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The Des Moines Housing Market Is A Hot Place For Real Estate Investment

Hottest Des Moines Real Estate Market Insight

Des Moines is the most populous city in Iowa, and it is also the capital of the state. Des Moines is home to over 200,000 people. The entire Des Moines real estate market includes the five county metropolitan area that is home to around 600,000 people and will soon have nearly three quarters of a million residents. Des Moines Area continues to be on everyone favourite because of affordability. The new developments in downtown and the suburbs continue to make this area a great value, a great place to buy a house or invest in real estate.

The Des Moines real estate market is strengthened by its rich and growing economy. The local real estate market went through a slow recovery after the housing crisis in 2008. However, it has been gaining momentum the last few years and is poised to continue growing thanks to the Des Moines’ solid economy and population growth. The Des Moines housing market is also more affordable than most others in the country. Let’s take a close look at the Des Moines real estate market trends and forecasts for 2019 & 2020 and find out why to invest in this hottest market in Iowa.

Des Moines Real Estate Market

Original Photo via Pixabay

Des Moines Real Estate Market Forecast 2019, 2020 & 2020

The median home value in Des Moines is $141,600 on Zillow.com. Des Moines home values have gone up 7.2% over the past year and the Des Moines real estate market prediction is that they will rise 8.1% within the next year. The median list price per square foot in Des Moines is $125, which is lower than the Des Moines-West Des Moines Metro average of $153. The median price of homes currently listed in Des Moines is $139,500 while the median price of homes that sold is $146,700. The median rent price in Des Moines is $950, which is lower than the Des Moines-West Des Moines Metro median of $1,200.

Des Moines Real Estate Market Forecast

Graph Credits: Zillow.com

During the last housing crash, the Des Moines market slowed down about 18 months after coastal markets. If the Des Moines experiences a similar lag this time around, a slowdown would occur in early 2018. Even if the local housing market does hit a slump, local real estate professionals agree it will be much less severe than the last housing crash. Home prices might stagnate, homes will sell a little slower and buyers will have more properties to choose from. According to Brennan Buckley, president of Iowa Realty, it is just going to be a normalization.

LittleBigHomes.com publishes forecasts for the trend in home prices in 380 Metropolitan Statistical Areas. The Des Moines real estate market forecast for the 12 months ending with the 3rd Quarter of 2019 is positive. The Accuracy of the Trend Projection for Des Moines is 90%.  Accordingly, they estimates that the probability for rising house prices in Des Moines is 90% during this period. If this Housing Market Forecast is correct, home prices will be higher in the 3rd Quarter of 2019 than they were in the 3rd Quarter of 2018.

Des Moines Housing Market Forecast 2019 – 2021

The Des Moines housing market forecast for the 3 years ending with the 3rd Quarter of 2021 is also positive. The Accuracy of the Trend Prediction for Spokane is 72%. Accordingly, LittleBigHomes estimates that the probability for rising house prices in Spokane is 72% during this period. If this Housing Market Forecast is correct, home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.

Check this page each quarter for updates to the Des Moines Real Estate Market Forecast.

Des Moines Real Estate Market Trends

Des Moines real estate market trends indicate an increase of $6,500 (5%) in median home sales and a 1% rise in median rent per month over the past year. The average price per square foot for this same period rose to $126, up from $121. Trulia has 730 resale and new homes in Des Moines lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

The median sales price for homes in Des Moines for Nov 7 to Feb 6 was $143,000 based on 761 home sales. Average price per square foot for Des Moines was $126, an increase of 4% compared to the same period last year. The median rent per month for apartments in Des Moines for Jan 12 to Feb 12 was $1,000.

Des Moines Real Estate Market Trends

Graph Credits: Trulia.com

As per the real estate company named Redfin, the Des Moines housing market is very competitive. The average sale price of a home in Des Moines was $470K last month, up 17.5% since last year. The average sale price per square foot in Des Moines is $210, down 13.6% since last year. Many homes get multiple offers, some with waived contingencies. Homes for sale in Des Moines, IA can sell for about 1% below list price and go pending in around 38 days. Hot Homes in Des Moines, IA can sell for around list price and go pending in around 7 days.

Des Moines Housing Market Statistics

  • Median Sales Price: $143,000 (On Trulia)
  • Price Per Square Ft: $126
  • Homes For Sale: 791 (Trulia)
  • Median Rent Per Month: $1,000
  • Median Household Income: $45,874
  • Home Owners: 74%
  • Single Residents: 38%
  • Median Age: 36
  • College Educated: 27%
  • Transportation: 96% people commute by car, public transport available

There are 989 homes for sale, ranging from $5.9K to $2.6M on Realtor.com. 68 of which were newly listed within the last week. Additionally, there are 252 rentals, with a range of $1 to $2.4K per month. In December 2018 the housing market in Des Moines, IA was a balanced market, which means there was a healthy balance of buyers and sellers in the market.

Des Moines Housing Market Trends

Graph Credits: Realtor.com

In December 2018, the median list price of homes in Des Moines, IA was $160K, trending up 6.7% year-over-year. The median listing price per square foot was $135. The median sale price was $157K. On average, homes in Des Moines, IA sell after 69 days on the market. The trend for median days on market in Des Moines, IA is flat since last month, and flat since last year.

Des Moines Housing Market Trend

Graph Credits: Realtor.com

There are 127 schools in Des Moines, IA. There are 60 elementary schools, 26 middle schools, 18 high schools and 23 private & charter schools.

The median list price in Des Moines is $159,900 on Movoto.com. The median list price in Des Moines was less than 1% change from February to March. Des Moines’s home resale inventories is 394, which decreased 7 percent since February 2019. The median list price per square foot in Des Moines is $140. February 2019 was $138. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in March.

Des Moines Real Estate Market Trend

Graph Credits: Movoto.com

Des Moines, IA Single Family Homes

As per the data from the real estate company called Neigborhoodscout.com, the median house price in Des Moines is $144,905 and it is below national average. Single family detached homes are the single most common housing type in Des Moines, accounting for 65.39% of the city’s housing units. Other types of housing that are prevalent in Des Moines include large apartment complexes or high rise apartments ( 22.46%), duplexes, homes converted to apartments or other small apartment buildings ( 5.19%), and a few row houses and other attached homes ( 4.61%).

People in Des Moines primarily live in small (one, two or no bedroom) single family detached homes. Des Moines has a mixture of owner-occupied and renter-occupied housing. Currently, there are 609 single family homes for sale in Des Moines, IA on Zillow. Additionally, there are 88 single family homes for rent in Des Moines, IA.

Des Moines IA Foreclosures And Bank Owned Homes

In Des Moines 1.4 homes are foreclosed (per 10,000). This is greater than the Des Moines-West Des Moines Metro value of 0.9 and also greater than the national value of 1.2; according to Zillow. The percent of delinquent mortgages in Des Moines is 1.3%, which is higher than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Des Moines homeowners underwater on their mortgage is 5.2%, which is higher than Des Moines-West Des Moines Metro at 4.9%.

On RealtyTrac, there are currently 298 properties in Des Moines, IA that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 585. In February, the number of properties that received a foreclosure filing in Des Moines, IA was 12% higher than the previous month and 21% lower than the same time last year.

Home sales for January 2019 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home was $0. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

  • Foreclosures in Des Moines = 298
  • Homes for Sale = 585 (RealtyTrac)
  • Recently Sold = 221
  • Median List Price = $140,000 (3% drop vs Jan 2018)

Des Moines Home Prices And Appreciation Rates

Des Moines housing market has enjoyed several years of uninterrupted growth. The market has seen record home prices and is poised to continue growing thanks to the city’s solid economy and booming population. Appreciation rates for homes in Des Moines have been tracking above average for the last ten years, according to NeighborhoodScout’s data.

The cumulative appreciation rate over the ten years has been 17.38%, which ranks in the top 40% nationwide. This equates to an annual average Des Moines house appreciation rate of 1.62%. Their data shows that during the latest twelve months, Des Moines’s appreciation rate, at 5.06%, has been at or slightly above the national average. In the latest quarter, Des Moines’s appreciation rate has been 2.66%, which annualizes to a rate of 11.05%.

Relative to Iowa, their data shows that Des Moines’s latest annual appreciation rate is lower than 50% of the other cities and towns in Iowa.

10 Best Neighborhoods In Des Moines For Real Estate Investment

There are 80 neighborhoods in Des Moines. Southwestern Hills has a median listing price of $249.9K, making it the most expensive neighborhood. Fairground is the most affordable neighborhood in Des Moines, with a median listing price of $100K. These are the best neighborhoods in Spokane to invest in real estate because they have the highest appreciation rates (List by Neigborhoodscout.com).

Is Des Moines Real Estate Good For Investment In 2019 & 2020?

Investing in real estate is touted as a great way to become wealthy. Is Des Moines rental property good for investment? If you are looking to buy Des Moines investment properties, then you must read this. These things make Des Moines real estate market stand out when it comes to choosing a place to invest in 2019 and beyond. We have already discussed the Des Moines housing market forecast for answers on why to put resources into this affordable and growing market in 2019.

The home prices in the Des Moines real estate market will be on an upswing all through 2019. The home prices have been trending up 6.7% year-over-year.  So you should consider investing in Des Moines rental homes sooner, to avoid higher home prices down the road. Des Moines housing market provides an excellent opportunity for investors and home buyers at the moment because more affordable than most other markets in the country.

Here are a few evidence-based reasons why to invest in the Des Moines rental properties for cash flow. 

1. The Population Growth Rate

Des Moines has seen a relatively slow but steady growth rate of 1.5% each year since 2010, significantly above the 0.58% growth rate seen for the whole Midwest and the 1% for the state as a whole. It explains why they’re the fastest growing city in the Midwest. This is as much due to in-migration of people moving from smaller cities and rural areas to Des Moines as people from around the country coming here to work.

2. The Relatively Low Property Taxes

Iowa residents pay one of the highest overall income tax bills in the U.S. If you live in another state but invest in Des Moines rental houses, you’ll enjoy their low property tax bills. The state came in 38 out of 51 jurisdictions (including DC) on the list of worst property tax rates. The average property tax rate Iowa property owners paid about $2700 a year. The average home owner paid roughly 1.44% of the home’s value in property taxes, a fraction of what you’d pay in Midwestern states like Illinois.

3. The Relatively Friendly Rules for Landlords

Compared to the skyrocketing taxes and regulations in Illinois, the Des Moines real estate market is landlord friendly. Short of someone failing to pay the rent, you can’t really evict them before the lease ends unless they’ve done something egregious. Conversely, owners of Des Moines rental houses don’t have laws governing pet deposits or non-refundable fees. You can raise the rent as long as you provide 30 days’ notice. Late fees for past-due rent can be up to $100 per month.

The record keeping is a little stricter than southern states, such as the requirement to provide a written list of all damages and charges you deduct from their deposit. Don’t create that paperwork and provide it on demand, and the landlord will be liable for punitive damages up to twice the monthly rent. The landlord can sue for legal costs related to eviction.

4. Illinois’ Loss is Des Moines’ Gain

Chicago is in a state of decline, and the entire state of Illinois is losing people. They’re fleeing the high taxes with promises to raise them even higher. They’re fleeing crime and an eroding job base. This explains why several hundred thousand de facto refugees from Illinois have come to neighboring Iowa since 2000. And many of them are coming to Des Moines. In contrast, relatively few are of these former Illinois residents are settling in the Quad Cities. Instead, they are choosing the bigger city with its more diverse, robust economy.

5. The Job Market

Des Moines has long been the “US insurance capital”, providing a wealth of professional jobs in a city otherwise defined by civic service, education and agricultural jobs. Many insurance headquarters and large financial services companies are located in Des Moines. However, it has sought to diversify its economy and expand its tax base. Des Moines made the Forbes list recently as the fifth best city in the U.S. for business and careers.

It was also considered one of the top ten cities for tech hiring in 2018. And don’t forget that Millennials who want to work in tech can actually afford to buy in the Des Moines housing market. All of this explains why the unemployment rate in Des Moines is below 3%, hitting a record 2.5% in 2018, well below the national average despite many local graduates choosing to stay here after graduation.

6. The Affordable Real Estate Market

The medina home in the Des Moines real estate market was $143,000. The typical home sold had a price of $125 or so per square foot. That’s significantly cheaper than the $180,000 home in Illinois and $200,000 plus home value in Chicago. And yet these affordable Des Moines rental houses are at record highs by historic standards. Demand is pushing home prices up even higher in desirable neighborhoods. In the most desirable communities, home values were growing by nearly $5000 a year for several years in a row.

7. The High ROI

The median rent in the Des Moines real estate market is roughly $1000 a month. One bedrooms command around $850 a month, while two bedrooms cost around $900 a month. Three and four bedroom Des Moines rental houses, of course, cost far more per month.

According to Numbeo, a three bedroom apartment costs between $1200 and $1600 a month depending on its distance from downtown, and people pay more for the privacy of a detached home. Combine strong demand with an equally strong job market, and you can expect to see rental rates go up along with property values.

8. The Large Student Market

Every state capital is home to at least one large flagship university, and Des Moines is no exception. Iowa State University in Ames has around 35,000 students. Drake University is a private liberal arts school with nearly five thousand students. Grand View University hosts around two thousand students. A number of smaller schools like AIB College of Business and Purdue’s Global Des Moines Campus dot the area.

This creates a diverse yet strong market for Des Moines rental houses. The many schools in Des Moines gives you the option of buying multiple rental properties in the Des Moines housing market aimed at students, yet you aren’t tied to the rise and fall of a single, major school.

9. And Iowa’s Birth Rate Has Rebounded

Iowa along with much of the Midwest saw its population aging and was at risk of declining. Attracting students from rural communities and neighboring states is only a short term solution. The long term solution is to maintain demographic momentum and create demand in the Des Moines real estate market a generation from now.

Iowa’s population of children has rebounded, and the state’s number of young children is now growing faster than the national average despite the state’s population being older than the country as a whole. This creates greater demand for large homes in the Des Moines housing market and ensures that demand will remain strong for years to come.

10. The Known Redevelopment Opportunities

Downtown Des Moines saw a building boom that continued through 2018. As people move into downtown to be close to work or live in walkable communities, expect to see property values in surrounding neighborhoods increase. This creates a good opportunity for those who either want to fix and flip or hold and rent properties in the Des Moines real estate market. Buy properties while the I35 construction is going one, not after it has finished in 2020.

Des Moines Real Estate Investment

Maybe you have done a bit of real estate investing in Des Moines, IA but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you invest wisely, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.

Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Des Moines, IA. Des Moines has been a solid but staid real estate market, but it is experiencing significant growth and has excellent long term prospects. It is an affordable real estate market where you can receive a good return on your investment and are certain to see your investment property’s value increase over time. Des Moines has the right market fundamentals. It has the fastest growing population in the Midwest and a strong job market as well – which leads to an influx of well-employed young people. And all these factors will help Des Moines housing market grow steadily without any slump or crash.

Buying an investment property is different from buying an owner-occupied home. Investment properties are designed to make money as rentals, which means you must look at it solely as an income producing entity just like any other business.

Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.

According to real estate experts, buying in a market with increasing prices, low interest, and low availability requires a different approach than buying in a cooler market.

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Which Are The Hot Markets To Invest In Real Estate?

Apart from the Des Moines real estate market, you can also invest in another hot market in Spokane, WA. Spokane is a relatively cheap real estate market on the West Coast. It is already seeing increased demand and property valuations, while it remains a safe place to invest in real estate. Skip Seattle and Silicon Valley and invest in the future growth of Spokane.

Seattle is larger than Spokane, but the Spokane real estate market is hotter because the area is cheaper than Seattle. Millennials in particular are flocking to the Spokane housing market because rents are half that of Seattle, while home prices are a third that of Seattle.

Note that if a one bedroom apartment in the Seattle market costs around $1000, you could charge $2000 or more for Spokane rental properties with enough space for a growing family. Seattle may be making its own tax mistakes from the soda tax to its fight to pass a city income tax. This makes buying in more sedate Spokane a wise choice.

Another market that we suggest is the housing market in Lakeland, Florida. The Lakeland housing market presents the perfect balance of currently affordable real estate for buyers and future growth. We can expect the population of the area to grow rapidly, and the renting population will grow even faster. The time to buy real estate in Lakeland is now.

While the Lakeland FL real estate market is cheaper than Orlando and Tampa, it is not a good overall value given the lower average wages of its residents. That explains why U.S. News and World Report gave the city an index score of 5.5 out of ten. This is due to the average resident earning around $23,000 a year, several thousand less than the U.S. average. Median household incomes are no better.

The median household income in Lakeland, Florida is around $40,000, more than ten thousand dollars below the national average. This creates strong demand for Lakeland rental homes, especially those that low income residents can afford.

Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here. 

One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.


*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References:

Property taxes
https://wallethub.com/edu/best-worst-states-to-be-a-taxpayer/2416

Landlord friendly
https://www.landlordology.com/iowa-landlord-tenant-laws

Growth rate
http://worldpopulationreview.com/us-cities/des-moines-population
https://www.desmoinesregister.com/story/news/2017/03/23/des-moines-fastest-growing-city-midwest-census-says/99502922

Chicago’s loss                                                                                                            https://wqad.com/2017/06/07/iowa-grows-illinois-shrinks-according-to-new-u-s-census-estimate

The Job market
https://livability.com/ia/des-moines/real-estate/heartland-hotspot-why-millennials-are-flocking-to-des-moines
https://www.desmoinesregister.com/story/news/2018/09/21/iowa-unemployment-rate-down-percentage-us-money-income-wages-jobs-des-moines/1379484002

Student market
https://www.collegesimply.com/colleges-near/iowa/des-moines

Affordable real estate
https://www.trulia.com/real_estate/Des_Moines-Iowa
https://www.zillow.com/cook-county-il/home-values
https://www.desmoinesregister.com/story/money/business/development/2017/01/28/widening-gap-how-dms-rising-home-values-left-behind-some-neighborhoods/96373234

ROI
https://www.rentjungle.com/average-rent-in-des-moines-rent-trends
https://www.numbeo.com/cost-of-living/in/Des-Moines

Redevelopment
https://www.desmoinesregister.com/story/money/business/development/2017/12/26/downtown-des-moines-streets-suburban-movie-theaters-interstate-improvements-coming-2018/964486001

Birth rates
https://www.legis.iowa.gov/docs/publications/SD/16442.pdf

Market Data, Trends and Forecast                                                                              https://www.zillow.com/DesMoines-ia/home-values                                              https://www.littlebighomes.com/real-estate-des-moines.html              https://www.trulia.com/real_estate/Des_Moines-Iowa                                  https://www.redfin.com/city/4570/WA/Des-Moines/housing-market      https://www.realtor.com/realestateandhomes-search/Des-Moines_IA/overview              https://www.movoto.com/des-moines-ia/market-trends https://www.realtytrac.com/statsandtrends/foreclosuretrends/ia/polk-county/des-moines https://www.movoto.com/guide/des-moines-ia/des-moines-real-estate-market-trends https://www.neighborhoodscout.com/ia/des-moines/real-estate


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