Experts Optimistic About Des Moines Housing Market

After recording their second-best January sales totals ever, home builders in the Des Moines housing market expect 2007 to be a fine year for selling houses.

“We’re still in the initial stages of a number of projects; we’re not backing off at all,” said Rick Tollakson, president and CEO of Hubbell Realty Co. “We believe the fundamentals are there; people are working and mortgage rates are good.”

The latest figures from the Des Moines Area Association of Realtors show that Central Iowa home sales totaled 580 in January, compared with 503 a year earlier, and the average sale price was $166,788.

That’s an increase of $4,000 from a year ago. However, the market had 6,391 active listings, 377 more than in January 2006 - reflecting the dropoff in Iowa mortgage demand over the past 12-18 months.

“I think a lot of builders were overextended,” Tollakson said. “They’ll get a lot of inventory sold off this year, but suffice it to say, a home loan lender won’t be so eager to finance spec homes in the future.”

He also predicted that a number of builders will drop out of the market.

“Our list of home builders is over 400, but well over 50 percent of them only buy one to three lots per year,” he said. “They tend to get in and out pretty easily.”

Tollakson said that with shifting market dynamics, Hubbell is becoming more involved with the multi-family home market - condos and townhomes.

“We started last year with one project, and hopefully we’ll have five or six this year,” he said. “The demographics are there; it’s still a good starter-home market.”

That matches the experience of Triton Homes in Ankeny, which specializes in multi-family construction rather than single-family homes.

“In 2006, we closed 318 townhouses in the Des Moines area,” according to Pam Ireland, the company’s Des Moines metro vice president. “That’s double what we did in 2005.”

Triton, founded in 2003, has had enough success to encourage expansion.

“We’re already building in Omaha, Nebraska, and we’re branching into Kansas City and Arkansas. We have land picked out in Kansas City and are working on due diligence there, and we’re identifying property in Arkansas,” Ireland said.

In short, look for home loan activity to remain strong in Central Iowa this year as buyers look to take advantage on optimal buying conditions.

SOURCE: Des Moines Business Record