Section 8 Fair Market Rent (FMR) for ZIP 98503 - 2027

Investment Score for ZIP 98503

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	$1,600
1 Bedroom	$1,670
2 Bedrooms	$1,960
3 Bedrooms	$2,560
4 Bedrooms	$3,160
5 Bedrooms	$3,666
6 Bedrooms	$4,106
7 Bedrooms	$4,434
8 Bedrooms	$4,656

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	$1,960	$394,921	0.5%	F
3BR	$2,560	$481,080	0.53%	F
4BR	$3,160	$543,271	0.58%	F
5BR	$3,666	$608,889	0.6%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98503 (Lacey, WA) #### Section 8 Voucher Dynamics In ZIP code 98503, the Fair Market Rent (FMR) for a two-bedroom unit is set at $1,990 per month for the year 2026. This amount represents 26.8% of the median household income of $89,002, indicating that it is within a reasonable range for many residents. However, the actual rental market in Lacey is significantly higher. The Zillow median price for a two-bedroom home is $391,319, which translates to a monthly rent of approximately $1,640 based on a typical mortgage payment. Given the price-to-FMR ratio of 16.4x, it’s clear that the actual market rents far exceed the FMR, creating a significant challenge for Section 8 voucher holders. They are constrained by the maximum allowable rent under their vouchers, which means they have limited options when looking for housing. #### Affordability & Renter Profile The population of 98503 is 41,656, with 41.6% being renters. This indicates a substantial portion of the community relies on rental housing. The occupancy rate of 96.1% suggests that the rental market is quite tight, with very little vacancy. Given the high price-to-FMR ratio, it’s likely that many renters are facing affordability issues. The median household income of $89,002 is relatively strong, but the high cost of living and the disparity between FMR and actual rents make it difficult for lower-income households to find suitable accommodation. #### Investor Angle For investors focusing on Section 8 properties, the ZIP code 98503 presents both opportunities and challenges. The FMR for a three-bedroom unit is $2,650, which is significantly below the market rent. If an investor can secure a property at or near the FMR, there could be potential for positive cash flow. However, given the tight market conditions and the high actual rents, finding properties at or below the FMR will be challenging. To assess the investment grade, we need to consider several factors including the demand for affordable housing, the likelihood of securing tenants, and the overall financial viability of the investment. In Lacey, the demand for affordable housing is high due to the large number of renters and the tight market. However, the low FMR compared to market rates means that investors must carefully evaluate their acquisition costs and operating expenses to ensure profitability. #### Specific Actionable Insights 1. **Target Properties Below FMR**: Investors should focus on acquiring properties that are priced below the FMR. For example, a three-bedroom property priced at $2,650 per month would be ideal for attracting Section 8 tenants. However, given the high price-to-FMR ratio, this will require careful selection and possibly renovation to bring down costs. 2. **Consider Multi-Family Units**: With 41.6% of the population renting, multi-family units such as duplexes or small apartment buildings might offer better returns. These units can spread the fixed costs over multiple units, potentially making the investment more financially viable. 3. **Engage with Local Housing Authorities**: Building relationships with local housing authorities can help secure Section 8 contracts. These authorities often have a list of approved landlords and can provide valuable insights into the availability of vouchers and the needs of the community. #### Bottom Line Given the tight rental market and the high price-to-FMR ratio, the recommendation for Section 8-focused investors in ZIP code 98503 is to **Hold**. While there is a significant demand for affordable housing, the current market conditions make it challenging to find properties at or below the FMR. Investors should proceed cautiously and only consider properties where the acquisition and operational costs align closely with the FMR to ensure financial viability.

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.