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 | $1,480 |
| 1 Bedroom | $1,670 |
| 2 Bedrooms | $2,050 |
| 3 Bedrooms | $2,830 |
| 4 Bedrooms | $3,200 |
| 5 Bedrooms | $3,712 |
| 6 Bedrooms | $4,157 |
| 7 Bedrooms | $4,490 |
| 8 Bedrooms | $4,715 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,050 | $476,803 | 0.43% | F |
| 3BR | $2,830 | $614,993 | 0.46% | F |
| 4BR | $3,200 | $814,912 | 0.39% | F |
U.S. Census Bureau data (2024)
The ZIP code 98388, located in Steilacoom, WA, presents a dynamic housing market with distinct characteristics. The Fair Market Rent (FMR) for the area is set at $1,790 for fiscal year 2024, while the actual market rent, as indicated by the Zillow Observed Rent Index (ZORI), stands at $1,942. This suggests that the rental market is slightly above the fair market rent, indicating a potential demand exceeding supply scenario.
The median home value in Steilacoom is $646,353, which places it within a moderate range for the region. However, without specific historical data, we cannot definitively state whether this represents an increase or decrease over time. The lack of percentage data on price-cut shares and days on market (DOM) indicates that the market is relatively stable, with few homes needing significant price adjustments or extended periods on the market.
A notable feature of the market is the 37.1% share of renters. This percentage suggests a substantial portion of the population prefers renting over owning, which can exert long-term pressure on the housing market. With a higher renter share, there is likely a continuous demand for rental properties, making it a favorable environment for landlords and small-portfolio investors who can provide well-maintained rental units at competitive rates.
The gap between the FMR and the ZORI also highlights the potential for landlords to achieve rents slightly above the government-set fair market rate, which could be beneficial in terms of maintaining profitability. However, it's important for landlords to remain aware of local economic conditions and the ability of residents to afford these rents.
In summary, Steilacoom's ZIP 98388 appears to be a market where demand may slightly outpace supply, particularly in the rental sector. The presence of a significant number of renters points towards ongoing housing pressure, suggesting a need for a steady supply of rental units to meet the needs of the community. For investors, this translates into a market where rental properties can be a sound investment, provided they align with the local economic realities and tenant preferences.
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.