Once nearly insulated by its strong agricultural industry from the real estate crisis, Iowa housing prices are coming down. But home prices aren't forecast to go through the devastating deflation that many other areas of the country have experienced.
In Des Moines, despite a slump in sales activity the median price of a home actually shot up for a while in 2008. But that may be an aberration that's likely not to be repeated for a while. Iowa's economy is dependent on agriculture as one of the top corn producing states, and as the political winds change from growing corn for ethanol with cheaper gasoline the state's economy could be in jeopardy.
The demand for homes has dropped in Des Moines and just about every where else in Iowa as one of the nation's smallest states is gripped by the credit crisis. Des Moines homes sales are projected to flatten over 2009 and the market is forecast to deflate an average of 6.4%.
Foreclosed homes are making a severe impact on housing markets in Iowa, including Cedar Rapids, where home sales are off and are expected to be slow through at least 2009. Home prices hit record highs in Cedar Rapids before the market collapsed and now foreclosures make up the largest majority of sales. Home prices are forecast to deflate 6.2% on average through the year.
 |
| City |
Forecast |
| Des Moines |
− 6.4% |
| Cedar Rapids |
− 6.2% |
| Davenport |
− 7.4% |
| Iowa City |
− 7.1% |
| Sioux City |
− 6.5% |
The housing depression isn't hitting Iowa City as much as else where since its home to The University of Iowa that produced a small but booming real estate market during the national frenzy. The excessive inventory of homes is plaguing the marketplace and pressuring price levels, which are forecast to fall an average of 7.1% in 2009. Lots of students hoping to capitalize on the once appreciating market are now holding on to their homes as investment properties indefinitely.
Like most of Iowa, Davenport is a farming community and most homeowners were too busy growing crops or working with their livestock to deal with the real estate boom when it was going on, but home prices shot up there for a while too. Now the reverse is true as many who moved to Davenport want to move to greener pastures. The farming business is at least healthy. But those facing foreclosure are looking for a way out or allowing the mortgage company to take the house back.
The real estate crisis is taking a toll on Davenport as sales slow and prices are forecast to deflate for yet another year in 2009 at an average rate of 7.4% through year's end. Mortgage payments are getting tougher for many to keep up with these days as the foreclosure epidemic worsens.
In Sioux City, the impact is similar as home foreclosures increase and the market stalls. More and more homeowners are walking away from their homes because of mortgages that have gotten to expensive to handle. Sioux City is forecast to deflate 6.5% in values in 2009.
