Location: Lake County, 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 | $800 |
| 1 Bedroom | $890 |
| 2 Bedrooms | $1,150 |
| 3 Bedrooms | $1,530 |
| 4 Bedrooms | $1,870 |
| 5 Bedrooms | $2,169 |
| 6 Bedrooms | $2,429 |
| 7 Bedrooms | $2,623 |
| 8 Bedrooms | $2,754 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $890 | $238,269 | 0.37% | F |
| 2BR | $1,150 | $331,423 | 0.35% | F |
| 3BR | $1,530 | $315,761 | 0.48% | F |
| 4BR | $1,870 | $331,924 | 0.56% | F |
U.S. Census Bureau data (2024)
The median income in ZIP 55731, which includes Ely, MN, stands at $62,008. At first glance, the market rent rate of $644 might seem manageable for most households. However, when considering the Housing Choice Voucher Program's Fair Market Rent (FMR) standard of $980, the disparity becomes apparent. This indicates a significant challenge for renters who rely on vouchers to find suitable housing.
The affordability gap between the market rate and the FMR suggests that landlords could face competition when it comes to accepting vouchers. While the market rate is lower than the FMR, the number of renters—comprising 25.0% of the 5,361 population—may not be sufficient to fill all available rental units if they only accept market rates. Conversely, landlords who exclusively target cash-paying tenants risk missing out on a portion of the rental market where voucher holders represent a substantial demand.
To put this into perspective, a household earning the median income would spend nearly 11% of their annual income on the market rent rate of $644. However, the FMR of $980 represents a larger portion of their income, making it harder to secure housing without financial strain. For landlords, this means that while voucher payments can cover higher rents, the pool of eligible tenants is limited by the voucher amount.
The takeaway for landlords is clear: diversifying your tenant mix to include both voucher recipients and cash-paying tenants is crucial. Accepting vouchers can help fill vacancies in a competitive market, but it also requires understanding the limitations and processes associated with the program. Landlords should balance the benefits of guaranteed rent through vouchers with the potential for higher market rents from cash-paying tenants to optimize their investment strategy.
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.