Location: Duluth, MN | Metro: Duluth, MN-WI MSA
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 | $790 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,130 |
| 3 Bedrooms | $1,560 |
| 4 Bedrooms | $1,890 |
| 5 Bedrooms | $2,192 |
| 6 Bedrooms | $2,455 |
| 7 Bedrooms | $2,651 |
| 8 Bedrooms | $2,784 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,560 | $334,402 | 0.47% | F |
U.S. Census Bureau data (2024)
The real estate market in ZIP 54874 presents a nuanced scenario for landlords and small-portfolio investors. With a median home value of $275,374, the area maintains a stable foundation for property investments. However, the absence of data on the percentage of listings that have been reduced and the median days on market (DOM) suggests a lack of volatility or significant downward pressure on prices at present. This signals that landlords and investors can expect to retain their pricing power over the next 12-24 months, barring any unforeseen economic shifts.
On the rental side, the Fair Market Rent (FMR) for ZIP 54874 in fiscal year 2024 is set at $1310, whereas the current market rent, according to Census ACS data, stands at $953. This indicates a potential upward trend in rental prices, suggesting that landlords who adjust their rents closer to the FMR level could attract higher-quality tenants and maintain occupancy rates without risking vacancy. The discrepancy between FMR and actual market rent also points to an opportunity for investors to increase rental income gradually, aligning with future FMR adjustments.
For long-term investors, the setup in ZIP 54874 implies a realistic appreciation thesis. Given the stable median home value and the potential for rental price increases, properties in this ZIP code are likely to appreciate in value over time. This appreciation is driven by the underlying demand for housing, particularly rental units, which are currently undervalued relative to the FMR. As rental prices converge toward the FMR, the overall value of properties is expected to follow suit, providing a steady growth in equity for those holding onto their assets.
In summary, the combination of a stable median home value, the current lack of significant price reductions among listings, and the favorable gap between FMR and market rent positions ZIP 54874 as a market where landlords and small-portfolio investors can maintain strong pricing power and anticipate gradual property value appreciation. This makes it a viable investment option for those looking to capitalize on both ownership and rental opportunities in a balanced market environment.
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.