Developers ‘look up’ as Coralville runs out of space to expand housing

CORALVILLE — Coralville, amid increasing development, is running out of space to expand outward, forcing developers to look inward and build upward to redevelop older housing stock.

Coralville is boxed in on all sides by Tiffin, North Liberty, and Iowa City — communities that have seen their own boom in residential development — leaving developers with waning options for new construction.

Rex Brandstatter, a longtime Coralville real estate agent, told The Gazette many homes in the city are selling at or above asking price, a situation he attributes to a lack of supply and strong demand, despite higher interest rates.

"We can't go out so we're going to have to go up,“ Brandstatter said. “That aids to the development of condominium living and rental development, like apartments.”

However, interest rates now hovering around 6.5 percent are deterring some people from buying a home, Iowa City developer Kevin Digmann of Hodge Construction said.

Digmann said the rental market remains strong, and he’s seen an increase in investment in rental housing to meet that demand.

“With interest rates going up as they have has probably slowed down homeownership, just because the rates are as low as they were,” Digmann said. “People are just not rushing into the decision to buy anymore and would rather rent for a while.”

The Iowa City metro area — Iowa City, Coralville and North Liberty — has 24,601 renters — or 41 percent of the area’s population, according to the U.S. Department of Housing and Urban Development.

The fair market rent for a two-bedroom apartment in the metro area is $1,127 a month, the highest in Iowa, which requires an hourly wage of $18.13 if renters are to pay no more than 30 percent of their income in rent. The average rent statewide in Iowa is $943 a month, according to HUD.

Coralville boom

Coralville has seen a boom in single-family housing development over the past three decades, one that followed the city’s rapid growth in commercial development, according to Jerry Anthony, a professor of planning and public policy at the University of Iowa.

“Coralville for the longest time, had a lot more commercial than residential development to support that commercial,” Anthony said. “So those working in Coralville would have to live elsewhere far away in Johnson County, maybe Iowa City if possible, but the city doesn't have reasonably priced housing.”

Even with increased residential development, such as the new Lundell apartments along the Coralville strip, demand continues to outpace supply, leading to some of highest average rent prices in the state, Anthony said.

The lack of properties with reasonable rent price points drives out the workforce Coralville needs to support its commercial development, he said, so many of those working in Coralville don’t live in Coralville.

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Anthony said the cities in Johnson County need to work to incentivize affordable and low-income housing to house the growing workforce.

“There is a responsibility placed upon all the governments to expand the housing stock as much as possible at all price points, not just for the very rich people, and not just for homeownership,” Anthony said.

“I hope that Coralville does that and I hope Iowa City does that,” he said. “I really hope that all the cities do it because there's no legal requirement but otherwise it distresses and stresses so many people.”

Digmann, the Iowa City developer, said creating affordable housing depends on local governments to incentivize that development via tax credits and other means.

“Unfortunately, the affordable option really, in my opinion, comes down to what the governments can help provide because the rental market is what it is and building costs are rising,” Digmann said. “Everybody knows that inflation is high, building costs are high and now interest rates are high.”

Cities tackle affordable

David Johnson, the director of community development for Coralville, said the city works hard to obtain workforce housing tax credits and other tax credits to make housing more affordable.

Several Coralville projects received those workforce housing tax credits in the past to help replace the 300 to 400 housing units Coralville lost in the 2008 flood.

Johnson said the need for affordable housing is also a priority as the city redevelops its downtown and the Iowa River Landing area.

One approach, he said, is to support mixed-use development, where residential is mixed with commercial via vertical development, where housing is placed above commercial spaces.

“I would anticipate that that development, the city will certainly continue to support in that area as well as developers, we'll continue to see a demand for in the Iowa River Landing,” Johnson said. “A lot of the development moving forward will continue to be mixed-use development.”

Rael Development Corp. — the group behind the downtown Gather Iowa Project — is applying for the state’s workforce housing tax credit program, with the council discussing adding a mixed-use building to provide affordable housing.

An innovative idea Iowa City is trying to create affordable housing by using 3D printing.

Better Together 2030 is working with Alquist 3D, Hodge Construction, Axiom Consultants and Neumann Monson Architects on a 3D-printed six-unit build in Iowa City. Construction on the project has not started yet.

Also, two Johnson County groups — the Johnson County Affordable Housing Coalition and the Housing Trust Fund of Johnson County — are studying and advocating for affordable housing, working with local governments in addressing that need.

Comments: 319-368-8877; liam.halawith@thegazette.com