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The Marion median home price is up 7% from last year

The Marion City Council was presented with the findings of its housing needs study during Tuesday night’s work session. (Jim Slociarek/The Gazette)

The median home price in Marion has risen 7 percent in the past year — a “significant” increase, a consultant told the Marion City Council Tuesday.

The median price in the city was $255,000 as of August, according to a housing needs study presented to the City Council.

The study pointed out that while market activity remains robust, it is expected to decline due to rising prices, increased interest rates and continued supply chain issues.

Home supply in the city remains tight and new construction has been hit by supply chain challenges and labor shortages, said Mary Bujold of Maxfield Research and Consulting, which tracked prices from late 2021 to August 2022.

“The increase is significant,” he said. “We’re seeing increases in the upper Midwest, but particularly in Marion, where this percentage increase far exceeds other areas.”

Bujold added that the city has a “critical” shortage of entry-level, for-sale housing.

“Marion has affordable rental options, but vacancies are very low,” he said. “The median home-sale price is rising, reducing options for entry-level buyers.”

The study comes as Marion has seen two decades of strong growth. More recently, from 2010 to 2020, the city experienced a 19.5 percent increase in its population.

Marion’s current population is just over 40,000.

Further, the study projects that the city will add 18.9 percent or 6,565 people by 2020 and another 11.9 percent or 5,700 residents by 2030.

“So Marion needs more housing across the board, but the focus needs to be on filling the gap in the housing stock through diversification of housing products,” Bujold said.

The suggestion doesn’t come as a surprise to city leaders. A similar housing report conducted in 2016 showed a shortage of housing and lack of housing options in the city.

Construction continues on the Broad and Main project in Marion last week. (Geoff Stellfox/The Gazette)

In the past year, a variety of large, multi-family projects have begun construction around the city, from Broad and Main in uptown Marion to the Green Park Apartments replacing the old YMCA, among others.

But there is a greater need, the study finds. Bujold recommended the city’s focus on creating single-family, detached homes on small lots, single-family attached homes such as townhouses, and above-market-rate, mixed-income and affordable rental units.

In July 2022, the vacancy rate for the city’s overall 1,538 market-rate units was 1.3 percent, with an average rent of about $721 per month.

The consultant’s recommendations for units needed by 2030 include 500 entry-level for-sale homes, 595 market-rate rental units and 306 affordable rental units among other types of homes and rental units.

The study pointed out that an estimated 72 percent of Marion renters with incomes below $35,000 a year are cost-burdened — meaning they spend more than 30 percent of their gross income on housing costs.

The median income in Marion is $76,969. Across the Cedar Rapids metro, that number is $66,686.

Forty-four percent of Marion owner households have incomes below $50,000, defined as cost-burdened.

“We see more young people choosing not to buy, even though a lot of national surveys indicate that those people would buy if they could,” Bujold said.

“There is concern nationally that the most significant way to build household wealth is through ownership.”

“We need to evaluate that against our comprehensive and strategic plans and decide with council what we do with this data and how we can provide more incentives to fill the gap in the future,” said city community development director Tom Treharne.

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