Highlights from this report:
- Des Moines, Iowa was recently named one of the best cities for younger home buyers.
- The Des Moines housing market is still relatively affordable, as of summer 2019.
- The city benefits from a strong job market with low unemployment.
- This real estate market is ideal for first-time buyers with limited funds.
- But inventory in the area remains low, so buyers will face competition.
Des Moines, Iowa made a recent appearance on a list of the “Top 20 Cities for Young Home Buyers” (including millennials). The list was created by Clever, a company that connects home sellers with local real estate agents.
To quote that report:
“Cities like Des Moines and Omaha have emerging job markets with affordable housing prices and high standards of living — in other words, these under-the-radar options deserve a serious look from millennial home buyers.”
We were curious to know why Des Moines, Iowa was named one of the best housing markets for younger buyers. So we conducted our own analysis of the local economy and real estate scene in that city.
The short version: With a low median home price and strong job market, Des Moines might be an attractive housing market for first-time and younger buyers alike (especially those with limited funds).
But it’s not necessarily a “buyer’s paradise.” As of summer 2019, the Des Moines real estate market was still suffering from a shortage of supply. That, combined with steady population growth and increased housing demand, could lead to fierce competition among home buyers through 2019 and into 2020.
Still, for those who are seeking a city that offers affordable housing costs and a strong local job market, Des Moines deserves a spot on the short list.
Here’s an up-to-date look at current real estate trends in the city, with a housing market forecast extending into 2020.
Des Moines: Affordable Homes for Cash-Strapped Buyers
As of late summer 2019, the median home value in Des Moines, Iowa was around $144,000. That was quite a bit lower than the median for the nation as a whole, which was closer to $230,000 during the summer.
The Des Moines real estate market is expected to continue rising into 2020 as well, though possibly at a slower pace. In August 2019, the housing research team at Zillow made the following prediction:
“Des Moines home values have gone up 6.3% over the past year and Zillow predicts they will rise 3.5% within the next year.”
This particular forecast stretches into the summer of 2020. Granted, it’s the equivalent of an educated guess. But it mirrors trends we are seeing in many housing markets across the country. Home-price growth is slowing in many cities, and even starting to dip in some areas.
But given the supply-and-demand situation in Des Moines, it seems likely that house values will continue to climb through the end of 2019 and into 2020. At present, there aren’t enough homes on the market to meet demand. And that is putting upward pressure on home prices across this metro area.
Strong Job Market Attracts New Residents
The real estate market in Des Moines is getting a boost from the strong job market in that area, as well.
According to the U.S. Bureau of Labor Statistics, the metro area had an unemployment rate of around 2.5% in summer 2019. That was more than one percent lower than the nation’s jobless rate during that same period.
The strong job market in Des Moines supports the local real estate market in two ways:
- It gives residents the financial means to buy a home and keep up with their mortgage payments.
- It helps to attract new residents from elsewhere in the country, thereby increasing demand for housing.
The population of Des Moines has grown steadily over the past decade or so. The latest Census Bureau figures show that the city’s population grew by more than 6% from April 2010 to July 2018. This increases demand for housing on both the rental and purchase side, thereby supporting property values.
Low Inventory Could Be Challenging for Buyers
Home buyers considering a purchase in the Des Moines housing market should know that inventory remains tight in this area. As a result, buyers have to compete with one another for a limited number of homes.
As of July 2019, this market had less than a three-month supply of homes for sale. That’s quite a bit lower than the five- to six-month supply level that’s considered to be a “balanced” market. This is a trend in many cities across the U.S., actually.
So, from a supply standpoint, the Des Moines real estate market still tends to favor sellers over buyers. Affordability is a big plus in this market, from a buyer’s perspective. But inventory is lacking.
It doesn’t help that recent changes to the city’s building codes have led builders to pull back from construction.
According to a July 31 article in the Des Moines Register, zoning code changes that were “intended to make it easier for developers to build in Iowa’s capital city would instead halt construction of new single-family homes, local developers are warning.”
The bottom line here is that inventory is currently constrained within the Des Moines housing market, and that could carry over into 2020. As a result, buyers will want to give themselves plenty of time to find a suitable property and might want to consider surrounding areas as well.
Disclaimer: This story contains forecasts and predictions issued by third parties not associated with the Home Buying Institute. Such projections are the equivalent of an educated guess and should be treated as such. HBI makes no claims about future housing market conditions.