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Des Moines: Real Estate and Market Trends

Published on Monday - May 04, 2015

The Des Moines real estate market has seen price growth stall, actually swinging negative for the first time this year. With an appreciation rate of -0.2 percent, the median home value in the area is $167,400. That is considerably lower than the national average of $208,067. The difference may be attributed to the rate in which homes across the country are appreciating: 5.7 percent. However, while homes in the Des Moines real estate market have seen prices temper, they are considerably better than they were at the depths of the recession. In fact, Des Moines real estate has come a long way is just three years. Des Moines real estate investing will be something to keep an eye on, as a result. Lower prices mean affordability is increasing. Spreads on assets are becoming that much more attractive.

Again, price gains have started to slow down. However, homeowners have managed to regain a lot of equity in a short period of time. This is a great sign for Des Moines real estate investing and homeownership. The following highlights how much equity has been gained relative to the year of the home’s purchase:

Des Moines skyline at night

  • Homes purchased in the Des Moines housing market one year ago have appreciated, on average, by $2,258. The national average was $14,170 over the same period.
  • Homes purchased in the Des Moines housing market three years ago have appreciated, on average, by $26,046. The national average was $53,857 over the same period.
  • Homes purchased in the Des Moines housing market five years ago have appreciated, on average, by $34,865. The national average was $48,036 over the same period.
  • Homes purchased in the Des Moines housing market seven years ago have appreciated, on average, by $28,900. The national average was $13,870 over the same period.
  • Homes purchased in the Des Moines housing market nine years ago have appreciated, on average, by $38,884. The national average actually dropped $2,822 over the same period.

While not on par with cities like Seattle and San Diego, or even Cedar Rapids for that matter, Des Moines’ economy is strong. At the very least, Des Moines has strong market fundamentals in place to build of for the foreseeable future. With an unemployment rate of 3.9 percent, Des Moines is well ahead of the national average. Subsequently, the national unemployment rate is hovering around 5.6 percent.

According to data released by NerdWallet, Des Moines is actually the 11th best city in the nation to start a business. The average revenue a business in Des Moines makes is $1,667,181. While that is certainly not the highest net, it is complemented with a modest annual median housing cost ($11,808), and strong market fundamentals that favor businesses. These factors, and many more, have actually drawn more businesses to the area in the last three years, serving to strengthen Des Moines economy. This only makes the area more attractive to new Des Moines real estate investors.

On the other hand, Des Moines could benefit from an improvement in its current job growth rate. At 1.1 percent, the city’s job growth rate is almost half of the national average (1.9 percent). Should Des Moines continue to attract more businesses, the local housing market should be one of the first sectors to benefit. Regardless of the local job sectors position, Dews Moines real estate investing – and the real estate industry as a whole – will benefit from a higher job growth rate.

In addition to having a stable job sector, the Des Moines housing market has one more thing supporting it: affordability. Accordingly, the Des Moines housing market is more affordable than most others across the country. Recent data acknowledges that Des Moines homeowners have gotten used to spending about 7.5 percent of their income on monthly mortgage payments – about half of what the rest of the country spends on average. Accordingly, the average homeowner in the United States spends about 15.1 percent of their monthly income on mortgage obligations. Not only is Des Moines’ affordability greater than other markets, it is historically strong and improving. Look for Des Moines real estate investing to take off as a result.

According to RealtyTrac, the Des Moines housing market has approximately 697 properties in some stage of the foreclosure process. That is to say that these distressed properties are at risk of being repossessed, have been repossessed by banks, or are going to be placed up for auction at some point in the near future. As recently as the first quarter of this year, the number of properties that received a foreclosure filing in the Des Moines housing market was 19 percent higher than the previous month and 21 percent lower than this time last year.

Des Moines real estate investing will really benefit from the discount these distressed properties offer. While down from last year, the average distressed property in Des Moines is discounted about 42 percent. The median sales price of a non-distressed home was $103,500. The median sales price of a foreclosure home was $60,067, or a savings of nearly $44,000 per home.

Des Moines real estate investing will find that the majority of distressed acquisitions will come from the pre-foreclosure pool. Distressed properties in pre-foreclosure are in the early stages of being repossessed due to the property owner’s inability to pay an outstanding mortgage obligation. That said; 38.9 percent of the properties in today’s distressed market are of a pre-foreclosure nature. Not far behind are those properties to be placed up for auction, at 36.9 percent. Rounding out the rest of the foreclosures are bank-owned properties. Again, each of these scenarios will benefit Des Moines real estate investing.

The Des Moines housing market, while not as hot as the top markets in the country, is doing very well at its own pace. For all intents and purposes it is stable. Des Moines real estate investing will appreciate the fact that price appreciation has stalled, making properties more affordable.

Des Moines Housing Market Summary:

  • Current Median Home Price: $167,400
  • 1-Year Appreciation Rate: -0.2%
  • Unemployment Rate: 3.9%
  • 1-Year Job Growth Rate: 1.1%
  • Population: 207,510
  • Median Household Income: $61,194

Des Moines County Map:

Map of Des Moines neighborhoods

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