East North Central Market: IL, OH, WI, IN, MI
Illinois entered 2020 as one of the weakest housing markets in the country due to outstanding tax, pension burdens, and political turmoil. The coronavirus could make the situation even worse, potentially doubling the number of mortgage delinquencies in the state (Illinois Policy). Nearly one in four citizens are out of work, and almost three-quarters of a million jobs were lost. It is likely to compound the state budget issue even further; any investors are smart to ignore potential opportunities, even those popping up in Chicago. The nation’s most stringent stay-at-home orders have led to a slowing of virus spread and the faster reopening of the city, and, in turn, increased sales activity for SFRs, multifamilies, and condos across Chicago.
Columbus began the year as one of the strongest markets in the nation, and remains on pace to be one of the fastest recovered markets, as well. One of the lowest infection rates in the country, plus historically low-interest rates have spurred on buyers, particularly those looking for SFRs in the suburbs of Columbus, with yards, pools, and space- vital in a pandemic when social distancing is the name of the game. With sale prices routinely going higher than the asking price, via New Era Real Estate Group, any foreclosure or short-sale opportunity may be a strong option for investors for a quick flip.
Despite remaining relatively unaffected with COVID cases as opposed to other states, Wisconsin has similarly been impacted by the pandemic with tight inventory. Home sales have declined 20% since approximately since May of last year, and prices have skyrocketed (WPR). Complicating matters, building permits are down 36% for residential projects as of April 2020 (The Daily Reporter). For individuals in the market, any chance to purchase 1-4 family properties that may newly come on the market could yield dividends, particularly as apprehension abounds while people wait to see what the long-term pandemic impact will be.
Strangely, Indiana’s market has remained relatively untouched, according to the Greater Northwest Indiana Association of Realtors, with less than a 10% drop in sales, per the Chicago Tribune. Conversely, sale prices jumped ~13%- but still remain affordable, topping out at ~$180K, well lower than other parts of the country, making the state both a buyer’s and a seller’s market. The close proximity of the area to Chicago (just an hour away), makes it an ideal stepping ground for individuals looking to escape Illinois, yet can still commute and/or work remotely for jobs in the city- not to mention the lakefront location. Investors might make a killing here in Indiana, as opposed to tightened inventory, higher prices, and employment issues in other eastern states.
For years, optimists have seen reason for hope in smaller properties in the city proper area of Detroit, with housing sales down 70% (The Detroit News). The pandemic has largely ravaged the city’s economy, still, centrally build around a few token industries without much diversification. Stay-at-home orders put millions of jobs at stake, and as any smart investors know- investment should follow the jobs. By contrast, throughout the rest of the state, there has been a housing boom. The Greater Metropolitan Realtors Association has seen nearly double-digit mortgage application increases. With reasonable prices, Michigan, likely Indiana, could be another area for flippers to focus on in the coming months.
West North Central Market: IA, KS, MO, NE
The “Silicon Prairie” is helping Iowa rebound through the housing market woes facing the rest of the country. A stronghold for millennials due to an influx of tech jobs and affordability, combined with the quality of life, over the last few years, that trend has only increased with the rise of COVID-19. Tech jobs are famously flexible, allowing workers to be able to work remotely- and from anywhere in the country. With major millennial metro areas such as Florida, NY, NJ, and California seeing massive spikes in virus cases, and more countries transitioning to remote work, places like Cedar Rapids are continuing their increase in popularity. With the average home price in the region clocking in at just $170K (NAR), and the flip or rental purchase could be a steal for would-be investors.
The market is Kansas has been strong, led by a robust burst of activity in Wichita. Interest rates in the area are as low as ~2.85%, but there are only 1.6 months of housing inventory left on the market; in a balanced market, there is 6 months’ worth of homes available. For investors who are used to homes on the east or west coast to be significantly more expensive, an investor picking up a property for roughly $200K, as-is, and adding repairs can easily pay dividends, as properties are going fast, over asking price, and receiving multiple offers in days after showings—all for less than half the cost in other markets.
Nebraska has maxed out at less than 800 COVID-19 cases to this point in the pandemic, making it one of the least impacted states in the country. As a consequence, it’s strong housing market has continued to keep pace. Low-interest rates are spurring applications, and inventory is up ~23% in the closing of the second quarter (House Canary), making moved abundant. While the commercial sector is coming to a screeching halt as companies look to shut down permanent offices and go to remote working full-time, would-be buyers are going to look for larger spaces to isolate work life and home life away from a traditional office. In that case, Nebraska may look to get even hotter in the coming weeks and months.
Virus cases are piling up around the south at the present, but even so, Missouri’s market continues to be strong, particularly in the St. Louis-Metro area. Home sales were only down between 3% and 6% in March and April, respectively, from those same months in 2019 (St. Louis Realtors Association). The area has not been hit as hard by the virus, admittedly, but the governor of Missouri also deemed real estate services “essential,” so while much of the region was staying at home, the market continued onwards. St. Louis suburbs also reported strong demand for occupancy permits throughout the early months of the pandemic. The National Real Estate Investors Association says that with starter homes going for less than $200K a year, and older folks downsizing, the opportunity is available for investors to scope out homes and spruce them up for profit or rent to meet increasing demand.
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