The Cedar Rapids real estate market has had the pleasure of benefiting from several national trends. Similar to everywhere else, the Iowa city has seen home values rise in the wake of three very specific indicators: positive sentiment in the real estate industry, a strong economy, and a distinct lack of available housing. While not unique to Cedar Rapids, these three indicators have combined to lift up the local housing market. While real estate in Cedar Rapids is more valuable than it has ever been, however, it has the added benefit of affordability. Despite almost nine consecutive years of price increases, real estate in Cedar Rapids remains affordable. As a result, the city has seen demand grow in the face of recent appreciation, which bodes well for everyone, especially investors.
Cedar Rapids Real Estate Market Overview
Median Home Value: $144,672
1-Year Appreciation Rate: +2.1%
Median Home Value (1-Year Forecast): +2.6%
Median Rent Price: $950
Price-To-Rent Ratio: 12.69
Average Days On Market: 63
Unemployment Rate: 2.5% (latest estimate by the Bureau Of Labor Statistics)
Population: 133,174 (latest estimate by the U.S. Census Bureau)
Median Household Income: $56,828 (latest estimate by the U.S. Census Bureau)
Percentage Of Vacant Homes: 7.02%
Foreclosure Rate: 1 in every 2,260 (4.4%)
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Median Home Price In Cedar Rapids
The Cedar Rapids real estate market has seen its median home values increase for the better part of a decade. Thanks, in large part, to a strengthening economy, positive sentiment in the real estate industry, historically low mortgage rates and a lack of available inventory, median home values have increased year-over-year for nearly nine consecutive years. As recently as the first quarter of 2011, in fact, median home values in the Cedar Rapids housing market bottomed out around $116,000. Since then, median home values have increased 24.7%, and now rest somewhere in the neighborhood of $144,672. To put things into perspective, median home values in the United States increased 46.1% over the same period of time. Today, the median home value in the United States is about $244,054.
It is clear that Cedar Rapids has trailed behind the pace set by national trends, but the last decade has been nonetheless impressive. With that in mind, it is safe to assume the majority of Cedar Rapids’ success within the real estate industry is directly correlated to the same indicators lifting up markets across the country: growing optimism in the real estate sector, improving economic conditions, and a distinct lack of inventory. At the very least, more buyers are able to actively participate in the market thanks to improving working conditions, but there simply aren’t enough homes to meet the added demand. The resulting competition over available listings has served to drive up prices for years.
Prices in the Cedar Rapids real estate market are expected to continue rising for the foreseeable future, to the tune of about 2.6% in the next year. The tempered appreciation rate is not consistent with a decline in market health, but rather a return to normalcy. If for nothing else, there’s simply no more room for prices to continue increasing at their current pace; a temperance has been expected, and it appears to be happening at this very moment.
Cedar Rapids Foreclosure Statistics
According to RealtyTrac, a nationally recognized real estate information company that specializes in distressed properties, Cedar Rapids has a relatively high distribution of distressed properties. With approximately one out of every 2,260 homes in some stage of distress (default, auction or bank owned), Cedar Rapids boasts a foreclosure rate of 4.4%. The United States, as a whole, has a 3.9% foreclosure rate.
Cedar Rapids real estate trends have witnessed a higher foreclosure rate than the national average, and there’s nothing to suggest the trend won’t continue for the time being. Foreclosures in Cedar Rapids have actually risen in the last year. As recently as December, “the number of properties that received a foreclosure filing in Cedar Rapids, IA was 43% lower than the previous month and 80% higher than the same time last year,” according to RealtyTrac. By the real estate information company’s calculations, Cedar Rapids is now home to at least 150 foreclosures. The largest distributions of said distressed homes may be found in the following neighborhoods:
Cedar Rapids Real Estate Investing
Not unlike every other market across the United States, distressed assets have demanded the attention of investors in the Cedar Rapids real estate market. At the very least, distressed assets are most likely in the possession of motivated sellers, which significantly increases the chances of investors not only securing a deal, but securing a deal with attractive profit margins. That said, Cedar Rapids’ relatively high foreclosure rate has been a blessing in disguise for local real estate investors.
The Cedar Rapids real estate market is full of potential, at least when it comes to distressed inventory. In particular, local real estate investors should pay special considerations to pre-foreclosure and auction inventory. Each making up 40.7% of the city’s “distressed” inventory, pre-foreclosures and auctions are the most abundant assets owned by “motivated sellers.”
As their names suggest, pre-foreclosures are the assets of homeowners who have fallen behind on payments. Their inability to keep up with mortgage obligations have placed their homes at risk of falling into foreclosure. Consequently, pre-foreclosures aren’t in foreclosure, but rather at risk of it. Nonetheless, homeowners behind on payments may be more motivated to sell their homes — that, or face falling into foreclosure at a later date. Therein lies the real reason investing in Cedar Rapids real estate remains so attractive: the state’s high distribution of distressed homes suggests more homeowners will be motivated to sell. Those behind on payments are better off selling to investors than losing their properties to foreclosure. For their auction counterparts, investors in Cedar Rapids simply need to attend a local auction. There, investors should be able to bid on homes for less than their market value, and perhaps secure a deal with attractive profit margins.
Of course, knowing where to find real estate deals in Cedar Rapids is only going to take investors so far. Deals need to follow an exit strategy, which begs the question: What should investors do with the properties once they acquire them? Which exit strategies does the Cedar Rapids real estate market cater to the most?
At the moment, Cedar Rapids real estate investors may choose between any of today’s most popular exit strategies: rehabbing, wholesaling, and renting. Current economic conditions suggest each is a viable option in today’s market. However, there are a few indicators tipping the scales in favor of long-term rental strategies.
The city’s historically high prices, for example, have eaten into profit margins. The more homes cost, the less likely investors will be able to acquire deals with attractive profit margins. As a result, Cedar Rapids real estate investors may want to strongly consider building a rental portfolio. Several years of cash flow may easily offset higher acquisition costs, especially in a market as “affordable” as Cedar Rapids. In as little as a few years, investors could make up for the higher purchase prices and still have a cash flowing asset. On top of everything else, inventory remains low, which will force willing and able buyers to continue renting. The lack of available listings will actually work in favor of landlords, effectively making it easier to fill vacancies.
Cedar Rapids Real Estate Market Summary
The Cedar Rapids real estate market has had a hard time keeping pace with national trends. While home values have appreciated for the better part of a decade, foreclosure activity is on the rise. Contrary to the rest of the country, foreclosure activity has increased year-over-year. That said, Cedar Rapids may award savvy investors with affordable inventory. The presence of a high distribution of foreclosures suggests investors may be able to find more deals with attractive profit margins. That, on top of the city’s current demand for housing, should work in favor of the entire market.
Have you thought about investing in the Cedar Rapids real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Cedar Rapids in the comments below.
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