Local Trends in Real Estate
Local experts discuss current and future trends in the real estate market.
What is happening in the local real estate market? What effect does the current rise in the interest rate have on current and potential home buyers? Are they forging ahead? Or are they holding back, waiting to see what will happen?
We talked to four veteran Realtors® to get their assessments on what is taking place in the Des Moines metro market. They have weathered storms and bright spots as the Des Moines market has expanded in all directions.
See what they have to say.
Tom Butler
Realtor® | Coldwell Banker Mid-America
Ask Tom Butler about the state of real estate, and he offers a quick, one-word response: “tricky.” Inventories remain low because there are just not enough homes for sale on the market. Prices are not expected to come down. With low inventories, labor shortages, and new construction cost increases, prices are likely to continue to rise. As for rates, they go up and down, but it is not expected that we will see 2.5% again.
Butler, a Realtor® for 16 years, has been around the market, first in the mortgage business and then as a builder, so he knows the market from all aspects.
He says, “Some experts say the rates might come down next year and settle around 5%, maybe slightly higher or lower. Home buyers need to remember that rates under 4% were an anomaly, not the norm. Those rates are not forecasted to return.”
If inflation comes down, rates could come down to around 5%, he notes. But if inflation rises, interest rates will hold at current levels or even increase.
Waiting to buy is a risky strategy. If consumers want to make a move, they should consider starting the process now. The consensus is that home prices will continue to increase.
As for how long homes stay on the market before selling, Butler says that sales are all over the board. He notes that some homes under $300,000 might sell in under a week. Those ranging from $300,000 to $700,000 might be on the market for a month or two. New-construction homes continue to make up over half of the total homes on the market and are selling, but buyers are being very selective.
The key to selling in a reasonable amount of time is pricing your home appropriately. “During COVID, we would get multiple offers. Buyers would waive inspections and appraisals. This is not happening now,” he says.
“One of our biggest struggles to keep inventories up is labor. It is hard to get enough qualified field staff to keep up with the building.”
Butler lives in Ankeny but is active in all the metro-area communities. “There is good activity in all four directions around the metro. Ankeny’s phenomenal growth has come from various factors. The city is positioned well with such easy access to I-80 and I-35. Also, the city leaders are all for growth. And the geography surrounding Ankeny makes development accessible and affordable.
“Even with the accessibility of information and online tools, there probably has never been a more important time for buyers and sellers to be represented by a professional. Whether building, buying, or selling, an experienced professional that is in your corner could make the difference between a successful transaction and a nightmare plagued with hard feelings and legal ramifications.”
Tom Butler
Coldwell Banker Mid-America, Ankeny | 2425 North Ankeny Boulevard | Ankeny
Tom@TomButler.com | 515.491.1561
Tammy Heckart
Realtor® | Re/Max Concepts
“After 22 years in this crazy business, I have learned that real estate markets can vary based on the location and economic factors. Considered a long-term investment option, real estate tends to go through cycles of ups and downs. Interest rates, economic growth, housing supply and demand, and government policies can influence the ever-changing market,” says Tammy Heckert.
The real estate market also differs among regions, cities, and neighborhoods, so buyers need to consider local market conditions. Some areas may experience high demand and limited supply, which leads to rising prices and competitive markets. Other areas may face slower growth or even declining values, she explains.
Interest rates play a huge role in the market, she says, influencing borrowing costs and defining buying power or affordability for potential buyers. When interest rates are low, people can be encouraged to enter the market and take advantage of favorable financing conditions and purchase higher-priced and perhaps larger homes.
“Interest rates affect affordability. Obviously, with lower rates, your buying power is better,” she points out. “With that being said, everyone needs to live somewhere. What do they say? ‘Fall in love with the home; date the rate.’ You can always refinance as rates come down, but you may only have that one opportunity to buy that special home that you love.”
“I feel that the Des Moines metro area remained strong during COVID. I know that we as real estate agents were deemed a necessity, continued to work and was definitely the busiest I have seen in years.”
She says the demand for homes increased as individuals’ employment changed to more people needing a home office. Children were at home with online learning and families gathered at home versus going out created the need for more space.
In resale vs. new construction, resale homes move quickly because there are fewer of them. New-builds move more slowly but remain steady. Costs have not come down. Heckart says that many builders have partnered with lending institutions to offer financing or reduced prices, but overall, sales have remained steady.
She moved to Ankeny in 1999. “Two business communities, Ankeny and Waukee, over the past five years have increased around 9,000 people to date. I have come to love this town. There is not a time I go to dinner or lunch in Ankeny that I do not run into someone I know. I love that!”
Tammy Heckart
RE/MAX Concepts, Ankeny | 1360 SW Park Square Drive | Ankeny
Tammy@TammyHeckart.com | 515.778.8807
Scott Steelman
Realtor® | Iowa Realty
While lots of cities suffered, at first through the COVID crisis and now through the interest rate crisis, Des Moines did not, says Scott Steelman, a Realtor® with 24 years of experience. “Many realtors in this market had their all-time-high sales recorded during that time. It was amazing.”
In many markets, he points out, the word was that people would have to go out into the ’burbs to make their money work for them. “We did not have that. People were able to spend within their income.”
When COVID restrictions were taken away, then the interest rate situation took over. But in the Des Moines area, those two did not run simultaneously. “Predictions are that in the national outlook, the interest rate crisis will last about two more years before rates get below 7%,” Steelman says.
All in all, he says the real estate market here is strong in all directions—from Altoona and Bondurant to Waukee, Adel, DeSoto, Earlham, and Stuart; from Norwalk to Ankeny and Polk City; and from Johnston to Grimes and Dallas Center.
Much of the growth comes from national builders who are purchasing ground and building homes, he says.
And who is buying those homes? Steelman explains that earlier trackers show that many people from Illinois came across the Mississippi River into central Iowa to establish homes. Now the tide has shifted to the Los Angeles area of California. “People can get so much more for their money here.” He cites the fact that multi-million-dollar home listings are up 47% in the past year.
Matthew Kody, research and business intelligence manager for the Iowa Economic Development Authority, says the data is collected from Internal Revenue Service returns. If you lived in Corona, California, last year and filed a return in Polk County, Iowa, this year, that move would be recorded as part of the tracking.
Steelman also cites an interesting fact. “A couple years ago we had a farm listing in the Granger area for $3.5 million. I got calls from people on the West Coast asking what was wrong with such a property that it only was listed at that price. That tells us the kinds of listings they are used to.”
He mentions another phenomenon shows a standard of growth. “There are apartments being built in every zip code around here. We have not seen that for a time.” Those are for young people who do not want to purchase a condominium or for older Iowans who do not want the buy-in fees for some of the senior living situations.
So will the situation change over the next year? Steelman says likely no. “But hopefully, people will see some relief on the interest rate.”
On the total picture, as he pointed out, there are no dead zones in the Des Moines real estate market. And that is always a good thing.
Scott Steelman
Iowa Realty | Mills Crossing Office | 5901 Mills Civic Parkway | West Des Moines
Scott@IowaRealty.com | 515.556.2208
Scott Wendl
Realtor® | Re/Max Precision
Scott Wendl, in the real estate business for 27 years, gives his all for local and national professional organizations. “This industry has been good to me. Therefore, it is important that I give back.”
He is active in the Des Moines Association of Realtors and past president of the Iowa Association of Realtors. He serves on the Realtor Political Action Committee. And, on the national level, he serves on the Major Investor Council of the National Association of Realtors.
What is the real estate market like today?
“Houses in good shape in the $300,000 to $400,000 range are selling quickly, often within a week or so. And on top of it all, as of mid-July, there are 109 houses with more than million-dollar price tags on the market, most in the Des Moines area,” he says.
Interest rates, the elephant in the room, are causing homeowners and potential buyers to hold off a bit.
“They are watching the national and local news to see what will happen,” Wendl says. “Some feel that the next time the Fed meets, they will not raise the interest rate. Perhaps it was raised too quickly at the outset.”
In 2024 and 2025 millennials, the population segment since the Baby Boomers, will start becoming first-time homeowners.
“As they plan their purchases, they watch carefully to protect their first large house payment. The buyers are shopping hard,” he says.
He points out that houses stay on the market as a variable on price range. He notes that sometimes a million-dollar home gets purchased on the first day; other times, it sits on the market for six months.
The interesting story on new vs. resale homes: Building permits are up, and some people are waiting for certain resale homes they know will be on the market. In that regard, there are still many homes being sold above the asking price.
Wendl says, “The last four or five homes sold in our office were that way.”
On new construction, there are lots of spec homes available, with builders often throwing in good deals with appliance packages, closing costs, and decorating allowances.
One interesting fact is that a number of older homeowners are moving back to Iowa to retire, and they are paying cash for their homes. One statistic says 25% of those purchases are taking place that way.
“We are lucky in the Des Moines metro area,” he concludes. “In all directions—north, south, east, and west—the whole area is strong. Sure, there are some differences, but new construction is happening throughout.”
The bottom line is this, according to Wendl: “With Des Moines’ affordability, it’s a great place to live overall.”
Scott Wendl
RE/MAX Precision | 8705 Chambery Boulevard #100 | Johnston
Scott@ScottWendl.com | 515.249.9225