Among the 358 Metropolitan Statistical Areas in the latest VeroFORECAST from Veros Real Estate Solutions, the Omaha-Council Bluffs MSA is one of those that straddle a state line. In this case, it’s the border between Nebraska and Iowa.
Because the quarterly VeroFORECAST reports provide 12-month predictions of changing property values for both single-family residences and condo-townhomes at the metropolitan, county, and ZIP code levels, we can look at whether the projections indicate differences between cities and counties in each state.
The Omaha-Council Bluffs, NE-IA MSA ranked 44th of the 358 MSAs analyzed in our third quarter 2018 report, which projects appreciation rates over the year between Sept. 1, 2018 and Aug. 31, 2019.
The average rate at which single-family residences are predicted to rise in value across this eight-county MSA is 6.8%, with condos and townhouses forecast to go up, on average, 7.1%.
Before we dissect that difference over the two states and their counties, some background.
Of the many criteria the VeroFORECAST factors into its data analysis, those most impactful for the Omaha-Council Bluffs MSA were housing supply, unemployment rate, inflation, interest rates and population trends. This North Central U.S. market has a low cost of living that is driving its housing supply down to only 1.6 months and making this a fairly strong market. Its unemployment is also very low, at only 2.9%, for a population that has grown 14% during the past seven years.
That population is predicted to continue its growth well into the next decade, according to a 2017 Omaha World-Herald article. Staffer Jeffrey Robb dove into the demographics of the Omaha-Council Bluffs MSA and reported that “overall, the Omaha-Council Bluffs metropolitan area’s growth continues to come steadily, a bit more than 1% a year. Based on conversations with a research coordinator at the University of Nebraska’s Center for Public Affairs Research, Robb projected that the metro area could grow from its current estimate of 924,129 to over 1 million by 2024 or 2025.
A RIVER RUNS THROUGH IT
Two of the largest U.S. rivers form Iowa’s ragged sides: the Mississippi River to the east and the Missouri to the west. It’s the Missouri that divides Nebraska and Iowa and separates the MSAs five Cornhusker counties from the Hawkeye State’s three.
Of Iowa’s three counties, Pottawattamie, where Council Bluffs is located, is biggest with over 93,000 residents. The other two have a little more than 29,000 residents between them. The average projected appreciation rate across all price ranges of the three counties is more than 7.7% through next August, with virtually no difference between SFRs and condo-townhouses.
Over across the wide Missouri, the market’s five Nebraska counties are anchored by Douglas County, the overwhelming population center with more than 571,000 residents. Omaha is located here, with just under 80% of that population. Second is Sarpy County with over 186,000, followed by Washington, Saunders and Cass, with a combined population of just under 70,000.
The average projected appreciation rate across all price ranges in the Nebraska portion of the market is slightly more than 7%, with a substantial half-percent difference between SFRs at 6.9% and condo-townhouses at 7.5%.
As we mentioned earlier, these differences are partially explained by the cost-of-living differences. The Best Places website has a cost-of-living comparison that shows Council Bluffs is about 5% cheaper than Omaha. The biggest factor in this cost-of-living differential is median home prices, which it shows are 24% cheaper in Council Bluffs.
Population density likely plays a part in this disparity, with more than 826,000 Nebraskans living in the 2,300 square miles that make up its five counties and just 123,000 Iowans spread out over the less-than 2,100 square miles in its three-county half of the MSA.