Market Stats:
Cost of living here is 10% below the national average
No. 1: America’s best cities for young professionals – Forbes
No. 2: Top places to find a job in 2015 – WalletHub
DES MOINES, IOWA
It just makes plain old Midwestern good sense that Des Moines, located in one of the first states in the country to pull out of the housing slump, has earned a place on BUILDER’s list of the hottest housing markets of 2015.
Thanks to a stable economy and strong tax base that attracts financial, tech, and insurance firms that bring white-collar jobs by the thousands, the Des Moines housing market began recovering from the recession as early as 2011, while many other metropolitan areas were still struggling. “With the stability in our city, we don’t have the big highs and the big lows so our recovery happened a lot sooner than the rest of the country,” says Dan Knoup, executive officer of the Home Builders Association of Greater Des Moines.
Much of this early recovery was driven by multifamily building, but single-family has made a comeback, too. 2013 was the industry’s best year in a decade, in which metro area home building permits increased 21 percent from the previous year. The HBA is predicting an 8% to 12% increase next year, despite Iowans’ potential distraction from the upcoming presidential caucus, which generally slows sales for a few months, Knoup says. Local firms like Classic Builders Inc. and Jerry’s Homes are thriving in this market, with very little competition from larger production companies.
One potential issue could cloud the industry’s bright outlook: Although this Heartland city is a popular destination for college-educated millennials looking to settle down, growth in entry-level housing is not on the horizon. Land costs are rising in and around the city, and housing developers must compete with the agricultural industry for pricey sites; an April 2013 survey found the average price of high-quality farmland to be more than $11,000 per acre. This leads most builders and developers to focus on move-up projects instead, Knoup says. “A lot of lots are being developed but not at the entry-level price point.”
The city’s success in attracting waves of young
professionals may lead to a housing shortage unless builders can find a way to
provide entry-point single-family housing. One thing is for sure: The area will
continue to be an attractive place for residents looking for a good quality of
life, low cost of living, and stability—something most home builders dream of.
— Jennifer Goodman
