the cash flow would be minimal, likely around $30 per month. Given these figures, the investment grade for properties in ZIP code 98374 would be considered low for Section 8-focused investors. The primary challenge is the gap between the FMR and the market rent, which reduces the potential profitability of the investment. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio for two-bedroom units, investors might want to focus on smaller units such as one-bedroom or studio apartments. The FMR for a one-bedroom unit is $1,820, which is still below the median market rent but offers a better chance of positive cash flow. Additionally, the demand for smaller units might be higher due to the tight rental market. 2. **Consider Location-Specific Factors**: Investors should also consider the location within Puyallup. Areas closer to public transportation, schools, and employment centers might have a higher concentration of Section 8 voucher holders. These areas could offer more stable tenancy and potentially higher rents relative to the FMR. 3. **Explore Alternative Financing Options**: To improve cash flow, investors might explore alternative financing options such as government-backed loans or grants specifically designed for affordable housing. These options could reduce the mortgage payment burden, making the investment more viable at the FMR. #### Bottom Line Based on the provided data, the recommendation for Section 8-focused investors in ZIP code 98374 is to **Skip** this market. The high price-to-FMR ratio and the tight rental market make it difficult to achieve positive cash flow while participating in the Section 8 program. Additionally, the limited availability of units and the high competition among renters suggest that there might be better opportunities in other ZIP codes with a more favorable balance between FMR and market rents. However, if investors are willing to take on the challenge and are looking for long-term stability rather than immediate profitability, they might consider focusing on smaller units or exploring alternative financing options. Nonetheless, the overall market conditions in Puyallup do not favor Section 8 investments, and the risk of negative cash flow is high.

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.