However, recent history has been in a largely declining rate environment and a period where lenders had a lot of defaulted loans and REO to deal with.

In the other instance, you're speculating that you can sell the property in a year for an $18K profit, which may be a BIG speculation in a declining real estate market.

Which areas of town are declining.

The #1 place they moved was Texas.I’m not thrilled about this trend, but CA can sustain a decline in population so long as there is a correction at some point.

@Vitaliy Pynzenyk Do a declining lease option.

The seller said no sellers credit and already declined low offers. 

I really don't think there will be a "housing crash" let alone in the Midwest market - the areas that are most likely to experience significant declines (if not crashes) are the areas that had huge runups in the last couple of years (Idaho, Arizona, Tennessee etc), Midwest prices haven't really come up that much in comparison and are thus less likely to have any significant fall ahead in my view

Personally we are migrating to Cedar Rapids more as I see Iowa City flatlining in rent rates and I anticipate even a bit of a decline in some pockets/types of rentals.

I actually have tried to help a few of my W-2 job consultants find housing for longterm projects they are working on and had no luck finding and investors that had open properties so I would think demand is still pretty high for the area regardless of the recent population decline.

It's a sketchy neighborhood in a city with a declining population over 2000 miles away from his primary residence.