Location: Newark, NJ | Metro: Newark, NJ 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 | $2,230 |
| 1 Bedroom | $2,520 |
| 2 Bedrooms | $3,040 |
| 3 Bedrooms | $3,790 |
| 4 Bedrooms | $4,340 |
| 5 Bedrooms | $5,034 |
| 6 Bedrooms | $5,638 |
| 7 Bedrooms | $6,089 |
| 8 Bedrooms | $6,393 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $3,040 | $706,403 | 0.43% | F |
| 3BR | $3,790 | $928,910 | 0.41% | F |
| 4BR | $4,340 | $1,258,117 | 0.34% | F |
| 5BR | $5,034 | $2,126,077 | 0.24% | F |
U.S. Census Bureau data (2024)
The HUD Fair Market Rent (FMR) for ZIP code 07940, which encompasses Madison, NJ, within the Newark, NJ HUD Metro FMR Area, stands at $2,660 for FY 2024. This figure is below the current market rent, as indicated by the Zillow Observed Rent Index (ZORI), which is set at $2,899. Voucher tenants in this area would typically generate a negative cash flow when renting properties at the HUD FMR, unless the landlord secures premium units where the rent-to-price ratio might be more favorable.
The median home value in ZIP 07940 is $1,030,690. To derive the rent-to-price ratio, we can use the ZORI figure. Dividing the annualized ZORI ($2,899 multiplied by 12) by the median home value gives us a ratio of approximately 3.5%. This suggests that rental income alone is not sufficient to cover the mortgage payments on average-priced homes, indicating that landlords should expect to subsidize their Section 8 properties to some extent.
The day median Days on Market (DOM) and the 0.1% price-cut share are not applicable (N/A) in this scenario. However, these metrics usually help assess the local real estate market's activity and pricing dynamics. In ZIP 07940, the stability of the housing market is a significant factor, given the high median home value and the relatively low vacancy rates typical for this area.
The strongest investor angle in ZIP 07940 is likely stability. The robust economy and low unemployment rates in Morris County support a consistent demand for rental properties, making it a reliable investment option for those seeking steady returns over time.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.