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, real estate in Cedar Rapids has been able to improve its outlook, 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: lower interest rates, competition, and a distinct lack of available housing. While not unique to Cedar Rapids, these three indicators have combined to lift prices in 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. That said, the Fed’s latest attempt to increase interest rates will impact demand moving forward, which begs the question: Is the Cedar Rapids real estate market a good place to invest in real estate?
Let’s look at what the latest move by the Federal Reserve means for real estate investors in the Cedar Rapids real estate market.
Cedar Rapids Real Estate Market 2022 Overview
- Median Home Value: $206,573
- Median List Price: $211,633 (+10.9% year over year)
- 1-Year Appreciation Rate: +11.8%
- Median Home Value (1-Year Forecast): -0.7%
- Weeks Of Supply: 9.8 (-2.6 year over year)
- New Listings: 81 (-13.8% year over year)
- Active Listings: 696 (-40.5% year over year)
- Homes Sold: 78 (-19.6% year over year)
- Median Days On Market: 10 (-41 year over year)
- Median Rent: $973 (+15.6% year over year)
- Price-To-Rent Ratio: 17.69
- Unemployment Rate: 3.4% (latest estimate by the Bureau Of Labor Statistics)
- Population: 136,467 (latest estimate by the U.S. Census Bureau)
- Median Household Income: $60,787 (latest estimate by the U.S. Census Bureau)
- Total Active Foreclosures: 193
Cedar Rapids Housing Market Trends 2022
Today’s Cedar Rapids housing market trends are directly correlated to the impacts of COVID-19 on the local real estate sector and the Fed’s latest moves to mitigate another housing crisis. More specifically, indicators in the Cedar Rapids real estate market are the result of both microeconomic and macroeconomic stress points. Consequently, the Fed’s latest decision to increase interest rates has dramatically shifted how the Cedar Rapids real estate market operates. The change in dynamics has culminated in the following trends:
- Supply Trends: There are currently about 696 homes listed on the Cedar Rapids housing market. If homes continue to sell at their current pace, today’s inventory will last about 9.8 weeks. At that rate, Cedar Rapids’ inventory most likely won’t be able to keep up with demand. Supply is expected to increase as higher mortgage rates keep more buyers away, but borrowing costs also prevent more homeowners from listing; they don’t want to trade their current rates for new ones. As a result, inventory levels are expected to increase, but at a relatively slow pace for the foreseeable future.
- Home Price Trends: Price activity in the Cedar Rapids real estate market mirrors that of the national market. Prices have risen for the better part of a decade, with the fastest pace taking place over the last two years. A distinct lack of supply and relatively low mortgage rates spurred a lot of buying activity when supply couldn’t keep up. As a result, competition drove up home values at a historic pace. Moving forward, activity is expected to slow from higher mortgage rates, but competition will remain intact and drive prices up at a slower pace.
- Interest Rate Trends: Mortgage rates have risen steadily for the better part of 12 months. However, the Fed’s latest attempt to combat inflation has witnessed a historic increase in rates. More than doubling year-to-date, the average commitment rate on a 30-year fixed-rate mortgage is just south of seven percent. The increase has already decreased mortgage applications in the Cedar Rapids real estate market and should continue to do so as long as the Fed keeps tightening.
- Investor Trends: Years of appreciation have driven most Cedar Rapids real estate investors to invest in long-term rental properties. Low borrowing costs enabled investors to offset higher acquisition costs and increase monthly cash flow. With prices near record highs, the rental exit strategy remains viable, but the recent increase in foreclosures suggests investors may start looking at flips and rehabs again. On the rise, foreclosures may allow investors to buy homes below market value and flip for a generous profit.
