3rd Quarter of 2024, Des Moines Metro Lot Analysis

For the first time in my life, I’ve had people calling me “coach”. Maybe not so much “calling me” coach… it would more likely be considered yelling “COACH” in slurred, broken English. My team (The Pink Flamingos) is a gang of three- to four-year-olds, representing neighborhoods from all over the capital city, respectively.

This year, these brawlers came together to take on some of the metro’s most elite soccer teams. As one might assume, coaching these three- to four-year-old soccer games is nothing less than the equivalent of trying to herd cats. At least one of the players is crying at all times, lots of handballs, and an immense amount of pushing. However, with all of that adversity, by my count, The Pink Flamingos went 6-0. A perfect season!

Being undefeated as a head coach, especially in this league, is really something to hang my hat on. So much so that the President of the League rewarded me with a “Buy One, Get One Free” beer voucher to the relatively new establishment, Either/Or. It really is the little things in life!

I hate to sound like a broken record, but I can never help but relate chaotic experiences to the real estate industry. When I talk to people in real estate, I inevitably ask “so how’s business?” I’d say 9/10 times the response that I get is “really good, I’ve been really busy.” To which as of late, my response is generally “oh, good for you, man. The land business is really slow. You must be doing something right.” Then the conversation completely reverses and they generally bring up something about interest rates, home prices being too high, and buyers waiting until after the election. Hook… line… sinker.

While there is some truth to all of that, there is much more going on. A few things to point out:

  • First, interest rates. Even though the Fed decreased the federal funds rate by 50 basis points (or ½ percentage point), as of the time of this article being written (10/29/2024), interest rates for a mortgage have actually gone up. This is because mortgage rates more firmly track the 10-year treasury bonds rate compared to the federal funds rate, a fact often overlooked in everyday conversations.
  • Next, home prices being high. I’d mention, from a new construction perspective, that land, materials, and labor are still high. On top of that, homebuilders have been needing to buy down rates to stay competitive, and that has been baked into new construction prices.
  • Finally, stagflation, which is something I’ve mentioned many times in previous articles that I have written. At least in my world of lots and development, stagflation is extremely apparent. There have continued to be new subdivisions being developed, however, when you compare finished lots (single family and townhome lots) from this year, to a year ago, our lot market is virtually the same. 7,055 vacant lots a year ago compared to 7,119 today.

As a teaser for next quarter’s article, building permits for new construction single family and townhomes have also been virtually the same. 2,561 YTD in 2023 vs. 2,524 YTD in 2024. Those similarities are insane to me. For the time being, the lot and new construction market really isn’t going up or down. It’s pretty much flat, and developers continue to chew through the ground that they already own, and builders continue to chew through the lots they own, of which neither are making their typical returns.

Something else that is similar when compared to a year ago is the percentage of all residential listings that are new construction vs. resale. A year ago, new construction made up 43% of all residential listings. Today… 44%.

I always try to study history and look at how “the great ones” handled different real estate cycles. Back in the 1990s, Sam Zell, one of the founders of the modern REIT, would continue to preach the mantra “Stay alive until ’95.” 30 years later, I’ve been hearing in the distance people in the real estate industry yelling “Stay alive until ’25.”

One more thing, do you want to know what the secret is to going undefeated in three- to four-year-old soccer? The trick is that kids at this age get lost in the minutia of dribbling around in midfield. I saw it with every team we played.

So, prior to our games, we would spend all of our practice time dribbling around the goal, and they were instructed that every time I yelled “SCORE, SCORE, SCORE, SCORE”, that it was their job to stop dribbling and immediately shoot the ball and follow up on the shot until the ball was in the goal. That’s it.

So, like the undefeated Pink Flamingos, in the real estate industry, and especially in a slow market, you need to “score” where you can in order to stay alive until ’25!


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.