Focus: Real Estate

Local residential real estate brokers are cautiously optimistic about home sales for 2003 following record-setting numbers in 2002. Spurred by several factors, including decades-low interest rates and a shift in capital by investors from the equities market to real estate, experts say Iowans’ need to nest has spurred the market.

Don Godwin, broker/owner of RE/MAX Real Estate Group in Des Moines, said his company had hoped to achieve $225 million in volume last year, but exceeded that goal with sales totaling $245 million. He said sales have been on the rise over the last five years and he anticipates 2003 to continue that trend.

“We’ve had about 60 months of continuous growth,” Godwin said. “This January was our best January ever as we closed 156 transactions. That’s a record for us. Part of that was the mild weather, part of that is the fact that the housing economy is one of the bright spots in the whole economy and another part is that mortgage interest rates are good for buyers, but not for savers.”

Carolyn Helmlinger, president of Coldwell Banker Mid-America Group, said sales were up last year for her company, too. From January of 2002 to January of 2003, sales increased 20 percent. So far, she said, sales in February are about even with the same period last year.

“This January was better than last year’s, so I’m very optimistic about the market,” she said. “Housing continues to be the best investments. Nothing else is paying dividends.”

Tom Franklin, co-founder of Next Generation Realty in Des Moines, said his company increased its volume 12 percent to 15 percent last year, completing more than 500 transactions.

“The first half was better than the second half,” he said. “We’re anticipating that kind of growth this year, too.”

However, Franklin is cautious to compare last year’s sales to this year’s sales because of the inordinate number of buyers who flooded the market early in 2002 after waiting to buy homes the previous fall following the September 2001 terrorist attacks.

“We were humming along until the terrorist attacks threw us off the track, so there was a lot of delayed buying last year,” he said. “By January of 2002, people were ready to go after being in a holding pattern.”

Last year might have been an anomaly due to that influx, but Franklin said the Des Moines’ real estate market is so steady it weathers highs and lows better than other cities.

“Cities like Portland, Atlanta and San Jose have been down for the last year and now they are kind of catching up with Des Moines,” he said. “Des Moines is the steadiest market in the world.”

Godwin said the presence of strong banks, financial services and the insurance industry in Des Moines helps stabilize the local economy. “We used to be fearful when a company closed down in Des Moines, but our economy has become more diverse now so we can maintain our way of life,” he said. “Central Iowa has a lot going for it, including a stable economy and a lot of good builders.”

Two weeks ago the state’s largest real estate brokerage, Iowa Realty Co., reported double-digit increases and record sales for the third year in a row in 2002. The company and its subsidiary, First Realty/GMAC, set records in both closed sales and written volume, company officials said.

In Greater Des Moines, Iowa Realty and First Realty increased their combined written volume 11 percent to $2.17 billion. Closed sales, totaling $1.97 billion, increased 12 percent for the year.

“The lowest interest rates in four decades obviously helped the housing market, but this level of sales performance takes more than a good market,” Michael Knapp, president and CEO of Iowa Realty, said in a written statement. “Our agents deserve a great deal of credit.”

Interest rates fell below 6 percent for a 30-year fixed mortgage last year. Realtors don’t know how long those rates will last, but they expect them to remain competitive in the second quarter.

“We’ve never seen interest rates this low, this long,” Helmlinger said. “I don’t know if they can go much lower. They might pop up a little bit, but people are still going to buy houses. When I got into the business in 1980 interest rates were 18 percent and we still sold houses.”

Analysts said the low-cost of borrowing not only encouraged existing homeowners to trade up, it brought scores of new prospective homeowners into the market as rents increased at several apartment complexes in the Greater Des Moines area. Sales to minority homeowners were up last year and homes priced between $100,000 to $200,000 in western suburbs and growing areas like Ankeny continue to sell well.

Opinions vary between industry experts about what kinds of products and buyers are driving the market, ranging from empty nesters to first-time home-buyers to sales of townhouses, condominiums and newly constructed homes. But all agreed that buyers today are savvy.

“We have a mix of consumers who are more educated than ever thanks to the Internet, and as a result, more discerning as buyers,” Helmlinger said. “They shop and they know if prices are out of whack.”