2nd Quarter of 2024, Des Moines Metro Lot Analysis
I’ve been a board member of Polk County Housing Trust Fund (PCHTF) for about a year-and-a-half now. It’s a great board to be on. In a nutshell, PCHTF is an organization that allocates community funds to help with affordable housing projects and services throughout Polk County. Advocacy for housing some of our community’s most vulnerable residents is something that I can absolutely get behind.
Being a part of PCHTF also opens doors to other advocates for affordable housing. I was recently at a PCHTF event and was able to talk to a friend of mine that is in real estate. I asked them what I ask most people that I encounter that are in real estate, “So how’s business?” I got a very common response, “Good, lots of activity out there.” I responded by saying “Interesting, land sales have been pretty slow.” To which I got the response “Yeah… well I’d say things are busy with people out looking. I don’t know, it seems like a lot of people are getting out of the business.”
The last couple of years have just seemed like a long squeeze. Sales are still happening, but it really doesn’t seem like they’re happening with “confidence”. Many buyers seem to be waiting for some form of correction, or at least relaxation, while sellers hope to keep the market moving in the “right direction”.
I think this is reflective in recent activity of the Des Moines Metro’s new construction and lot transaction numbers.
The first graph shows second quarter lot sales for the years 2018—2024. 2024 numbers are up from a year ago, however, it should be noted that a good percentage of these lot sales are not standard, “arms-length” transactions, as many of them are builders teaming-up with other builders or investors to develop lots and essentially sell the lots to themselves.
The next graph shows the number of second quarter, new construction permits (single family and townhome) for the years 2018—2024. Permits are actually down to their lowest numbers since the pre-COVID era.
Finally, second quarter, new construction sales. At least for the second quarter of the year, there is not a whole lot of volatility during this period over the seven-year time frame.
Similar to the last couple of years, indicators are all over the place. There’s a good chance we will see a rate cut in September, but it won’t likely be more than 25 basis points, and with where interest rates are currently at, that probably won’t help much. In addition to that, we are currently in somewhat of a chaotic political landscape, which makes forecasting our future real estate environment difficult. Things could remain stagnant through the fall and winter because of this uncertainty.
Like my colleague at the PCHTF event, I see it happening too. I think a lot of professionals are going to fall out of real estate. Being on the “land side” of real estate, I get to talk to a lot of people… builders, developers, landowners, Realtors, commercial agents, lenders, property managers, etc.
I kid you not when I say that over 16 years in the business, that I’ve had to have said this over 100 times “Real estate is cyclical and has peaks and valleys. You can’t get too high when things are good, but you also can’t get too low when they aren’t. You just keep moving forward.”
Nathan Drew, Broker/Owner of Drew Realty, a lot and development ground brokerage, has been in the business of lot and land acquisition and disposition since 2008. He keeps an ongoing inventory of all vacant lots and land throughout the Des Moines Metropolitan Area, and puts together a quarterly email blast with an interpretation of the metro’s lot market. Email Nathan to join his email blast list at Nathan@DrewRealtyUSA.com and follow him on Twitter @DrewRealtyUSA, on Facebook @DrewRealty, and on Instagram DrewRealty.