|Housing Market Profiles|
| Des Moines, Iowa
In 2000 the Des Moines metropolitan area population was 456,000, an increase of more than 63,000, or 16.0 percent, over 1990. Between the 2000 Census and July 1, 2003, the three-county metropolitan area grew by an estimated 23,000 persons, or 1.5 percent per year. This is only slightly below the 1.6 percent recorded between 1990 and 2000. Des Moines steady growth can be attributed to its being the state capital and a center for the insurance industry.
The resident labor force grew from 225,900 in 1990 to 261,400 in 2000, an increase of 35,500, or 15.7 percent. But during that same period nonfarm employment within the metropolitan area increased 23.2 percent, growing from 232,900 to 286,900, or an increase of 54,000 jobs. Since 2000 the resident labor force has continued to grow, averaging 276,600 for the 12 months ending June 2003, an annual increase of 15,200 workers, or 1.7 percent. Nonfarm employment for the 12 months ending June 2003 averaged 286,500. Population and resident labor force growth can therefore be attributed, in large part, to people moving to the metropolitan area.
Sales of existing homes continue strong throughout the Des Moines area, attributable in part to low interest rates. Existing home sales totaled 4,300 units through June 2003 compared with 4,150 through June 2002. The average sales price for an existing home has not increased significantly during the past year in part because of an increased supply of new homes on the market. In the first 6 months of 2003 the average existing home sold for $147,240, only 1.0 percent greater than the average price for the first 6 months of 2002. The median price for an existing home sold through June 2003 was $138,940.
In 2000, 2,430 single-family building permits were issued in the metropolitan area. For 2001 that number increased 12.5 percent to 2,730, and in 2002 it increased 21.1 percent to 3,310 single-family permits issued, the greatest number of single-family permits ever issued within the metropolitan area. For the 6 months ending June 2003, 1,810 single-family permits were issued compared with 1,520 issued through June 2002.
Multifamily construction is being pushed by low interest rates rather than by market demand for new rental units. From 2001 to 2002 some 2,540 multifamily units were issued building permits, the highest 2-year total since 1994 and 1995. Through June 2003, 540 multifamily building permits have been issued. According to local multifamily vacancy surveys vacancies have risen from 4.5 percent in 2000 to 7.3 percent at the end of 2002. This rate of multifamily rental vacancy was the highest rate recorded since the 8.6 percent observed in December 1997.
In the rental market the luxury apartment segment has been the most affected. Low interest rates combined with an abundant supply of new homes on the market have enabled many renters to move to homeownership. Upper-end renters can afford to buy homes in the $150,000 to $200,000 range and appear to be doing so in substantial numbers. To counter the competition owners of developments in the upper-end are offering unique incentives. In addition to the typical 1 months free rent to sign a 1-year lease, some apartments are offering $700 worth of new furniture or a new computer with 1 year of free high-speed Internet access.
After years of only token housing development activity in downtown Des Moines there are signs of a major reinvestment effort. A proposal called Riverpoint West would add 1,000 new residential units to the central business district of the city of Des Moines. The Department of Housing and Urban Development is also participating in downtown Des Moines development by insuring two market-rate multifamily rental proposals totaling more than 200 apartments.
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