Iowa Real Estate Market Trends & Analysis


The Iowa real estate market has prospered in the wake of a strengthening economy. Unemployment numbers look promising, and both current and future job growth expectations are close enough to the national average to support a more active real estate industry. Evidence of the strengthening economy has already been seen more than halfway through 2019, as Iowa appears to be one of the few states that have taken strides towards alleviating the inventory crisis.

While most markets have seen inventory shrink, Iowa was actually able to increase their months of supply. As one of the few states that actually added to their inventory in the last year, real estate in Iowa looks to be more balanced than most other markets, which spells great news for both buyers and sellers across the state.

The Top Iowa Real Estate Markets


While the best real estate market in Iowa is up for debate, here’s a list of the cities investors may want to pay special considerations to:

Iowa Real Estate Fees & Regulations

Real Estate

Closing Conducted by: Real Estate Agents, Attorneys
Conveyance: Warranty Deed

Foreclosure Procedure

Primary Foreclosure Method: Non-Judicial
Process Period: 5 - 6 months
Notice of Sale: Sheriff
Redemption Period: 12 Months

Taxes

Income Tax: 0.36% - 8.98%
Corporate Tax: 6 - 12%
Sales Tax: 6.00%
Estate Tax: No
Inheritance Tax: 0 - 15%
Median Property Tax: 1.29%
Property Taxes by County: http://www.tax-rates.org/iowa/property-tax#Counties

Average Transactional Costs

Closing Cost: $2,448.00
Transfer Fee: 0.16%
Origination Fee: $1,773.00

Overview


  • Median Home Value: $145,700

  • 1-Year Appreciation Rate: +4.5%

  • Median Home Value (1-Year Forecast): +2.4%

  • Median Rent Price: $1,100

  • Price-To-Rent Ratio: 11.03

  • Average Days On Market: 68

  • Unemployment Rate: 2.5% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 3,156,145 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $56,570 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 8.39%

  • Foreclosure Rate: 1 in every 3,612

Median Home Prices In Iowa


Home values across the entire state of Iowa have experienced radical shifts in relatively short periods of time. In as little as eight years, in fact, home values have seen both the depths of a recession and historically high prices. Dating back to March 2011, median home values in Iowa bottomed out around $109,000 — their lowest point of The Great Recession. Today, the median home value in Iowa is $145,700 — surpassing pre-recession highs. In that span of time (from March 2011 to October 2019), the state’s median home value increased 33.6%. Home values across the rest of the country, on the other hand, jumped 50.9%, or 17.3% more than the state of Iowa as a whole.

Home values in Iowa, much like the rest of the country, are primarily the result of three fundamental indicators: improvements in the economy, a distinct lack of available inventory and growing optimism in the housing sector. That’s not to say other factors haven’t influenced price increases over the course of the recovery, but rather that the unique combination of these three things have driven prices higher at a historic pace.

The rapid appreciation of home values in Iowa has left little room for growth. Prices are expected to continue increasing, albeit at a tempered pace. While values increased 4.4% over the course of last year, the next 12 months may see an increase somewhere in the range of 2.5%. At that rate, Iowa home values should increase at a rate similar to national trends.

Median Rent Prices In Iowa


Every rental market across the country shares a direct correlation with local home values; when they appreciate their rental counterparts are inclined to follow suit. As home prices increase — especially in today’s competitive environment — more prospective buyers are relegated to the sideline and forced to rent, which creates more rental demand. Therefore, those who weren’t able to buy actually end up creating more competition in the rental market and driving up prices. Not surprisingly, rental prices in the Iowa real estate market have increased in response to local appreciation rates. Since the first quarter of 2012, in fact, rent listing prices have increased 14.8%.

While Iowa rents are up from 2012, they have been on the decline since the third quarter of 2015. While most states have seen year-over-year increases since the depths of the recession, Iowa has actually seen a decline in rent listing prices, dropping approximately $74 from their peak about four years ago. Thanks, in large part, to a 4.8% increase in “months supply of inventory” over the previous year, more people have been able to buy affordable homes, effectively decreasing the competition for rentals. As a result, prices have dropped slightly. To put things into perspective, the median rent in the United States is currently somewhere in the neighborhood of $1,700; that is, after appreciating 30.3% since January 2012 (more than double the rate of the Iowa real estate market).

Iowa Foreclosure Trends & Statistics


According to data presented by RealtyTrac, one of the country’s most trusted sources for distressed property information, the Iowa real estate market is currently home to an average distribution of foreclosed properties. With about one in every 2,922 homes in some form of distress (default, auction or bank owned), the Iowa housing market has a foreclosure rate of 3.4%. The national real estate market, on the other hand, has a slightly higher foreclosure rate of 3.9%.

Iowa’s foreclosure rate has proven relatively stagnant in recent history. “In October, the number of properties that received a foreclosure filing in IA was 4% lower than the previous month and 1% higher than the same time last year,” according to RealtyTrac. Despite improvements to the local economy, it appears there are a few more obstacles the state needs to overcome to fully address the latest foreclosure crisis. As a result, there are a few counties across the state that have higher distributions of distressed properties. Five counties, in particular, have a higher distribution if distressed homes than anywhere else in the Iowa real estate market:

  • Harrison (1 in every 1,1296)

  • Clinton (1 in every 1,288)

  • Monona (1 in every 1,581)

  • Keokuk (1 in every 1,631)

  • Hardin (1 in every 1,640)


Tax Lien Investing


  • Tax Lien or Deed: Tax Lein State

  • Interest Rate: 24%

  • Redemption Period: 1.75 Years

Real Estate Investing In Iowa


Today’s greatest real estate investors know it, and it’s about time everyone else did, too: one of the easiest ways to secure a deal with attractive profit margins is to buy below market value. The concept is relatively simple: The more an investor is able to acquire a deal below its actual value, the more potential it has of increasing profits. Higher profit margins are an investor’s best friend, which begs the question: Where can Iowa real estate investors secure deals with the most profit potential?

Iowa real estate investors should pay special considerations to the state’s distressed property inventory. Distressed assets award savvy investors with higher profit margins than their traditional counterparts, and there’s no larger distribution of distressed assets in Iowa than those which are currently in a state of pre-foreclosure. Pre-foreclosures, or those assets in the possession of delinquent owners, make up 51.8% of Iowa’s distressed property market. Therefore, it makes sense for investors in Iowa to browse pre-foreclosures in order to increase their odds of landing a deal with attractive profit margins.

In order to identify homeowners who are behind on payments (and perhaps motivated to sell), investors should take a trip to their local courthouse, where the information is made available to the public. There, they’ll be able to find the owners behind on payments, and — even more importantly — their address and contact information.

Of course, knowing where to find real estate deals in Iowa is only part of the equation. Once investors secure deals, they need to know what to do with them, which begs the question: Which exit strategies are working the best for Iowa real estate investors?

The Iowa real estate market looks entirely capable of supporting all three of today’s most popular exit strategies: rehabbing, wholesaling and renting. Prices are affordable enough to warrant potential upside and demand remains in tact. Rehabbers will find the competitive market to their liking, as the state’s lack of inventory should allow them to increase asking prices. Average sales prices for single-family homes have increased 2.5% year-over-year. Those investors who get in sooner rather than later may be able to take advantage of the latest round of appreciation.

Iowa Housing Market Predictions


For all intents and purposes, the Iowa real estate market is firing on all cylinders. Housing activity is receiving plenty of underlying support from a healthy economy that appears to be growing stronger by the day. That said, exhibiting 100% confidence in any Iowa housing market predictions is a fool’s errand. Even in a market as “predictable” as Iowa, there are far too many variables to assume anything is guaranteed to happen. Instead, investors must remain patient and listen to what the market is telling them.

Let’s take a look at which Iowa housing market predictions are the most likely to come to fruition:

  • More inventory will ease appreciation rates: Iowa has done its best to address the state-wide inventory crisis, and it looks like the work is about to pay off. In the last year, Iowa’s months of available inventory have increased 4.8%, and there’s nothing to suggest the gains won’t continue. As a result, its safe to say appreciation rates will temper over the next 12 months. Instead of the historic rates residents have grown accustomed to over the last few years, Iowa homeowners can expect a more modest appreciation rate of about 2.5% over the next 12 months.

  • An influx of buyers from Illinois should increase demand: In an attempt to avoid high property taxes, Illinois residents are making their way across Iowa state lines in search of housing. Until something is done about the crippling taxes in Illinois, Iowa will continue to see an influx of demand, which will drive up prices in the meantime.

  • Optimism in the industry will work to Iowa’s favor: The Iowa real estate market has a lot working in its favor, but optimism might be its greatest resource. While prices haven’t exactly kept pace with the national average, the worst appears to be in the past, and positivity is all that remains moving forward. In particular, new inventory should facilitate a more active and balanced market.

Iowa Real Estate Market Summary


The Iowa real estate market has benefited immensely from indicators in particular: affordability. Real estate in Iowa, for example, is so affordable that more and more residents are able to partake in the housing industry each and every year. The activity generated by attractive housing prices has buoyed the entire state’s real estate sector and everyone partaking in it: buyers, sellers and investors. That, in addition to increasing inventory levels, should create one of the more balanced markets across the country.

Sources:



https://www.census.gov/quickfacts/fact/table/IA/PST045218
https://www.bls.gov/regions/midwest/iowa.htm#eag
https://www.realtytrac.com/statsandtrends/foreclosuretrends/ia/
https://www.realtytrac.com/statsandtrends/ia/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/
https://www.zillow.com/ia/home-values/
https://www.zillow.com/home-values/
https://www.iowarealtors.com/news/home-sales-bounce-back-more-properties-on-the-market
https://www.iowarealtors.com/filesimages/Docs/Monthly%20Stats%20Report/IowaStats_July19_DetailReport.pdf

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