Location: Peoria, IL | Metro: Bloomington, IL MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,230 |
| 1 Bedroom | $1,300 |
| 2 Bedrooms | $1,660 |
| 3 Bedrooms | $2,160 |
| 4 Bedrooms | $2,260 |
| 5 Bedrooms | $2,622 |
| 6 Bedrooms | $2,937 |
| 7 Bedrooms | $3,172 |
| 8 Bedrooms | $3,331 |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $1,160 for ZIP code 61725 can adequately cover the mortgage on a home priced at $285,765. To address this concern, it's important to consider that the FMR represents the maximum amount a landlord can charge for a Section 8 rental unit. While this figure does not directly reflect the mortgage payment, which depends on interest rates and loan terms, it does provide a benchmark for rental pricing. Assuming a typical 30-year fixed-rate mortgage at an average rate, the monthly payment on a $285,765 home would likely be around $1,200-$1,300, depending on down payment and other factors. Thus, the FMR is close but slightly below the mortgage payment, indicating a need for careful financial planning.
The investor might also wonder if the rental demand at 6.1% occupancy rate is sufficient. This percentage suggests that there is a relatively low demand for rental properties in ZIP 61725. However, it's crucial to note that the occupancy rate alone does not tell the whole story. The demand for Section 8 housing is often steady due to the federal subsidy, which guarantees payment up to the FMR. Therefore, while the occupancy rate is modest, the subsidized nature of these rentals means that landlords are less exposed to vacancy risks compared to market-rate rentals.
A final objection could be whether the Housing Choice Voucher Program will keep pace with the market rents, currently at $1,348. The FMR is set annually based on HUD's assessment of local market conditions. In ZIP 61725, the FMR is $1,160, which is lower than the market rent. This discrepancy means that landlords accepting vouchers must ensure they can afford to rent out their units at the subsidized rate. Historically, voucher amounts have adjusted to reflect changing market conditions, though this adjustment is not always immediate. Landlords should monitor local HUD announcements for any changes in the FMR that could affect their rental income.
In summary, while the FMR of $1,160 is close to covering a typical mortgage payment on a $285,765 home, it falls short. The occupancy rate of 6.1% indicates low demand but steady due to the guaranteed payment. Lastly, the gap between the FMR and market rent of $1,348 requires landlords to carefully assess their financial situation before participating in the program. The data provides a clear picture of the challenges and opportunities in ZIP 61725, but it's essential to stay informed about future adjustments in the FMR.
Data Sources: FMR data from HUD (2027). 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.