The Des Moines rental housing market report for Q2 of 2021 will discuss some of the factors that have affected the rental market in Des Moines and surrounding suburbs. We’ll take a look at: supply and demand in the Des Moines metro and surrounding areas, overall rental market data for RPM Iowa, the effect of COVID-19 and up-and-coming markets.
Supply and demand in the Des Moines metro
In our last report, we mentioned that the real estate market has been intensely competitive. This still rings true. “Supply has declined since our last market report in March,” said Ben Flurey, the General Manager at RPM Iowa. “Housing shortages are leaving people with limited options on what to do after they sell,” said Flurey.
Q2 Des Moines rental housing market report
Average rent in the Des Moines metro for RPM Iowa sits at around $1,507, which is slightly higher than the previous quarter ($1,464). Rental rates have increased over the past couple of years, even with the spread of COVID-19. In developing markets, like Grimes and Altoona, the average rental rates have taken an upward turn.
RPM Iowa average rental rates broken down by city and bedroom compared to Q1:
2 Bedroom: $1,106
3 Bedroom: $1,587
4+ Bedroom: $2,043
2 Bedroom: $972
3 Bedroom: $1,343
4+ Bedroom: $1,619
2 Bedroom: $1,276
3 Bedroom: $1,507
4+ Bedroom: $2,430
1 bedroom: $605
2 Bedroom: $900
3 Bedroom: $1,352
4+ Bedroom: $1,761
2 Bedroom: $1,395
3 Bedroom: $1,545
4+ Bedroom: $1,895
2 Bedroom: $1,095
3 Bedroom: $1,250
4+ Bedroom: $2,095
2 Bedroom: $1,010
3 Bedroom: $960
4+ Bedroom: $2,061
Three questions investors are asking in regards to COVID-19
With the introduction of the COVID-19 vaccine and the rate at which Americans are becoming vaccinated, the CDC has been able to loosen restrictions on businesses, welcoming the revival of the economy. In May 2021, the recorded number of unemployed persons fell by 496,000 to 9.3 million. The Bureau of Labor Statistics says that the newest measures are down considerably compared to the recent highs of April 2020, but they still remain above employment levels prior to COVID-19.
Millions of people are not caught up on their rent or mortgage payments, even though CDC regulations are lifting and unemployment seems to be falling. According to data collected by the CDC on May 26 – June 7, an estimated 14% of adult renters were not caught up on rent.
1. When does the eviction moratorium expire and how does it affect investment owners?
The federal eviction moratorium was set to expire June 30 2021, but was extended an extra 30 days until July 31. The eviction moratorium does not forgive or reduce rent payments, but merely delays eviction while renters simultaneously accumulate debt.
Without rent payments coming in, a significant number of small-time landlords are struggling to pay their mortgages and other property-related expenses. A report by Brookings has stated that 40% of residential property units in the U.S. are owned by individual investors. Roughly a third of these investors are from low-to-moderate-income households where their investment property income makes up to 20% of their total income.
2. How has the eviction moratorium affected RPM Iowa?
About 6% (48 residents total) needed and were approved for rental assistance during the peak of the pandemic. There are two state programs currently assisting Iowans with rent and mortgage payments as of March 29, 2021. The Iowa Rent and Utility Assistance Program helps eligible renters with rent and utility bills for up to 12 months. The Iowa Homeowner Foreclosure Prevention Program assists with mortgages for up to four months. For more information, you can go to the Iowa Finance Authority website.
3. What do maintenance requests look like during a pandemic?
Maintenance services are back up and running and even busier than the previous quarter. Per RPM Iowa’s in-house regulations, masks and gloves are still required for house visits. “Our vendors’ workloads have been very busy,” said Taylor McDonald, RPM Iowa’s Maintenance Coordinator.
Our vendor network is seeing an influx of need from homeowners and renters alike. It can be tricky to find quality vendors when there are homeowners buying houses and starting projects, or needing maintenance on their appliances. “About five or six months ago, we were experiencing some delay on non-emergency requests,” said McDonald. “But now, things are pretty much back to normal. On average, our maintenance requests are resolved within 48 hours.”
Future opportunities: What’s hot right now
“Everything is hot right now,” said Flurey. “The real estate market is not slowing down anytime soon – the price today is a deal tomorrow. Properties will continue to rise in value. Investors and homeowners are still buying left and right, both new construction or existing.”
“Housing shortages are leaving people with limited options on what to do after they sell,” said Flurey. “And relocating to a short term rental is less than ideal. That’s why we created the Sell & Stay Program.” RPM Iowa’s Sell & Stay Program allows homeowners to capitalize on the current market conditions without rushing to find their next home.
Bondurant & Altoona
The suburbs of Des Moines are expanding rapidly due to recent developments in the city. The 2020 United States census numbers came out recently, showing a 4.7% upward population growth for the state of Iowa since 2010. One of the newest entertainment districts is underway in Des Moines, as reported by the Des Moines Register. The Market District will be located to the south of East Court Avenue and close to the Historic East Village. This project will cost about $750 million and will include an indoor/outdoor concert venue, apartment complex with ground-floor retail, and an eight-acre riverfront park.
Similar to our last real estate investment report, some of the growth in Altoona and Bondurant is due to the brand-new Amazon facility that created a thousand new jobs. On November 4, 2020, the Business Record reported that Amazon is building a $55 million warehouse one mile west of their fulfillment center. Project Omega will be the third Amazon facility in Iowa.
Facebook announced its plans to expand the Altoona Data Center, reported by the Des Moines Register. This will bring the city of Altoona an additional $2 million annually. The company first announced its building project in 2013, with construction expecting to continue through 2023.
Now is a great time to invest in real estate.
There’s an opportunity to expand your wealth along with the development of Des Moines and surrounding areas. After reading the Des Moines rental housing market report, we hope you see that investing in real estate is the right move. Whether you’re looking to start investing, or expanding your current portfolio, schedule a consultation with our Real Estate Investment Advisor today.