Analysis: Cheaper to buy than rent in Iowa

CEDAR RAPIDS - In a sea change from long-held assumptions, Iowa residents overall now pay more to rent a house than they would to buy it.

And that's now true across most of the nation, according to a data analysis released this month by GoBankingRates.com.

Only eight states still have higher rates for purchasing a house than for renting - which was the standard pretty much across the board before the housing market crash of 2008-2009.

In fact, in Cedar Rapids's current market, said Stefan Doerrfeld, board president for the Cedar Rapids Area Association of Realtors and Realtor at Coldwell Banker Hedges Realty, some buyers - depending on their financial status - can obtain a mortgage with no money out of pocket.

However, John Benson, senior vice president with Hills Bank and Trust Company in Cedar Rapids, said costs can be dependent on each person's situation. Choosing to rent a house may be a better situation for some.

Owning expenses that include mortgage payments, property taxes and insurance costs were not accounted for in the analysis. The data also assumes homebuyers put 20 percent of the purchase price down, nor does it account for other out-of-pocket costs, such has repairs.

But mortgage lenders agree the findings are true for the Corridor as well, particularly due to low interests rates.

The average sale price of a house in Iowa also rose from June of last year, according to the Iowa Association of Realtors. The average sale of a house in June 2016 was $182,546 - slightly above the $181,009 price average in June 2015.

In Cedar Rapids, Nathan Seyfer, University of Iowa Community Credit Union mortgage loan officer, said the average price for first-house purchases is between $120,000 and $150,000.

Realtors association president Doerrfeld said the housing market is at a good place.

'I accredit it to low interest rates, consumer confidence and two different demographics that fuel the economy - baby boomers and millennials,” Doerrfeld said.

Doerrfeld said the lifestyle changes of the country's two biggest population groups have provided two different kinds of boosts to the housing market. As baby boomers retire or downsize to smaller houses, millennials are opting to pay mortgages rather than rent at higher rates.

'It's a good recipe,” Doerrfeld added.

Doerrfeld said he sees that trend within the Cedar Rapids market continuing for another 10 to 20 years if interest rates remain steady, housing needs are available and stay on pace with demand, consumer confidence remains and other factors.