Section 8 Fair Market Rent (FMR) for ZIP 98387 - 2027

Investment Score for ZIP 98387

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	$1,570
1 Bedroom	$1,780
2 Bedrooms	$2,180
3 Bedrooms	$3,010
4 Bedrooms	$3,400
5 Bedrooms	$3,944
6 Bedrooms	$4,417
7 Bedrooms	$4,770
8 Bedrooms	$5,009

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	$1,780	$416,198	0.43%	F
2BR	$2,180	$411,476	0.53%	F
3BR	$3,010	$488,363	0.62%	D
4BR	$3,400	$548,638	0.62%	D
5BR	$3,944	$582,365	0.68%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98387 (Spanaway, WA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 98387 in 2026 is set at $2,110 for a two-bedroom unit. This amount represents 23.7% of the median household income in Spanaway, which stands at $106,872. The FMR is designed to ensure that renter households can afford housing without spending more than 30% of their income on rent. However, the actual rental market in Spanaway is significantly higher than the FMR. For instance, the Zillow median price for a two-bedroom home is $406,935, indicating a price-to-FMR ratio of 16.1x. This means that the average rent for a two-bedroom unit would likely be much higher than the FMR, potentially making it difficult for Section 8 voucher holders to find suitable housing. Given the high price-to-FMR ratio, landlords who accept Section 8 vouchers may face challenges in covering their costs. The FMR of $2,110 for a two-bedroom unit is far below the market rate, suggesting that voucher holders might struggle to find properties within their budget. Additionally, the constraints imposed by the voucher program could limit the number of available units for these renters, leading to a competitive environment where landlords have fewer incentives to participate. #### Affordability & Renter Profile In Spanaway, 22.6% of the population are renters, and the occupancy rate is 96.2%, indicating a relatively tight rental market. With a median household income of $106,872, the majority of residents are likely homeowners or have the financial capacity to pay market rates for rentals. However, the 22.6% of renters include those who rely on Section 8 vouchers. These renters must navigate a market where the average rent is substantially higher than the FMR. The affordability issue is further highlighted by the fact that the FMR for a two-bedroom unit ($2,110) is only 23.7% of the median income. While this suggests that the FMR is reasonably aligned with the income levels of the area, the actual market rents are likely much higher due to the high price-to-FMR ratio. Therefore, the rental market in Spanaway is not particularly affordable for low-income households, especially those relying on Section 8 vouchers. The tight market conditions mean that there is little room for oversupply, and competition for rental units is likely high. #### Investor Angle From an investor’s perspective, the ZIP code 98387 presents both opportunities and challenges. The FMR for a two-bedroom unit is $2,110, but given the high price-to-FMR ratio, the actual market rents are likely much higher. If an investor were to purchase a property at the Zillow median price of $406,935 and rent it out at the FMR, they would likely face significant cash flow issues. The cost of mortgage payments, maintenance, and other expenses would exceed the FMR, making it financially unfeasible to operate solely on the FMR. However, if an investor is willing to rent out the property at market rates, the potential for positive cash flow exists. The key challenge lies in finding a balance between accepting Section 8 vouchers and renting at market rates. Given the high price-to-FMR ratio, it is unlikely that the investment grade would be favorable for properties rented exclusively at the FMR. Investors should consider the broader rental market and the willingness of tenants to pay above the FMR to determine the feasibility of their investments. #### Specific Actionable Insights 1. **Target Mixed-Income Properties:** Investors should focus on properties that can cater to both Section 8 voucher holders and market-rate tenants. A mixed-income approach allows landlords to leverage the higher market rents while still participating in the Section 8 program. For example, a three-bedroom unit with an FMR of $2,930 could be rented to market-rate tenants at a higher rate, providing a buffer against the lower FMR. 2. **Consider Multi-Family Units:** Given the high price-to-FMR ratio, multi-family units (such as duplexes or small apartment buildings) offer a better opportunity for positive cash flow. By renting out multiple units, landlords can diversify their tenant base and potentially achieve a higher overall rental income. For instance, a four-unit building with two-bedroom units could generate a total monthly income of $8,440 (4 units x $2,110), which is closer to the market value and more sustainable for investors. 3. **Engage with Local Housing Authorities:** To better understand the local dynamics and improve the chances of securing Section 8 tenants, investors should engage with local housing authorities. They can provide insights into the demand for subsidized housing and help landlords navigate the complexities of the voucher program. This engagement can also lead to partnerships that make the investment more attractive and feasible. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 98387 is to **skip** this market. The high price-to-FMR ratio and the tight rental market make it challenging to achieve positive cash flow when operating strictly within the FMR guidelines. Investors looking to enter this market should consider a mixed-income strategy or focus on multi-family units to mitigate the financial risks associated with relying solely on Section 8 vouchers. Given the current dynamics, the investment grade is low, and the potential for sustained profitability is limited unless investors can secure tenants willing to pay above the FMR.

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.