Iowa residential real estate market ‘hotter than a pistol,’ experts say

One of Jill Monnahan’s buyers have placed offers at six different houses in the Cedar Rapids area.

“And they still haven’t gotten a house yet,” said Monnahan, a Realtor with Skogman Realty and the president of the Cedar Rapids Area Association of Realtors.

It’s part of what experts have been describing as a historically seller-friendly residential real estate market in the area.

Art Cox, director of the University of Northern Iowa’s Center for Real Estate Education, described the market as “hotter than a pistol.”

“Things seem to be selling very, very quickly,” Cox said.

“My sense is that sellers, with their real estate agents, are setting list prices that six months or a year ago they would have thought would’ve been too high.”

Monnahan, who has been a licensed Realtor in the Cedar Rapids for more than two decades, said she is seeing a lot of “unbelievableness” in the market.

In April 2021, a single-family detached house in Linn County averaged 23 days on the market before it was sold, according to data from the Iowa Association of Realtors. That’s almost half the number of days — at 44 — it took to sell in April 2020.

The county had 0.6 months of inventory in April, according to Iowa Association of Realtors data. A balanced real estate market usually has five to six months of inventory.

“I really want my clients to get into a house the first day it is listed,” Monnahan said.

Waiting, Monnahan added, comes at a risk, even if a seller plans to give buyers time to set up offers.

“You never know what that seller may decide to do,” Monnahan said. “Even though they say, ’Hey, it’s listed today, but we’re not going to look at offers for three days,’ they could change their mind. There’s nothing that’s making them bound to that statement.”

That doesn’t give buyers much time to take a look at a house before submitting an offer. Monnahan said she recommends buyers focus on the house’s location, electrical panel and other things that can’t easily be changed.

“Cosmetic things can be changed,” Monnahan said.

“A lot of these buyers that are under contract right now have been in their house one time, maybe for a half an hour,” Monnahan said.

Johnson County also is experiencing a seller’s market although the Iowa Association of Realtors statistics are not as dramatic as in Linn County.

Single-family detached homes spent 53 days on average on the market before selling, and the county has 2.3 months of inventory.

Linn and Johnson counties both have seen rises in sale prices as demand remains high and supply is low.

The median sale price in Johnson County was up 17.3 percent from April 2020 to April of this year. Linn County’s median sale price rose by 14.3 percent in that time frame.

“Sellers today, if they bought their home two years ago, five years ago, they are definitely seeing an increase that’s substantial in the value of their home,” Monnahan said.

Monnahan recommends buyers look at houses that aren’t necessarily listed at the person’s maximum price range in case of a bidding war.

“You have to assume there are going to be multiple offers,” Monnahan said.

UNI’s Cox said the seller-friendly market extends well beyond Iowa’s borders.

“That’s everywhere,” Cox said.

The nationwide single-family detached home inventory was just over two months in April, according to data from the National Association of Realtors.

Nationwide, sales of existing homes fell in April by a seasonally adjusted annualized rate of 5.85 million units — 2.7 percent — from the previous month, according to the National Association of Realtors and as reported by CNBC.

That drop has been chalked up to the limited supply and higher asking prices in some markets.

The relative ease of getting a mortgage adds to the demand, Cox said. The weekly average interest rate for a Freddie Mac 30-year fixed-rate mortgage was 2.95 percent, as of May 27.

It’s not as low as when it hit 2.65 percent in January — but it’s significantly lower than the 4.56 percent rate from the week ending May 31, 2018.

“More and more people are beginning to think, ’Well, we’re beginning to see inflation now, so interest rates probably are going to go up,’” Cox said.

“’We better move now.’”

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