There are 24,437 housing units in Iowa City, not including dormitories and University of Iowa family apartments. Of that number, only 1,104 units (4.5%) were vacant according to the 1996 Special Census. More than half of the vacant units are for sale making the rental market vacancy rate less than 2.2%. This is in contrast to a typical market rental vacancy rate of 5% that is considered normal. Most three-bedroom units are owner-occupied; the opposite is true for two-bedroom units. Overall, almost 80 percent of the two-bedroom units are rental units while close to 50 percent of the vacant two-bedroom units are for rent. Nearly all efficiency and one-bedroom units are rental units.
Because The University of Iowa is the largest employer in the area, many homebuyers are University employees. Some people affiliated with the University, such as graduate students or medical residents, plan to live here only two or three years and may find it financially beneficial to buy rather than rent a home, which results in a continuous turnover for owner-occupied units. Over the last few years approximately 200 owner-occupied homes have been sold each quarter. Table III.6 shows the number of sales in Johnson County.
Many homebuyers new to the area come from areas where housing is expensive and tend to buy upscale housing in Iowa City. Other homebuyers are families already established in the community moving up to a larger home. Another trend is parents of college students buying homes (often condominiums) for one or more of their children to live in while attending the University. Despite continuous construction of single-family homes and rental units, there continues to be a need for lower-cost units for both markets.
The demand for both rental and owner-occupied housing has driven up the cost significantly over the last few years. Information from many sources suggests that the cost of owner-occupied units has increased at nearly the same rate as rental units. According to local landlords, the water and sewer rate increases due to the construction of new treatment facilities, have affected rental rates, possibly increasing rents by $5-$10/per month.
