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10 Reasons To Invest In Davenport Iowa Real Estate Market

Davenport, IA Real Estate

Davenport is a mid-sized real estate market in Iowa, home to around a hundred thousand people. However, Davenport is part of a larger ‘Quad Cities Metropolitan Area’ that includes Davenport and Bettendorf in Iowa, and Rock Island, Moline and East Moline in Illinois. Davenport is the third-most-populous city in Iowa. The Quad Cities region has a robust housing market, depending on which side of the river you land. Let’s look at a number of reasons to invest in the Davenport Iowa Real Estate over its neighbors.

davenport iowa real estate

Pic Credit – Pixabay.com

Davenport, IA Real Estate Market Trend And Forecast 2018

According to the Quad City Times, the average sales price for a home in Davenport and Bettendorf was $192,200. In Rock Island and Moline, it was $108,100. Josh Patrick, a business development manager at LeaderOne Financial Corp. in Davenport, said the housing marker in the Quad Cities is doing well compared to other similar-sized markets. The Quad Cities is a great place to live, and if you look at the growth on both sides of the river, as evidenced by the amount of new retailers in the area.

According to Zillow.com, the median home value in Davenport is $124,000. Davenport home values have gone up 0.7% over the past year and their Davenport real estate market forecast is that they will rise 0.8% within the next year. The median list price per square foot in Davenport is $122, which is higher than the Davenport Metro average of $119. The median price of homes currently listed in Davenport is $150,000. The median rent price in Davenport is $1,038, which is higher than the Davenport Metro median of $1,000.

Davenport ia real estate market trend and forecast

Graph Courtesy – Zillow.com

Foreclosures will be a factor impacting home values in the next several years. In the Davenport iowa real estate market, 0.7 homes are foreclosed (per 10,000). This is lower than the national value of 1.6 The percent of delinquent mortgages in Davenport is 1.9%, which is higher than the national value of 1.6%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Davenport homeowners underwater on their mortgage is 11.8%.

According to Trulia.com, Davenport housing market trends indicate a decrease of $13,000 (-9%) in median home sales over the past year. The average price per square foot for this same period fell to $107, down from $113. It has
has 379 resale and new homes in Davenport housing market, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. Real estate market trends in Davenport show  0% rise in median rent per month.

  • Median Sales Price in Davenport: The median sales price for homes in Davenport for Mar 28 to Jun 27 was $130,000 based on 59 home sales.
  • Average price per square foot in Davenport: It was $107, a decrease of -5% compared to the same period last year.
  • The median rent per month in Davenport: For apartments in Davenport for May 27 to Jun 27 was $1,000.
Davenport ia real estate market data 2018

Graph Courtesy – Trulia.com

10 Reasons To Invest In Davenport Iowa Real Estate Market

Demographic Momentum

Davenport has a somewhat younger population than the rest of Iowa. The median age in this town is 35, while the average age for the rest of the state is closer to 40. A quarter of the population is under 18. The city has a stable age distribution; it contains many families with children who are likely to grow up to buy homes in the same area. The population grew about 3% between 2010 and 2017. This is a stable market given that many other Midwestern states. And the Davenport Iowa real estate market is not suffering the slow decline due to depopulation hitting more rural markets.

Davenport Real Estate’s Affordability

The average household income is just below $50,000 a year while the median property is worth around $120,000. Affordability calculators would say that you could afford to buy a home up to $200,000 at that income level, making Davenport an affordable real estate market for those who live here as well as outside investors. For someone who puts almost no money down in real estate investing, this equals a $1500 monthly payment. Payment and interest would equal a thousand a month. PMI, insurance and taxes add another $500 a month in costs. While this housing market is, in general, affordable, a large minority in this market cannot afford the average home and end up renting instead.

The Affordable Upscale Market Potential

We brought up the median home price hovering around $200K. However, this is a fair sized metro area, and it is large enough to support a modest collection of upscale homes. Fewer than half of one percent of homes in this market cost more than a million dollars. Luxury homes here are found for $600,000 and up. This means that you could buy executive homes to rent in this market for the price of small condos in more expensive markets like Miami, New York City or anywhere in California. The best market for these homes is are those relocating to work for defense contractors in the area.

Davenport’s Solid Rental Rates

Rental rates in Davenport, Iowa certainly give landlords good profit margins if they manage things right. According to Census data, the median home owner without a mortgage has median monthly costs of $442. The median gross rent between 2012 and 2016 was $715. That alone would yield more than $200 per month in cash flow. This does assume that one buys the property cash, but larger single family detached homes would command higher rental rates as well, yielding similar if not better cash flow numbers.

The Continual Demand for the Foreseeable Future

A steady-state market with a large percentage of renters is something of an ideal situation for investment real estate buyers. A deteriorating market risks owning homes you can neither rent out nor sell.  Housing affordability improves when median incomes in an area are rising, and Davenport’s median income is inching up along with inflation. While people can continue to afford their apartments or homes, there isn’t a boom in jobs and spike in wages to allow many to move up and out. However, the low unemployment rate means that people will remain in the area due to the job opportunities and remain able to pay their rent.

Limited Supply of New Properties

A hot market risks buying investment properties at the top of the market before values go down, while strong demand means that new units will come onto the market as quickly as possible, eventually eroding profit margins. Davenport’s new home construction rate is essentially nil; no one is building out to try to meet growing demand, so this issue will never undercut cash-flow for landlords. Currently, Zillow has 511 homes for sale and 321 homes for rent in Davenport, IA real estate market.

Hot Student Market For Rentals

A good source of renters is the local college. The Davenport Iowa real estate market is perfect for those who want to rent to students, since there are more than a dozen colleges within fifty miles of downtown Davenport. Schools range from technical colleges and community colleges to the Palmer College of Chiropractic and a campus of Purdue. St. Ambrose University alone has over a thousand students.

The Military Market

The Davenport Iowa real estate market is unusual for not only having a large student market but a fairly large population of military families as well. This is due to its proximity to Rock Island Arsenal. Military families tend to rent because they know they could be moved hundreds of miles away with the next deployment.

The Flight from Illinois

Iowa is blessed with affordable real estate and equally affordable property taxes. Illinois’ leadership seems intent on driving out home owners by continually raising property taxes. Illinois residents already pay the second highest property tax rates in the nation. The effective property tax rate they pay is just over 2% annually. A proposed statewide 1% tax on all properties would add another percentage point to that bill. The tax would be used to pay down Illinois’ incredible pension debt, so it isn’t going to go away soon. If passed, that would make Illinois property taxes the highest in the nation.

This means that investors who want to buy property in the Quad Cities area should buy in Davenport, since the taxes will be lower for the foreseeable future. And if property taxes get bad enough, people will start selling properties like mad on the Illinois side and move to Davenport. In short, Illinois’ woes are good news for the Davenport Iowa real estate market.

The Landlord Friendliness

Illinois is a “renter-friendly” state. If someone isn’t paying their rent, the laws protect them. While Iowa isn’t the most landlord-friendly, if you want to own rental properties, you should do so in the market more favorable to the landlord. In the case of the Quad Cities market, this means buying property in Davenport, across the Illinois state line. A side benefit of the Davenport Iowa real estate is that you’re far from the “me-too” real estate restrictions that seem to hit Chicago’s suburbs every time they think they’ve got a good idea to help renters.

Should You Invest In Davenport Iowa Real Estate?

Davenport, Iowa offers a large, stable population that includes a disproportionate number in two classes guaranteed to rent: students and military families. However, its large and diverse employment base ensures a steady supply of renters and stable real estate market. Norada Real Estate Investments helps take the guesswork out of real estate investing in the Quad Cities real estate market. Their rental properties for sale in Davenport have a high Cap rate and good appreciation potential. Also, the above mentioned real estate market data and trends suggest that you should think of putting your money down in Davenport Iowa investment properties. The Davenport housing market is a growing market. with diversified economy and employer base.

You can read about our comprehensive real estate market overview of the cities given below:

If you are a beginner in rental property investing, it very important to read some best real estate books out there and learn from the savvy investors who have made fortunes by investing in some of the best real estate markets like Orlando Real Estate Market and Kansas City Real Estate Market. We also recommend these hottest real estate markets 2018 for investors looking to build their portfolio of single family rental homes. Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.

References:

Demographics
https://datausa.io/profile/geo/davenport-ia/
https://www.census.gov/quickfacts/fact/table/davenportcityiowa/PST045217
Note: Census data also says low to no building permits
Affordability calculators
https://www.zillow.com/mortgage-calculator/house-affordability/
Colleges in and around Davenport
http://www.collegesimply.com/colleges-near/iowa/davenport/
Illinois property taxes
http://www.chicagotribune.com/classified/realestate/ct-re-0408-property-taxes-primer-20180402-story.html
https://www.illinoispolicy.org/proposal-make-illinois-property-taxes-highest-in-the-nation-to-pay-state-pension-debts/
Landlord friendly
https://www.ezlandlordforms.com/articles/educational/2/176/the-country-s-best-places-to-invest-in-rental-properties/
Luxury home price threshold
https://www.melfosterco.com/quad-cities-luxury-homes-for-sale.aspx
Military contractors
http://quadcitieschamber.com/locate-start-grow/locate/targeted-growth-sectors/defense

Market Forecast & Trends                                                                                                      https://www.trulia.com/real_estate/Davenport-Iowa/market-trends                          https://www.zillow.com/davenport-ia/home-values/                               https://www.trulia.com/real_estate/Davenport-Iowa

*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified.


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