Real estate is holding strong in Des Moines and is still appreciating, making the this “a really hot time for investors,” according to WHO 13 News.
One of the reasons why the housing market is steady and stable is because the market is more rural, yet has a growing tech scene with recent announcements of Facebook and Apple investing over $1.7B combined in data centers nearby.
Des Moines is the capital of Iowa and is located along the banks of the Des Moines River. Founded back in 1843 as a coal mining town, the city quickly became the largest in the state. Today, Des Moines is the third-largest spot for insurance companies in the world and is home to the headquarters of financial corporations including Wellmark Blue Cross Blue Shield, EMC Insurance Companies, and Principal Financial Group.
One of the first caucuses of the presidential primary cycle takes place in Des Moines, with the New York Times describing the city as the perfect place to watch politics in a close-up and intimate setting. Over the last several years Des Moines has been ranked as the best place for business and the wealthiest city in America.
Keep reading to learn why investing in the Des Moines real estate market is worth considering in 2020.
Des Moines and the city’s suburbs have accounted for 50% of the population growth in the entire state of Iowa since 2010. According to the Des Moines Register, several suburbs in Des Moines – including Waukee, Ankeny, and West Des Moines – have boomed by between 48% and 74%. In fact, while a large majority of towns in Iowa have lost residents, Des Moines just keeps on growing.
Key Population Stats:
- Des Moines is the largest city in Iowa with a population of more than 203,400 in the city and more than 655,400 residents in the Des Moines-West Des Moines metropolitan area.
- Metro area of Des Moines consists of Polk, Dallas, Warren, Madison, and Guthrie counties.
- Suburban communities in the Des Moines metropolitan area include Altoona, Ankeny, Bondurant, Norwalk, Pleasant Hill, Waukee, and West Des Moines.
- Over the last 10 years, the population of Des Moines has grown by 7.1%.
- Des Moines is the fastest-growing city in Iowa and one of the fastest-growing major cities in the Midwest.
- Unemployment in Des Moines is just 2.5%.
- Job growth in Des Moines was 1.6% last year with a metro area cost of living 7% below the national average.
- Median age in Des Moines is 33.9 years, making the market perfect for renting to millennials.
Over the past decade, the number of high-tech jobs in Des Moines has increased by nearly 60%, faster than traditional big-city technology centers such as Seattle, Boston, and Portland. Midwestern “Heartland” cities like Des Moines are attracting and keeping Millennials at higher rates due to the low cost of living, high-tech job growth, and sense of community.
Key Employment Stats:
- GDP of the Des Moines-West Des Moines MSA is more than $50 billion, according to the Federal Reserve Bank of St. Louis, and has grown by more than 50% over the last ten years.
- Job growth rate in Des Moines was just under 1% through Q1 2020 and nearly 2.5% last year.
- Median household income in Greater Des Moines is more than $71,300 while per capita income is $35,600.
- Forbes ranks Des Moines as the 10th-best place for business and careers, with high rankings for cost of doing business, education, and job growth.
- Key industries in the Des Moines metro area include advanced manufacturing, agbioscience, data centers, insurance and financial services, logistics, and technology.
- Region’s high concentration of agriculture and biotech companies, plus the region’s access to prime farmland and a talented workforce, have earned the nickname “America’s Cultivation Corridor.”
- Facebook and Microsoft have strategic data operations centers in Des Moines.
- More than 80 insurance companies are located in the Des Moines metro area, creating the highest concentration of employment in insurance and financial services in the U.S.
- Major non-government employers in Des Moines include Wells Fargo & Company, UnityPoint Health Partners, Nationwide insurance, John Deere companies, Cortiva Agriscience, Pella Corporation, MidAmerican Energy Company, Tyson Fresh Meats, and Drake University.
- Mercy College of Health Sciences, Grand View University, and Drake University all have their main campuses in Des Moines.
- More than 93% of the residents in the Des Moines metro area are high school graduates or higher, and nearly 39% hold a Bachelor’s or post-graduate degree.
- Des Moines is located only a few hours by car from Minneapolis, Chicago, St. Louis, Kansas City, and Omaha, Nebraska.
- Located at the crossroads of Interstates 80 and 35, Des Moines is a prime location for logistics, warehouse, and distribution facilities.
- Des Moines International Airport (DSM) provided service to nearly 3 million people last year with non-stop flights to cities such as Atlanta, Phoenix, Denver, Washington D.C., Dallas, Los Angeles, and New York.
Real Estate Market
Des Moines has an emerging job market, affordable housing prices, and a high standard of living, making the real estate market here a great under-the-radar option, according to the Home Buying Institute. A real estate agent recently told WOI the real estate market in Des Moines as “still not”, with active home buyers, excited sellers, and phenomenal interest rates.
Key Market Stats:
- Median listing price of a house in Des Moines is $149,900, according to Zillow (as of January 2020).
- Square foot listing price of a home in Des Moines is $133 vs. $154 per square foot in the Des Moines-West Des Moines Metro area.
- Homes values in Des Moines have increased by 2.5% last year and by more than 36% since December 2012, based on the Zillow Home Value Index.
- Average days on market is 61, according to the Iowa Association of Realtors.
- During the listing period, 1.1% of the houses for sale in Des Moines have a reduction to the asking price.
- 5.2% of the homes in Des Moines have a negative equity vs. 8.2% U.S. average.
- 1.3% of the homes in Des Moines have a delinquent mortgage vs. 1.1% nationally.
- Downtown Des Moines and Gray’s Lake are two of the neighborhoods in Des Moines with the highest median Zillow Home Value Index.
- King Irving and M.L. King Jr. Park are two of the neighborhoods in Des Moines with the lowest median Zillow Home Value Index.
Attractive Renters’ Market
HousingWire recently reported that Des Moines ranks just 70th place in the country for a high cost of renting, even though the rental market here had the fastest growth rate for one-bedroom units. While the rents have kept rising in Des Moines, cities with much higher costs of living such as Seattle and San Diego have seen year-over-year rents decrease by nearly 10%.
Key Market Stats:
- Median rent in Des Moines is $1,025 per month vs. $1,200 in the Des Moines-West Des Moines metro area.
- Rents in Des Moines increased by 2% last year, according to RENTCafé.
- 42% of the households in Des Moines rent rather than own.
- 50% of the rental units in Des Moines have monthly rents of between $701 and $1,000
- Neighborhoods in Des Moines with the highest rents include Downtown Des Moines, East Village, and North of Grand where rents range between $1,222 and $912 per month, according to Rent Jungle.
- Cheapest neighborhoods for renters in Des Moines are Southwestern Hills, Woodland Heights, and Greater South Side where monthly rents run as low as $693 per month.
- Top neighborhoods in Des Moines for renters include Beaverdale, Chautauqua Park, Downtown Des Moines, and Linden Heights, according to Rent Jungle.
Historic Price Changes & Housing Affordability
Reviewing the historical change in home prices and the affordability of housing in a market are two ways investors can forecast the potential appreciation and demand for rental property looking forward.
The Freddie Mac House Price Index (FMHPI) measures the typical price inflation for houses in the U.S. Freddie’s HPI uses December 2000 as a benchmark of 100, then compares the increase in housing prices in each state and metro area to 100.
The most recent FMHPI for Des Moines shows that:
- House Price Index for the Des Moines-West Des Moines metro area is 156.58 through April of 2020
- One year ago, the HPI for Des Moines was 153.22
- Year-over-year home prices in the Des Moines metro area have increased by 2.2%
The editors of Kiplinger’s Personal Finance publish regular reports showing home prices in the 100 largest metro areas. Real estate markets are ranged on an affordability scale of 1 to 10, with 1 being the most affordable place to buy and 10 being the least affordable.
The affordability index report for Des Moines shows:
- Since the last real estate cycle market peak in May 2006, home prices in Des Moines have increased by 26.1%.
- Since the last real estate cycle market bottom in March 2012, home prices in Des Moines have increased by 45.0%.
- Des Moines has an affordability index of 3 out of 10, meaning that Des Moines is one of the most affordable markets in the country to buy a home.
Quality of Life
Des Moines is ranked by U.S. News & World Report as the 5th-best place to live and the 46th-best place to retire in the U.S. The publication admits that the flyover state may not be a top tourist attraction, but the city is a great place to live for singles, couples, and families.
Key Quality of Life Stats:
- Cost of living in Des Moines is 7% below the national average, according to Forbes.
- Des Moines receives high rankings from Niche.com for diversity, nightlife, family living, housing, and public schools.
- The city has a dense suburban feel, with parks, coffee shops and bistros easy to find.
- Climate is humid continental with warm to hot summers with a lot of humidity and cold, snowy winters with an average snowfall of 35.3 inches per season.
- Iowa’s cultural center is located in Des Moines, with numerous art and history museums, and performing arts groups calling the city home.
- Greater Des Moines Botanical Garden is an indoor conservatory with one of the largest collections of tropical, subtropical, and desert-growing plants in the Midwest.
- More than four miles of enclosed walkway make the Des Moines Skywalk System in the central business district one of the largest in the U.S.
- MercyOne is ranked as the #1 hospital in Des Moines and the 2nd-best in Iowa by U.S. News
Get Out the Map
Where to begin your search? Roofstock created a heat map of Des Moines based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels, and other vital investment criteria.
DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood
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