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Local housing market only down slightly

Posted in Parade of Homes, Parade of Homes 2009 by jane.nesmith

Low unemployment locally has helped insulate the Iowa City area housing market

Sometimes it’s good to be off the beaten path—especially when it comes to the economic downturn’s affect on the housing market.

“The Iowa City area is always rather insulated from large market swings,” says Ernie Galer, partner at Lepic-Kroeger Realtors in Iowa City. “In years past, we never had that ten percent increase in home values, but now, we’re not getting the sharp declines either.”

Stable employment opportunities offered by the University and local businesses means the local housing market tends to avoid rollercoaster ups and downs. “Unemployment in Iowa City is lower than in other areas of the country, and that’s always a good indicator for the housing market,” points out Galer.

Statistics suggest that, while a slight downturn in the housing market has occurred here, the emphasis is on “slight.”

The total volume of home sales was down in February, for example, with home sales taking in about $5 million less than last year at that time. “When you divide that by the number of homes that were sold, that’s not much,” points out Galer. In Feb. 2008, 105 homes were sold; in Feb. 2009, 91 homes were sold.

Median house prices have also dropped slightly, just 8.75 percent from Feb. 2008 through Feb. 2009. Nationally, housing prices dropped more drastically in the same period—a big 15.5 percent. There’s some good news, too. According to Galer, homes spend fewer days on the market before being sold—an average of 109 days compared to 115 days on the market a year earlier.

In addition, financial incentives may make it easier for buyers to pay for homes. “The big incentive is the interest rates,” points out Galer. “[In late March] buyers can get a 30-year loan for 4.75 percent.”

Realtors can also point buyers to programs like one supported by President Obama’s stimulus package. “First time homebuyers and people who’ve been out of the housing market for three years could be eligible for up to $8,000 in tax credits,” says Galer.

Certain sectors of the housing market are doing well in Iowa City. “The condominium market has always been good here,” says Galer. And homes in the $200,000 to $300,000 price range seem to move more quickly. Homes in the “top end” of the market are moving slower, but according to Galer, that’s pretty typical, even when the overall market is doing well. “There just aren’t as many buyers looking in that price range.”

Buyers and sellers should keep some things in mind to make the market work for them. Buyers should work with their real estate agent to make sure the price is appropriate by checking selling prices of similar homes in the area.

Sellers should also research the market value of the house they’re selling

“Be realistic,” warns Galer. “Two years ago, it was a seller’s market, and you might have been able to name your price. But that’s not the case any more.”

In these volatile economic times, is buying a house still a good investment?

Galer is sure it is. “Just ask anyone when they’ve looked at their retirement funds. Your home is not going to lose forty to fi fty percent of its value overnight. And if anyone plans to stay in the area for a number of years, buying a home is still a good investment.”