The Des Moines housing market in 2024 is showing signs of a shift from the highly competitive seller's market of the past few years. Des Moines housing market trends indicate a cooling down, with home prices experiencing a slight decline and homes staying on the market a bit longer. While the market remains competitive, buyers are finding a bit more leverage and breathing room compared to previous years. Let's delve into the key aspects that are shaping the Des Moines housing market this year.
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Des Moines Housing Market Trends in 2024: A Comprehensive Look
Home Sales
According to recent data from Redfin, the number of homes sold in Des Moines in September 2024 was down compared to the same time last year. Specifically, there were 214 homes sold in September 2024, representing a 14.1% year-over-year decrease from 249 homes sold in September 2023. This decline in sales volume could be a reflection of various factors, including rising interest rates, increased housing inventory, and a slight softening in buyer demand.
While the decrease in sales might seem alarming at first glance, it's important to consider that the housing market is cyclical. We might be seeing a period of normalization after the exceptionally strong surge we witnessed in the wake of the pandemic. However, I also believe that the market in Des Moines is still strong compared to many parts of the country. We are still seeing solid demand for homes, especially in desirable neighborhoods.
Home Prices
One of the most talked-about aspects of the Des Moines housing market in 2024 is the change in home prices. Data from Redfin shows that the median sale price of a home in Des Moines was $197,000 in September 2024, representing a 4.5% decline year-over-year. While this decrease is noteworthy, it's important to understand that it is not a drastic drop. It's a gradual correction after the sharp price increases we saw in the past few years.
Furthermore, the median sale price per square foot in Des Moines is $190, which is up 6.4% since last year. This suggests that while the overall median sale price has declined slightly, the value of homes based on square footage is still increasing. This could indicate that buyers are still willing to pay a premium for desirable features and homes in preferred areas, even with a slight overall price decrease.
Housing Supply
The availability of homes for sale is another critical factor influencing the Des Moines housing market. While the exact numbers are difficult to pinpoint precisely, I've observed that the housing supply in the Des Moines metro is beginning to improve compared to the tight inventory conditions of the past few years. This increased inventory is giving buyers more options and potentially leading to less bidding wars, which was a common feature of the market in recent times.
It's worth noting that while the supply is improving, it's not yet back to pre-pandemic levels in some areas. We are seeing a gradual increase in the number of new home constructions, which should contribute to a more balanced market in the coming months and years. However, there are still some specific neighborhoods where the inventory remains limited, particularly desirable areas within the city and suburbs.
Market Trends
The Des Moines housing market is experiencing a shift towards a more balanced state. After a period of rapid price increases and low inventory, we are now witnessing a moderation in both home prices and the pace of sales. As a real estate professional, I see this as a more sustainable and healthy market for both buyers and sellers.
Here are some key trends shaping the Des Moines housing market:
- Moderating Price Growth: While prices have declined slightly, the growth rate has slowed down compared to the past few years.
- Increased Inventory: While not at pre-pandemic levels in all areas, the housing inventory is gradually increasing.
- Longer Days on Market: Homes are now staying on the market for longer compared to the fast-paced market of the past few years.
- Less Intense Competition: While the market remains competitive, buyers are experiencing fewer bidding wars and are potentially in a better position to negotiate.
- Shifting Buyer/Seller Dynamics: The shift in market conditions is gradually tilting the scales towards a more balanced buyer/seller dynamic.
Is It a Buyer's or Seller's Housing Market?
Currently, the Des Moines housing market is trending towards a more neutral position, neither heavily favoring buyers nor sellers. It is leaning slightly towards a buyer's market, as buyers have more choices and some leverage in negotiations. However, the market is still competitive in desirable areas, and sellers who price their homes appropriately can still expect a reasonably fast sale.
Here's how the shift is impacting buyers and sellers:
Buyers:
- More Options: The increased inventory gives buyers more opportunities to explore different homes and neighborhoods.
- Less Pressure: Buyers are experiencing less pressure to submit offers quickly or waive contingencies.
- Negotiating Power: Buyers have a bit more room to negotiate on price and other terms.
Sellers:
- Need for Realistic Pricing: Sellers need to ensure their homes are priced competitively to attract buyers in the current market.
- Longer Time on Market: Homes might stay on the market for longer than they did in the recent past.
- Focus on Presentation: Homes need to be presented well to stand out in the market.
Are Home Prices Dropping?
While the Des Moines housing market has experienced a slight decline in median sale prices, it's not experiencing a drastic drop. The overall market remains healthy, and homes are still selling. The price decline is more of a correction after a period of significant growth.
Factors Contributing to the Slight Price Decline:
- Rising Interest Rates: Higher interest rates are making mortgage payments more expensive, potentially impacting affordability and buyer demand.
- Increased Inventory: More homes on the market are providing buyers with more options, which can sometimes lead to a slight decrease in prices.
- Economic Uncertainty: Concerns about the economy and potential recession have caused some buyers to become more cautious.
My Opinion
I don't anticipate a significant or sustained decline in home prices in Des Moines. The fundamentals of the Des Moines housing market are still strong. The city has a robust economy, a growing population, and a desirable quality of life. I believe that home prices will likely stabilize and possibly see modest growth in the future.
However, I do think that the current trend towards a more balanced market is likely to continue. This means that buyers and sellers will need to be more informed and strategic in their decisions. Buyers should take their time, shop around, and consider their affordability carefully. Sellers should make sure that their homes are priced competitively and presented well to attract buyers.
Sale-to-List Price and Homes Sold Above List Price
Redfin data also reveals insights into the negotiation dynamics within the Des Moines housing market. The average home is selling for about 98.3% of the list price, which is a 0.84-point decrease year-over-year.
This implies that while homes are generally selling close to the asking price, sellers are potentially experiencing a slight reduction in the premium they were able to secure earlier.
Similarly, the percentage of homes sold above the list price has dropped to 24.8%, a decrease of 7.8 percentage points year-over-year. This confirms the trend of a less heated and competitive market.
The percentage of homes with price reductions has increased to 40.5%, a rise of 5.9 percentage points year-over-year. This suggests that sellers are becoming more willing to adjust their prices to entice buyers. It is a sign of the market trying to balance itself.
Des Moines Housing Market Forecast 2024-2025
Important Considerations for Future Trends
Several factors could influence the Des Moines housing market trends in the coming months and years.
- Interest Rates: The trajectory of interest rates will play a key role in shaping affordability and demand for homes.
- Economic Conditions: The overall health of the economy and any potential recessionary pressures will impact buyer confidence and spending habits.
- Job Market: The strength of the Des Moines job market will continue to be a significant driver of housing demand.
- New Construction: Continued increases in new home construction can contribute to greater inventory and help balance the market.
- Infrastructure and Amenities: The development of new infrastructure, amenities, and attractions in and around Des Moines can attract new residents and further boost the market.
The Des Moines housing market in 2024 is exhibiting a shift from the intense seller's market we saw in previous years. The market is becoming more balanced, with buyers having more options and some negotiation leverage. While home prices have seen a slight decline, the overall market remains healthy and robust. The city's strong economy, growing population, and desirable quality of life continue to attract new residents.
As a real estate professional, I believe that the future of the Des Moines housing market is positive. We are likely to see a continued trend towards a more balanced and sustainable market, with stable home prices and a healthy level of buyer and seller activity. Buyers and sellers who stay informed and make well-informed decisions can thrive in this evolving market.
Should You Invest in the Des Moines Real Estate Market?
Population Growth and Trends
Investors contemplating the Des Moines real estate market should carefully examine various factors, starting with population growth and trends.
- Steady Population Growth: Des Moines has been experiencing consistent population growth, with approximately 663,381 residents in 2022. This upward trend is a positive sign for real estate investors as it indicates a growing demand for housing.
- Diverse Demographics: The city attracts a diverse range of residents, contributing to a dynamic real estate market. A mix of demographics can create opportunities in various property types, from family homes to apartments.
Economy and Jobs
The local economy and job market play a vital role in determining the attractiveness of a real estate market for investors.
- Strong Economy: Des Moines boasts a robust and diversified economy, with sectors such as insurance, finance, healthcare, and technology contributing to its economic stability. This diversity can provide stability to the real estate market, even during economic fluctuations.
- Job Opportunities: A healthy job market is crucial for attracting residents and tenants. Des Moines has low unemployment rates and continues to create jobs, making it an appealing destination for those seeking employment.
Livability and Other Factors
The overall livability of a city and additional factors can significantly impact the real estate market's appeal to investors.
- Livability: Des Moines is known for its high quality of life, with affordable housing, excellent schools, and a vibrant cultural scene. A city's livability can drive demand for real estate, making it an attractive investment location.
- Tax Benefits: Iowa offers various tax incentives for homeowners and investors, which can positively impact your financial returns from real estate investments.
Rental Property Market Size and Growth
Investors interested in rental properties should assess the size and growth of the rental market.
- Rental Demand: Des Moines has a consistent demand for rental properties, with a mix of students, young professionals, and families seeking rental units. Understanding the specific rental demographics can help you target your investment strategy.
- Rental Income Potential: The city's rental market can provide attractive income opportunities, especially in neighborhoods with strong rental demand.
Other Factors Related to Real Estate Investing
Investing in real estate involves various considerations beyond the local market. These include:
- Market Research: Conduct thorough research on property prices, historical trends, and market conditions in Des Moines. This data will help you make informed investment decisions.
- Property Management: Decide whether you will manage properties yourself or hire a property management company. Property management can impact your investment's success and your peace of mind.
- Risk Mitigation: Diversify your real estate investments to spread risk. Consider various property types, such as residential, commercial, or multifamily, to balance your portfolio.
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