Iowa City Housing Information

Housing Market Analysis: Significant Characteristics of the Housing Market:
Cost of the Housing Stock

 

I. Development of the 2001-2006 Consolidation Plan (CITY STEPS) II. Housing & Homeless Needs Assesment III. Housing Market Analysis IV. Strategic Plan V. Certifications VI. Appendices
A. Significant Characteristics of the Housing Market B. Public and Assisted Housing C. Homeless Facilities D. Special Needs Facilities and Services E. Barriers to Affordable Housing F. Housing Discrimination
1. Background and Trends 2. Supply and Demand 3. Condition of the Housing Stock 4. Building Permits and Value of New Construction 5. Cost of the Housing Stock
6. Vacancy Rates 7. Housing Stock Available to Persons with Disabilities 8. Housing Stock Available to Persons with HIV/AIDS 9. Areas if Concentration of Racial/Ethnic Minorities 10. Concentrations of Low Income Households

5. Cost of the Housing Stock

Iowa City has one of the most dynamic housing markets in Iowa due to the economic growth of the community. As witnessed by the number of building permits issued and low vacancy rates for all types of housing, there continues to be a very strong demand for housing. Because of this demand, the private sector has been concentrating on higher priced homes, which provide them the greatest return on investment. Building permit data shown on Table III.6 indicates that the average cost to build a home in Iowa City in 1998 was $124,903, this price does not include the price of the lot, which can range from $20,000-$70,000. Since 1993 this data shows a 19.5% increase in the average home price, not including the lot.

Table III.5 and Table III.6 offer evidence of the cost of housing using sales data from the Iowa City Area Association of Realtors which has been compiled from the Multiple Listing Service. According to this data, the average sales price of single-family dwelling units has increased from $104,517 in 1993 to $124,903 in 1998, or approximately 20%. There are very few homes in Iowa City valued at less than $50,000 (3%) while statewide more than half of the homes fall in this category. Thirty-three percent of owner-occupied homes for sale in Iowa City in 1998 were valued between $55,000 and $99,999.

Table III.5
SINGLE-FAMILY HOME SALES REPORT
JOHNSON COUNTY

January 1, 1998 to March 31, 1999

Price Class

2 or Less

Bedrooms

3

Bedrooms

4 or More

Bedrooms

 

Total

Percent of Units Sold

$40,000 & Under

4

2

1

7

0.4%

$40,000-$54,999

36

3

1

40

2.6%

$55,000-$69,999

114

14

--

128

8.4%

$70,000-$84,999

63

45

6

114

7.5%

$85,000-$99,999

73

171

18

262

17.1%

$100,000-$124,999

112

189

53

354

23.2%

$125,000-$149,999

17

168

54

239

15.6%

$150,000-$199,999

11

103

98

212

13.9%

$200,000-$249,000

6

28

53

87

5.7%

$250,000 & Over

0

17

68

85

5.6%

Total

436

740

352

1,528

100%

SOURCE: IOWA CITY AREA ASSOCIATION OF REALTORS, March 1999

 

Table III.6
ANNUAL RESIDENTIAL SALES
JOHNSON COUNTY AND SURROUNDING AREAS2
Johnson County

1991

1992

1993

1994

1995

1996

1997

1998

Number of

Sales1

1,039

1,251

1,248

1,269

1,193

1,365

1,486

1,760

Average

Listing Price

$92,175

$95,954

$106,581

$112,956

$115,239

$115,916

$122,728

$128,020

Average

Sale Price

$89,816

$93,751

$104,517

$111,174

$112,761

$112,913

$119,202

$124,903

Total Sale

Volume

(thousands)

$91,672

$117,564

$130,437

$141,080

$134,524

$154,804

$177,134

$219,829

1Sales of residential and condominium properties.

2Surrounding areas include West Branch, Tipton, West Liberty, Riverside, Kalona, Wellman, and adjacent rural areas.

NOTE: Figures based on Iowa City Association of Realtors Service Area

SOURCE: IOWA CITY BOARD OF REALTORS, MARCH 1999.

In order to afford a median cost home ($120,500) in Iowa City in 1999, a potential homebuyer would have to earn a minimum annual salary of approximately $43,800 assuming few other debts. The median household income for a family of four is $54,400, while non-family households, which are the majority of households in Iowa City, earn considerably less. Excluding the many non-family households that are probably students or post-graduate young adults not yet in the ownership market, these income figures show it is difficult, though not impossible, for first time homebuyers to get into the market. Below are income requirements for a few home price categories:

House Price

Payment Per Month

Annual Income Required

$50,000

$443

$17,750

$75,000

$665

$26,660

$100,000

$888

$35,520

$125,000

$1,109

$44,360

$150,000

$1,331

$53,240

 

Assuming 30-year loan, 5% down, 7.75% interest rate, .0074 PMI, and typical tax and insurance costs. Does not include utility costs.

Renters and homebuyers alike face these financial pressures. If the cost of housing is more than 30 percent of the households' monthly income, the household is considered by HUD to have a housing problem (cost burden). According to the 1990 Census, in Iowa City, 61 percent of all related households under 80% of median family income with five or more members (renters or owners) have some housing problem as defined in II B. Fifty-nine percent of all other renting households are facing similar dilemmas. Overall, fourteen percent of homeowners and 53% of renters encounter housing problems.

The cost of rental units in Iowa City increased by an average of 6.45% between 1990 and 1994, however, the range of increase was from 10.44% for efficiencies to 1.57% for two-bedroom units (Carlson, McClure & McWilliams, Inc. Apartment Survey - 1994). Data from this survey also showed an average vacancy rate of 2.5% for all units. The following shows the average market rents (1994) listed in the survey:

Efficiency/1 BA$3882 BR/2 BA$589
1 BR/1 BA$4313 BR/3 BA$715
2 BR/1 BA$5143 BR/1.5 BA$796
2 BR/1.5 BA$6063 BR/2 BA$677

Maxfield Research Inc. conducted a rent survey in October and November of 1997. The average rents are as follows:

Efficiency$335Three BR$730
One BR$410Four BR$1,000
Two BR$535Five BR$1,250

This data may appear to suggest rental costs for efficiencies through three bedroom units has decreased. However, since the two surveys did not identify units in the same manner, their results are not directly comparable. Data from the Maxfield survey showed an overall vacancy rate of only 1.9%.

Manufactured homes are some of the least costly homes to purchase in Iowa City. At present, there are approximately 1,300 mobile homes in Iowa City. During the 1993 flooding, two mobile home parks in the floodplain sustained damages reducing the capacity of Iowa City's mobile home parks for a time. In 1999 two mobile home parks with a total of approximately 70 homes were closed. However, a new manufactured home park, Saddlebrook, has been opened. It currently contains 71 homes and has received approval for a total of 222 homes. Saddlebrook owns an additional 40 acres of land zoned for manufactured homes which has not been planned for development yet. Adjacent areas in Johnson County contain several mobile home parks and one new park (Lake Ridge). In addition to these local parks, the cities of North Liberty and Coralville also have accommodations for manufactured housing.
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