CEDAR RAPIDS — Demand exists for more than 1,000 single-family homes in the Cedar Rapids market over the next five years, according to a new housing market analysis discussed Wednesday.
Single-family homes for sale were by far the biggest demand type in the housing market, according to a draft version of the 2018 Maxfield Research and Consulting housing analysis.
Maxfield found a need for 1,191 single-family homes, 419 market-rate rentals, 348 shallow-subsidy rentals, 77 deep-subsidy rentals, which would include units 30 percent of the median area income or less, and 299 for-sale multifamily units through 2023.
A market for new housing development exists across all types, city officials said.
“Demand in all areas. Strength in all sections,” City Manager Jeff Pomeranz said. “I think it also shows we are on the right track when we are approving projects … There is a need, and therefore it is appropriate the city continues to encourage development of all housing types.”
The city has been commissioning the study since 2011. The latest version updates 2016 findings. The findings can be a resource for developers, but also serve as a gauge for the types of housing developments the city awards public tax incentives.
The analysis suggested building no more than 100 to 125 single-family homes at any given time through 2023, and those would be prudently absorbed and not oversaturate the market. The market could not sustain adding all 1,191 homes at one time, officials said.
Homes sat on the market for just 56 days on average last year, which was down from 67 days in 2016. The average resale price of homes was $164,820.
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“Low inventory has increased prices, pushing some buyers out of the market and making it more difficult for first-time homebuyers to enter the market,” according to the analysis.
On the rental side, vacancy rates are low compared to what is considered a healthy supply of about 5 percent vacancy. The overall rental vacancy rate in Cedar Rapids is 2.3 percent. The vacancy rate is 1.8 percent for low-income units, and many of those properties have waiting lists, according to the analysis.
“We still have a very tight market,” said Jennifer Pratt, the city’s community development director. “It’s not surprising in any way, shape or form that our needs increase for those at the lower end of the income range.”
Population and housing growth in the Cedar Rapids metro has been outpacing growth in Cedar Rapids since 2000. Growth is expected to continue but slow down in the years ahead.
Housing and population growth rates in flood-affected areas are expected to outpace growth in surrounding neighborhoods due to increases in high-density housing downtown, according to the analysis.
Availability of land and proximity to the College Community School District are driving forces in housing growth in the southwest quadrant, City Council member Marty Hoeger said.
Council member Ann Poe said she hopes the city uses the data to encourage development in the northwest quadrant. She noted growth in the northwest quadrant and that flood protection could breed confidence for more development. The extensions of Highway 100 and Ellis Boulevard to Sixth Street NW also should help, she said.
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