Location: Iowa City, IA | Metro: Iowa City, IA 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 | $1,010 |
| 1 Bedroom | $1,070 |
| 2 Bedrooms | $1,260 |
| 3 Bedrooms | $1,740 |
| 4 Bedrooms | $2,110 |
| 5 Bedrooms | $2,448 |
| 6 Bedrooms | $2,742 |
| 7 Bedrooms | $2,961 |
| 8 Bedrooms | $3,109 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,070 | $207,734 | 0.52% | F |
| 2BR | $1,260 | $203,345 | 0.62% | D |
| 3BR | $1,740 | $277,357 | 0.63% | D |
| 4BR | $2,110 | $363,577 | 0.58% | F |
| 5BR | $2,448 | $500,651 | 0.49% | F |
U.S. Census Bureau data (2024)
The real estate landscape in ZIP 52240, Iowa City, IA, presents a balanced market with implications for both pricing power and investment strategy. With a median home value of $277,169, the area remains attractive for buyers seeking affordable housing options. The fact that only 0.1% of listings have been reduced signals strong seller pricing power, indicating that homes are selling close to their asking prices. This trend, coupled with a 38-day median Days on Market (DOM), suggests a healthy demand for properties in the region, as homes are being sold relatively quickly.
On the rental side, the Federal Market Rent (FMR) for ZIP 52240 in fiscal year 2024 is set at $1,080, while the Zillow Observed Rental Index (ZORI) indicates a market rate of $1,127. This slight premium of the ZORI over the FMR reflects the reality that private landlords can command higher rents than those subsidized by the government. However, the gap is not substantial, which might limit the ability to increase rents significantly without potentially losing tenants to lower-cost alternatives.
For long-hold investors, the setup implies a steady appreciation thesis rather than explosive growth. The combination of stable home values and a competitive rental market suggests that investments will likely yield moderate returns. The quick sale times and minimal price reductions indicate that the local economy supports housing demand, which bodes well for maintaining property values. However, the narrow margin between FMR and ZORI also points to a market where rental increases must be carefully calibrated to avoid tenant loss.
In summary, ZIP 52240 offers a solid investment opportunity for those looking to capitalize on a stable housing market. The data points towards a scenario where investors can expect consistent, if not spectacular, appreciation and rental income growth over the next 12-24 months. The key will be in aligning expectations with the realities of the market, ensuring that investments are made with an understanding of the balanced nature of supply and demand.
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.