Location: Madison, WI | Metro: Madison, WI 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 | $1,320 |
| 1 Bedroom | $1,540 |
| 2 Bedrooms | $1,760 |
| 3 Bedrooms | $2,320 |
| 4 Bedrooms | $2,610 |
| 5 Bedrooms | $3,028 |
| 6 Bedrooms | $3,391 |
| 7 Bedrooms | $3,662 |
| 8 Bedrooms | $3,845 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,760 | $312,020 | 0.56% | F |
| 3BR | $2,320 | $436,868 | 0.53% | F |
| 4BR | $2,610 | $541,073 | 0.48% | F |
U.S. Census Bureau data (2024)
The real estate market in Cottage Grove, WI (ZIP 53527), presents a nuanced landscape that landlords and small-portfolio investors should carefully consider. With a median home value of $479,129, the area reflects a stable housing environment where slight reductions in listing prices have been observed. Only 0.2% of listings have seen price cuts, indicating a strong seller's market where homes are generally priced at or near their initial asking values.
The median days on market (DOM) being listed as 'N/A' suggests a brisk sales pace, likely due to the low percentage of price reductions and the overall desirability of the area. This combination signals robust pricing power for the next 12-24 months, as buyers continue to compete for homes without significant downward pressure on prices.
On the rental side, the Federal Market Rent (FMR) for ZIP 53527 is projected at $1,560 for fiscal year 2024, while the Zillow Observed Rent Index (ZORI) currently stands at $1,808. The discrepancy between the FMR and the ZORI indicates a potential for rental income to remain steady or even increase slightly, as market rents exceed the federally adjusted rates. Landlords can expect to maintain current rental levels or see modest increases, provided they keep their properties competitive in terms of amenities and condition.
For long-term hold investors, the setup implies a cautious approach to appreciation expectations. While the current market conditions suggest strong pricing power and steady rental income, the lack of significant price reductions and the already high median home value point to a mature market with limited upside potential. Appreciation in Cottage Grove will likely be modest, driven by general economic growth and inflation rather than speculative bubbles or rapid demand increases. Realistic appreciation theses should focus on maintaining property quality and leveraging rental income for returns.
In summary, the data points towards a market where landlords and small-portfolio investors can enjoy solid pricing and rental income stability, but appreciation expectations must be grounded in reality. Investing in Cottage Grove is best suited for those looking for consistent, albeit moderate, growth in property value and rental yields.
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.