Des Moines is No. 1 in nation for millennial homebuyers
59 percent of Des Moines homebuyers using a mortgage in the first half of 2015 were millennials. That's more than any other market in the nation.
After dropping $800 a month to rent an apartment for the past two years, Courtney Althoff decided to secure a mortgage for a condo in West Des Moines.
“I was tired of paying expensive rent and getting no equity,” the 27-year-old said. “With the market and the interest levels today, it just made sense for me to put some money down and get something in my own name.”
She's not alone.
Millennials — the recession-hardened generation of roughly 21- to 35-year-olds — are dominating the real estate market in metro Des Moines like no other market in the nation.
A study from Realtor.com found that 59 percent of metro Des Moines homebuyers using a mortgage in the first half of 2015 were millennials. That was the highest rate in the country and made metro Des Moines the only market where millennials accounted for more than half of mortgage applicants.
Provo, Utah, had the second-highest rate of millennial mortgage applicants at 49 percent.
Des Moines makes list of top cities for Millennial home buyers
A Greater Des Moines first-time home buyer's guide
In the Des Moines mortgage market, millennials "are really starting to come out of the woodwork," said Larry Goodell, area sales manager with Wells Fargo Home Mortgage.
Why Des Moines?
Cheap homes, a strong job market and a pipeline of young people moving to metro Des Moines have made the market a home-buying haven for millennials.
- Between 2010 and 2012, 29 percent of people who moved to Des Moines were millennials, according to NAR. That was a higher percentage than many other millennial hotbeds such as Austin, Seattle and Dallas.
- Young people can find affordable homes in central Iowa. The median sale price in August was $182,250, according to the Des Moines Area Association of Realtors. The National Association of Realtors ranks Des Moines as the 53rd most affordable housing market out of 178 cities.
- The metro's unemployment rate in August was 3.1 percent, according to the Bureau of Labor Statistics.
Recognition as an attractive market for young homebuyers is not new for Des Moines. In 2014, the National Association of Realtors named Des Moines one of the top 10 cities for millennial homebuyers. But the latest data from Realtor.org indicates even more young people are taking advantage of the favorable conditions here.
“Millennials can find a job in San Francisco, for example, but they will not be able to buy a home. It will just be too expensive," said Lawrence Yun, chief economist with the National Association of Realtors. "The Des Moines market is very affordable, so people with a stable income and decent credit should be able to buy a starter home.”
Real estate researchers and industry observers have been anxious to learn when and where the generation will start buying homes. Millennials, many of whom came of age during the global financial crisis, have put off marriage, children and home ownership longer than previous generations.
3% down payments lure first-time homebuyers
That has clogged the flow of first-time homebuyers entering the market. In 2014, first-time homebuyers accounted for the smallest share of home sales since 1987, according to the National Association of Realtors.
Perhaps 2014 marked a turning point, researchers say.
Yun said he expects first-time homebuyers to increase their share in 2015 and even more in 2016.
The report from Realtor.com, sparked additional buzz for metro Des Moines, which has become accustomed to touting its presence on various "best-of" lists. Bloomberg and Money magazine pointed to Des Moines as a place "where millennials are taking over the housing market."
Althoff, who moved here from Minneapolis in 2013 and works in marketing at Meredith Corp., is scheduled to close on her West Des Moines condo in two weeks. She decided to buy because she was feeling stable at her job and settled in the community.
Her real estate agent, Erika Hansen with Coldwell Banker MidAmerica Group, said about half her clients this year have been millennials.
“We have great schools and the cost of living is low," she said. Millennials "see value in that, and I think that’s why we have been able to attract the younger generation.”
Wells Fargo: Millennials show confidence in market
Millennials are feeling more confident about their finances and figure to drive the housing market in the next three years, according to a new survey from Wells Fargo.
Some 66 percent of millennials surveyed feel their personal financial situation will improve, compared with 48 percent of the general population.
Millennials were the mostly likely generation to be in the process of buying a home, and nearly a third of them said they plan to buy a home in the next three years, compared with just 19 percent of the general population, the survey said.
Young homebuyers are a critical catalyst for the housing market, allowing established homeowners to sell and move up to new homes, said Larry Goodell, area sales manager with Wells Fargo Home Mortgage.
“I think it bodes well for the next couple years in the housing and mortgage market,” he said of the survey.
The report, "How America Buys and Borrows," surveyed nearly 2,000 Americans between the ages 18 and 65 in June. It defined millennials as ages 18 to 35.
Cities where millennial homebuyers dominate
Millennials accounted for a higher portion of homebuyers in metro Des Moines than any other market, according to Realtor.com. Here's a look at the top 10 millennial cities based on the share of homebuyers ages 21 and 35 using mortgages during the first half of 2015.
- Des Moines: 59 percent
- Provo, Utah: 49 percent
- Baton Rouge, La.: 47 percent
- Pittsburgh, Penn.: 47 percent
- Lafayette, La.: 47 percent
- Grand Rapids, Mich.: 46 percent
- Madison, Wis.: 46 percent
- Clarksville, Tenn.: 45 percent
- New Orleans, La.: 45 percent
- Shreveport, La.: 44 percent