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 | $1,290 |
| 1 Bedroom | $1,460 |
| 2 Bedrooms | $1,790 |
| 3 Bedrooms | $2,470 |
| 4 Bedrooms | $2,800 |
| 5 Bedrooms | $3,248 |
| 6 Bedrooms | $3,638 |
| 7 Bedrooms | $3,929 |
| 8 Bedrooms | $4,125 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,460 | $322,833 | 0.45% | F |
| 2BR | $1,790 | $377,966 | 0.47% | F |
| 3BR | $2,470 | $441,605 | 0.56% | F |
| 4BR | $2,800 | $499,979 | 0.56% | F |
| 5BR | $3,248 | $550,703 | 0.59% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis in ZIP code 98404, located in Tacoma, WA, is fundamentally about leveraging the disparity between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR is set at $1570, while the Zillow Observed Rent Index (ZORI) indicates that the market rent is $1983. This creates a significant gap of $413, which translates to a 26.3% difference between the two figures.
The implications of this gap are clear for landlords and small-portfolio investors. When the FMR is lower than the market rent, it means that landlords who accept Section 8 vouchers will be renting properties at rates below what they could charge to open-market tenants. In Tacoma, where 31.4% of residents are renters, and the median income stands at $82,191, the median home value of $443,299 suggests a relatively stable housing market. However, the discrepancy between the FMR and ZORI highlights a potential challenge for landlords.
Accepting Section 8 vouchers can lead to a lower rental income per unit, but it also provides a steady stream of tenants who are financially supported by the government. This stability can be beneficial in a market where finding reliable tenants might otherwise be difficult due to economic fluctuations. However, landlords must consider the costs associated with maintaining properties that are rented below market rates. These costs include potential maintenance expenses, property management fees, and the opportunity cost of renting to voucher holders instead of market-rate tenants.
In conclusion, the $413 gap between the FMR and ZORI in ZIP 98404 represents a significant financial consideration for landlords. While accepting Section 8 vouchers ensures a consistent tenant base, it also means operating at a discount compared to the local market rates. Investors should weigh these factors carefully when deciding whether to participate in the Section 8 program in this area.
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.