Cedar Rapids, IA Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Tue, Aug 24 2021

Jump To Another Year In The Cedar Rapids Real Estate Market:


The Cedar Rapids real estate market has done everything in its power to put the latest recession in the rearview mirror. For the better part of a decade, in fact, real estate in Cedar Rapids has been able to improve its outlook, and that’s including the latest setback created by the pandemic. While it still has a ways to go, encouraging improvements have been put in motion to lay a strong foundation for the future of the Cedar Rapids real estate market.

Like everywhere else, values have risen in the wake of three particular indicators: positive sentiment in the real estate industry, a strengthening economy, and a distinct lack of available housing. While not unique to Cedar Rapids, these three indicators have combined to lift the local housing market. 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 2021 Overview

  • Median Home Value: $164,220

  • 1-Year Appreciation Rate: +11.2%

  • Median Home Value (1-Year Forecast): +8.5%

  • Homes For Sale: 260

  • Months Of Supply: 1.0

  • Pending Sales: 315

  • Closed Sales: 376

  • Days On Market: 12

  • Median Rent Price: $834

  • Price-To-Rent Ratio: 16.40

  • Unemployment Rate: 5.5% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 133,562 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $58,511 (latest estimate by the U.S. Census Bureau)


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    Cedar Rapids housing market trends

    Cedar Rapids Real Estate Investing 2021

    The Cedar Rapids real estate investing community has adapted to a constantly evolving marketplace for years, and the last 12 months have been no exception. In fact, this time last year, investors in Cedar Rapids were focused primarily on rehabs and flips. Profit margins remained intact despite years of appreciation, and distressed homeowners provided enough inventory to run a viable investing business. Fast forward to today, however, and the market looks completely different.

    Since the Fed introduced lower rates to combat inactivity in the first quarter of last year, demand has increased exponentially. More buyers than anyone could have imagined began to actively participate in the market to take advantage of historically low borrowing costs. Today, the average commitment rate on a 30-year fixed-rate mortgage is about 2.87%, according to Freddie Mac. While up year-to-date, rates are still attractive enough to encourage more buyers to go shopping.

    However, it is worth noting that the demand created by lower borrowing costs greatly outweighed supply; there are too many people looking to buy and not enough homes. As a result, homeowners have increased their prices accordingly. Since rates were initially dropped, the median home value in Cedar Rapids has increased nearly ten percent; that’s in addition to the previous eight years of appreciation seen in Cedar Rapids. Suffice it to say: real estate in Cedar Rapids is growing more expensive by the day. In just one year, real estate in Cedar Rapids has appreciated an average of 11.2%.

    Where rehabbing once reigned supreme, long-term rental properties became the new norm. Investors began trading expensive rehabs for long-term rentals as soon as prices got too high. For starters, the profit margins on flips weren’t where they used to be. Investors were taking on too much risk with how much the market had appreciated. Secondly, interest rates are now low enough to help offset acquisitions acquired through traditional mortgages. With rates just under three percent, investors can increase their monthly cash flow from properties placed in operation. If for nothing else, lower monthly mortgage payments mean investors get to retain more of the rent they collect.

    Last but certainly not least, Cedar Rapids’ price-to-rent ratio is leaning in favor of local rental property owners. At 16.40, the local price-to-rent ratio suggests it is more affordable to rent a home in the Cedar Rapids real estate market. The resulting affordability should both attract more renters and increase competition. Not unlike how competition drove up home values, demand for rental units will allow rental property owners to increase prices. At the same time, demand should mitigate the risk of vacancies, making the prospect of owning a rental property that much more attractive.

    To be clear, the Cedar Rapids real estate investing community still has the opportunity to flip homes. This is because the city, as a whole, is still relatively affordable compared to its national counterparts. However, new indicators created in the wake of the Coronavirus have made rental properties more viable than ever, and it’s time investors considered adding them to their own portfolios.

    Foreclosure Statistics In Cedar Rapids 2021

    Foreclosures have been down on a national level for more than a year, due largely to government assistance and forbearance programs. Following the introduction of the Coronavirus, safety nets were put in place to prevent many people from losing their homes in tough financial times. As a result, foreclosures declined across the entire country.

    According to Attom Data Solutions’ Midyear 2021 U.S. Foreclosure Market Report, “there were a total of 65,082 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — in the first six months of 2021. That figure is down 61 percent from the same time period a year ago and down 78 percent from the same time period two years ago.”

    With the light at the end of the tunnel growing brighter and the economy starting to expand, however, assistance is nearing its end. It is only a matter of time until we see an influx of distressed homeowners file for foreclosure.

    “The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

    Foreclosures will increase sooner rather than later, and the Cedar Rapids real estate market is no exception. However, there’s reason to believe real estate in Cedar Rapids may be in a better place than most cities across the country.

    “We’ve actually been experiencing a decrease in our mortgage delinquency in the last 12 months in comparison to the previous 12 months,” said Christina Christensen, account resolution manager for Veridian Credit Union, which has 30 offices in Iowa and eastern Nebraska. “That’s a bit of a surprise coming off a pandemic.”

    Thanks, in large part, to creditors working with borrowers to defer payments and waive fees, the Cedar Rapids real estate market could be better off than most. That’s not to say there won’t be any foreclosures over the course of 2021, but rather that Cedar Rapids has taken the necessary steps to keep its homeowners financially stable in an unstable time.

    Median Home Prices In Cedar Rapids 2021

    The Cedar Rapids real estate market has seen its median home value increase since 2012. Thanks 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 over a decade. As recently as the first quarter of 2011, in fact, median home values in the Cedar Rapids housing market bottomed out at around $116,000. Since then, median home values have increased 41.5% and now rest somewhere in the neighborhood of $164,220, which bodes well for the Cedar Rapids real estate investing community.

    To put things into perspective, median home values in the United States increased about seventy percent over the same period of time. Today, the median home value in the United States is about $298,933. Following years of appreciation, it would appear that real estate in Cedar Rapids is still relatively affordable.

    The biggest increases in the Cedar Rapids real estate market have taken place in the last year. Due to government stimuli, increased savings, and historically low interest rates, more people are looking to buy than in previous years. However, with only a month of inventory, there aren’t enough listings to keep up with demand. The resulting competition has driven prices up 11.2% in the last year. Consequently, prices are expected to continue rising for the foreseeable future. Today’s forecasts are calling for homes to appreciate by another 8.5% over the next 12 months.

    Cedar Rapids Real Estate Market: 2020 Summary

    • 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%)

    Cedar Rapids Real Estate Investing 2020

    Long-standing Cedar Rapids real estate trends were interrupted in the first quarter of 2020 when COVID-19 was officially declared a pandemic. Before the introduction of the Coronavirus, for that matter, real estate activity in Cedar Rapids appeared healthier than at any point in the previous decade. Nonetheless, the impact of the Coronavirus on the real estate market changed just about everything, not the least of which includes the way investors did business.

    The new marketplace created in the wake of the pandemic directed investors away from traditional rehabs and towards long-term investments. In particular, the Cedar Rapids real estate investing community looked to rental properties to compensate for changing indicators. Rental properties enabled investors to take advantage of the lower borrowing costs put in place by the Fed. Rates were so low, in fact, that they simultaneously helped offset years of appreciation and increased monthly cash flow from properties placed in operation. At the very least, lower monthly mortgage payments meant investors could increase profits from tenants.

    That’s not to say investors couldn’t flip homes in Cedar Rapids in 2020. On the contrary, those lucky enough to find homes below market value were the lucky beneficiaries of attractive profit margins. However, as prices rose, coming across worthwhile profit margins became harder and harder. As a result, investors turned their attention to rentals; they weren’t the only game in town, but new indicators created by the pandemic made them the most viable exit strategy.

    Cedar Rapids Real Estate Market: 2016 Summary

    • Median Home Price: $157,000

    • 1-Year Appreciation Rate: 4.7%

    • 3-Year Appreciation Rate: -4.6%

    • Unemployment Rate: 4.0%

    • 1-Year Job Growth Rate: 0.9%

    • Population: 128,429

    • Median Household Income: $54,465

    Cedar Rapids Real Estate Investing 2016

    Cedar Rapids real estate news was turning positive in 2016. Home prices and appreciation rates slightly improved during the first half of the year, with real estate prices growing relative to the previous year. On the flip side, home prices and appreciation rates remained below the national average, with price trends undercutting the steady post-recession price trend in the previous three years. Nevertheless, the Cedar Rapids real estate market made positive headway in the first half of 2016, and the trend has continued today.

    A variety of factors helped real estate in Cedar Rapids in 2016. Home affordability was impressive during the first six months of the year, as homeowners nearly paid half as much as the rest of the country. Other positive notes included improvements to the local economy and new housing construction, which continued to achieve small gains in the right direction. While below the national average, improvements favored Cedar Rapids real estate investing at the time.

    The median home price was $157,000 during the second quarter, compared to the national average of $239,167. Home appreciation also experienced improvements in the second quarter. One-year appreciation rates reached 4.7%, while three-year rates were -4.6%. In the last three years, price trends have undercut the steady post-recession price trend, yet price appreciation in the last three years has helped homeowners build equity.

    The highlight of the Cedar Rapids housing market in the second quarter of 2016 was home affordability. Homeowners paid 6.8% of their income to mortgage payments, compared to the national average of 15.8%. As a result, Cedar Rapids was among the most affordable areas in the country at the time. Conversely, the rate of new housing construction declined during that period. The level of construction was 17.1% below the long-term average. At the same time, the number of single-family housing permits also declined during the same period, dropping -8.7% compared to the national average of 10.6%.

    Cedar Rapids Real Estate Market: 2015 Summary

    • Median Home Price: $156,900

    • 1-Year Appreciation Rate: 10.4%

    • Unemployment Rate: 4.4%

    • 1-Year Job Growth Rate: -0.4%

    • Population: 125,450

    • Median Household Income: $49,298

    Cedar Rapids Real Estate Investing 2015

    In 2015, the median home price in Cedar Rapids was $156,900. The national average, on the other hand, was $203,867. Despite the price difference, the city was making moves to close the gap. Between 2014 and 2015, appreciation rates reached as high as 10.4%. The national average was somewhere around 6.7%.

    Cedar Rapids was a soft buyer’s market at the time, as great deals on homes are widely available. The number of homes listed for sale was greater than the number of homes being sold, suggesting that demand was not where many would have liked it. However, rent prices were relatively stable in 2015, and availability wasn’t an issue for tenants.

    The economy was a bit more polarizing in 2015. While unemployment was well below the national level, 4.4% and 5.5%, respectively, job growth was less than encouraging. In one year, Cedar Rapids managed to drop its unemployment rate by nearly one whole percentage point. While the rest of the country added jobs at a clip of 2.1%, Cedar Rapids actually lost jobs. Quite simply, local employment growth was poor and needed to improve.

    Despite appreciating at a higher rate than the national average, Cedar Rapids real estate was more affordable than most markets across the country. In fact, homeowners in the area spent about 7.1% of their income on monthly mortgage obligations at the time; the national average was more than double that.

    Cedar Rapids County Map:

    Map of Cedar Rapids neighborhoods

    Cedar Rapids Real Estate Market Summary

    The Cedar Rapids real estate market has endured a particularly rough year, not unlike everywhere else. The pandemic threatened to bring about an end of nearly a decade’s worth of progress in one fell swoop. However, real estate in Cedar Rapids has continued on. As we get closer to the light at the end of the tunnel, all indicators are moving in the right direction. Employment is improving, enabling more people to participate in the market, and builders are already working hard to add more inventory. All things considered, the Cedar Rapids real estate market has done quite well, given the circumstances, and the future looks promising.

    Have you considered investing in the Cedar Rapids real estate market? To what degree does Cedar Rapids real estate investing interest you? We would love to know your thoughts on real estate in Cedar Rapids in the comments below:


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    Sources

    https://www.zillow.com/cedar-rapids-ia/home-values/
    https://www.zillow.com/home-values/
    https://www.zillow.com/research/data/
    http://marketstatsreports.showingtime.com/IR_11msx3/sst/202107/Cedar-Rapids-Area-Association-of-REALTORS.pdf
    https://www.apartmentlist.com/research/category/data-rent-estimates
    https://www.bls.gov/eag/eag.ia_cedarrapids_msa.htm
    https://www.census.gov/quickfacts/fact/table/cedarrapidscityiowa/PST045219
    https://www.attomdata.com/news/most-recent/attom-mid-year-2021-u-s-foreclosure-market-report/
    http://www.freddiemac.com/pmms/pmms30.html
    https://www.thegazette.com/government-politics/wave-of-foreclosures-not-anticipated-in-iowa-as-moratorium-expires/

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