Iowa’s housing market from 2018 through 2023 saw significant shifts that affected budget-conscious homebuyers (households earning under $250,000). This period spans the late 2010s stable growth into the pandemic-era housing boom and subsequent cooling. Overall, Iowa remained one of the most affordable U.S. housing markets, but rapid price increases and low inventory presented challenges.
Urban vs. Rural Homebuying Trends
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Iowa’s urban areas (like Des Moines, Cedar Rapids/Iowa City, Davenport, Sioux City) experienced more robust homebuying activity and price growth than many rural areas during 2018–2023. Urban centers saw stronger demand and new construction. For example, the Des Moines metro led the state in population and job growth, fueling home sales and development of new subdivisions.
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Rural communities often faced housing shortages due to limited new building. The housing shortage in rural Iowa has been a growing concern, exacerbated by builders’ hesitancy to develop in small towns and an aging rural population. Many smaller towns have aging housing stock and fewer young buyers moving in, which tempered sales volume but also meant any quality, affordable listing could see high demand due to scarce supply.
Inventory and Price Patterns
Inventory and price patterns diverged between urban and rural markets. In the late 2010s, Iowa’s overall housing inventory was tight, but rural areas sometimes had slightly more supply relative to demand than cities. In 2018, single-family home listings were lower most of the year while condo/townhome listings were higher, offsetting some shortage.
During the 2020–2022 boom, urban markets overheated: In Linn County (Cedar Rapids) in early 2022, homes averaged just 21 days on market, with realtors noting “for sale” signs were few and far between. Rural counties, although less frenzied, also saw faster sales than historically normal as remote work and low interest rates enabled some city residents to consider small-town life.
Population Shifts
Population shifts played a role in these trends. Urban and suburban counties (Polk and Dallas around Des Moines) grew and attracted buyers, while many rural counties continued to lose population or saw static growth.
Some remote workers relocated from high-cost cities (out of state) into Iowa’s affordable towns, but this was a modest factor. More impactful was migration within Iowa – young professionals often moving to metro areas for jobs, and some older Iowans retiring in place in rural hometowns or small cities. Notably, a high share of Iowa’s seniors chose to “age in place” (94% of homeowners 65+ remain in their same home each year), which affected rural housing turnover.
Price Appreciation Across Iowa
Despite these nuances, home price appreciation touched all corners of Iowa. Rural home values rose alongside urban ones during 2020–2022’s surge (often by double digits annually), albeit from a lower base. The affordability gap between city and country remained – housing in rural Iowa generally costs less – which provided budget-conscious buyers an alternative.
By 2023, Iowa’s median home prices were up significantly from 2018 in both metros and small towns, but urban areas still commanded higher absolute prices. In summary, urban markets offered more choices (including condos/townhomes) but stiffer competition, while rural markets offered affordability but very limited inventory of quality homes. Both saw rising prices, though the pace was fastest in the urban/suburban counties where demand consistently outstripped supply.
First-Time vs. Repeat Buyers in Iowa
Homebuying trends differed for first-time buyers versus repeat (existing) homeowners in Iowa, mirroring national patterns to some extent. First-time homebuyers struggled with rising costs and competition, especially during the 2020–2022 boom. From 2018 to 2021, Iowa’s median sale price jumped from ~$161,000 to $195,000, and then further to the $200Ks in 2022–2023.
These rapid gains outpaced wage growth and made saving down payments harder for young buyers. Inventory shortages were most acute in the “starter home” price range, which is typically what first-timers seek. In 2019, IAR President Scott Wendl noted that “inventory is a little bit tight, especially in the first-time buyer price range” in Iowa, whereas higher-end homes had more selection.
Declining First-Time Buyer Share
Consequently, the share of homes bought by first-timers fell over this period. Nationally, first-time buyers made up only about 26% of home purchases in 2022 – a historic low – and dropped to 24% by 2023. Iowa likely reflected a similar or slightly better proportion, given its lower prices and programs for first-timers. (Indeed, Iowa was ranked the 5th best state for first-time homebuyers in 2023 due to its low down payment requirements and affordability.)
Repeat buyers with existing home equity had a clear advantage. They could use proceeds from selling their prior home (which had likely appreciated considerably) to put down larger down payments or even pay cash. By 2023, a record 26% of U.S. buyers paid all cash, often these were current homeowners or investors. Iowa followed this trend of move-up buyers leveraging equity – many repeat buyers bought “dream homes” or upsized houses.
Programs for First-Time Buyers
First-time buyers in Iowa did have some assistance. The state introduced the First-Time Homebuyer Savings Account (FirstHome program) in the late 2010s, allowing tax-deductible contributions toward a first home’s down payment. Iowa Finance Authority and local governments also offered down payment assistance grants/loans (for example, Cedar Rapids provided up to $14,999 forgivable loans to qualifying buyers).
Even so, many first-timers had to stretch their budgets: NAR data show the typical age of first-time buyers climbed to 36-38 by 2022-2023 (mid-30s, up from low-30s historically), and their median incomes rose to $95k+ – indicating that those who succeeded in buying were older and more financially prepared than previous generations.
Repeat buyers, on the other hand, were often in their 50s or 60s by 2023 with higher household incomes. In Iowa, many repeat buyers were Gen X or Boomer homeowners taking advantage of favorable conditions to change homes. During 2018–2021, with low interest rates, a number of existing homeowners traded up to larger houses or relocated to preferred neighborhoods/cities.
Home Types Purchased
The vast majority of budget-conscious Iowan buyers continued to purchase single-family detached homes from 2018 to 2023. Iowa is traditionally a state of single-family houses – whether in city neighborhoods, suburbs, or small towns. Statewide sales data consistently show detached homes making up the bulk of transactions each year. For instance, in 2021, Iowa set a record with over 49,000 homes sold, most of which were standalone houses on their own lots.
Condominiums and townhouses carved out a niche, particularly in urban areas. Condos and townhomes comprised a smaller share of sales (primarily in the Des Moines metro, Iowa City, Cedar Rapids, and some retirement communities). They often attracted two types of buyers: downsizers (empty-nesters or retirees moving from a house to a low-maintenance condo) and some first-time buyers who found condos slightly more affordable or accessible in competitive markets.
Market Shifts During the Pandemic
During the pandemic boom, any form of housing saw increased demand. New townhome developments in suburban areas became popular as a mid-priced option, and downtown condo units in Des Moines or Davenport started receiving more interest as well. By 2022, the median price of Iowa townhome/condo sales had risen to roughly match or even exceed single-family median price in some months.
Manufactured homes and mobile homes also represent a segment of Iowa’s housing, but sales data for those are often tracked separately. Some lower-income buyers under $250k might opt for manufactured homes on leased land or small acreages in rural areas as an affordable option.
Overall, single-family homes remained the dominant choice. In Iowa’s culture and market, owning a detached house is a primary goal for most households, and the period of 2018–2023 reinforced that: people chased the available single-family listings aggressively.
Buyer Motivations: Upsizing, Downsizing, Relocating, and Second Homes
Buyer motivations during 2018–2023 varied by life stage and circumstance, especially for those mindful of budget.
Upsizing Trends
Upsizing (trading up to a larger home) was common for growing families and many repeat buyers. With historically low interest rates in 2020–2021, thousands of Iowa homeowners seized the opportunity to sell their starter homes and purchase larger properties. The low mortgage rates kept monthly payments manageable even for bigger houses, and rising home equity provided down payments.
The move-up buyer segment was very active in 2020–21. Homes in mid-range price tiers ($250k–$400k) saw brisk sales as these upsizers moved in. By 2023, upsizing slowed somewhat (higher interest rates made the jump less affordable), but the early period had already shifted many households into larger homes.
Downsizing Patterns
Downsizing was driven largely by older homeowners and empty nesters. Iowa’s Baby Boomers influenced housing patterns significantly. Many boomers chose to stay put (as noted, over 94% of Iowa seniors did not move annually), which actually limited downsizing inventory.
Those who did move often sought smaller, one-story homes, condos, or townhouses – anything easier to maintain and possibly closer to healthcare or family. From 2018–2023, when downsizers listed their large family homes, those properties were quickly bought by upsizers, while the downsizers themselves sometimes had trouble finding suitable smaller homes due to scarce supply (creating a bottleneck).
Relocation Trends
Relocating within Iowa or into Iowa was another trend. Within the state, common relocations included moves from rural areas to urban centers (for jobs) or vice versa (for those seeking a quieter life or remote work environment). During the pandemic, some urban dwellers in Iowa relocated to more rural locales or smaller towns where they could get more house for the money and have space.
Conversely, major employers in cities like Des Moines continued to pull people from across Iowa (and beyond), fueling relocation purchases in those cities. Interstate migration into Iowa also contributed: Iowa remained relatively affordable, so it attracted a trickle of buyers from higher-cost states.
Second Homes
Second homes/vacation homes are a smaller factor for this income group in Iowa, but worth mentioning. Under $250k income, few households were purchasing lavish vacation properties. However, some higher-earners in this range did buy modest second homes – such as cabins by Lake Okoboji or hunting lodges/farm acreage retreats.
Within 2018–2023, low interest rates and rising wealth did enable a subset of upper-middle-class families to acquire lake cottages or country homes for weekend use. This was especially true in 2020–2021, when travel was restricted and owning a getaway within driving distance became attractive. Still, the vast majority of home purchases in Iowa were primary residences.
Market Barriers and Influencing Factors (2018–2023)
Multiple external factors shaped Iowa’s homebuying landscape, posing both barriers and opportunities for budget-conscious buyers:
Mortgage Interest Rates
Interest rates had perhaps the most dramatic influence over this period. Rates were relatively low in 2018–2019 (~4% on a 30-year mortgage) and then plunged to historic lows (~3% or even 2.x%) in 2020–2021, greatly boosting buyers’ purchasing power.
However, this flipped in 2022. To combat inflation, the Federal Reserve’s rate hikes pushed mortgage rates up sharply – by mid-2022, 30-year rates hit 5-6%, and in late 2022–2023 they hovered around 6-7%, the highest in ~20 years. Iowa buyers suddenly faced a major affordability squeeze: a $200,000 loan at 7% costs much more per month than at 3%.
Rising rates in 2022 quickly cooled demand. Home sales in Iowa fell 28% in July 2022 compared to a year ago as buyers pulled back. By 2023, many first-time buyers were priced out due to high financing costs, and even repeat buyers hesitated to give up their ultra-low rate mortgages from prior years.
Housing Inventory
Chronic low inventory was a hallmark of this period in Iowa. Coming out of the 2010s, the number of homes on the market was already modest, and the 2020–2021 surge exacerbated it. In 2021, Iowa’s housing supply hit record lows – at one point in early 2022 there were only ~6,900 homes on the market statewide, 16.5% fewer than a year prior.
Realtors reported “very small supply” against very high demand, leading to bidding wars. Homes sold at the fastest pace on record: the average days on market in 2021 was just 38 days statewide (down from ~63 days in 2019), and in some counties like Linn it was a mere 21 days. For buyers, this meant limited choices and needing to decide (and bid) quickly.
Inventory gradually improved in late 2022 and 2023 as the market cooled, but supply never fully met demand in 2018–2023. A statewide analysis in 2024 estimated Iowa had a deficit of about 13,200 homes (relative to needed supply) and projected the shortfall would persist for years.
Home Price Appreciation and Inflation
Home prices in Iowa rose substantially from 2018 to 2023, especially during 2020–2022. While Iowa started the period with very affordable prices (2018 median ~$161k), by 2023 the median was around $220k. That’s roughly a 35% increase in five years.
According to the FHFA House Price Index, Iowa’s single-family home prices jumped 40% from Q2 2020 to Q2 2024. For buyers, this rapid appreciation was a double-edged sword. It built wealth for those who owned homes, but for those trying to buy, it meant chasing a moving target.
General inflation in the economy (which hit 40-year highs in 2022) also hurt buyers by increasing the cost of living – higher prices for gas, groceries, etc. made it harder to save for down payments, and higher construction costs pushed new home prices up. While Iowa remained cheaper than most states (by 2022 it was the 7th most affordable state in mortgage cost terms), the erosion of affordability was tangible.
Alternative Financing Options
With conventional buying becoming more challenging, some Iowans explored rent-to-own arrangements or contract-for-deed deals. These options, often marketed to those who cannot get traditional mortgages, allow a buyer to rent a home with the option (or requirement) to purchase later, or to pay the seller in installments towards ownership.
In practice, however, such arrangements carry risks. In the Midwest, “contract for deed” (a form of seller financing akin to rent-to-own) has often “rarely ended with the buyer owning the home” and can lead to the buyer losing their investment if they miss payments.
During 2018–2023, consumer advocates in Iowa raised concerns about these deals, as most states (including Iowa) have little regulation or protection for buyers in rent-to-own situations. Because the economic climate actually favored those who could buy outright (with low rates pre-2022), rent-to-own did not become a mainstream solution – it remained a niche and often last-resort option.
Comparing 2018–2023 to 2008–2017
When we contrast the 2018–2023 period with the prior decade (2008–2017), the differences are striking. The housing market in 2008–2017 was defined by the aftermath of the Great Recession and a slow recovery, whereas 2018–2023 was a time of robust growth, a pandemic-induced frenzy, and new challenges.
Market Activity and Sales Volume
The late 2000s saw a significant slowdown. The 2008 housing crisis was felt in Iowa, though less severely than in many states. Home sales in Iowa dropped in 2008–2010, and prices stagnated or dipped slightly. For instance, Iowa home prices fell by around 5% from their mid-2000s peak during the recession.
The recovery began around 2012 and by 2015–2017 the market was relatively healthy again. However, total sales in those years were lower than what we saw in the early 2020s boom. In 2017, about 41,755 homes were sold in Iowa. Compare that to 2021, when 49,157 homes sold – an all-time record.
Home Price Trends
From 2008 to 2017, Iowa’s home price growth was relatively modest and steady (after the initial slump). For example, in 2017 the median sale price was around $155,000; by 2018 it was $161,000 (up ~3.9%). Over the whole 2008–2017 period, cumulative appreciation was significant but not spectacular – essentially a recovery to pre-crisis trendline.
In contrast, 2018–2023 saw much sharper appreciation, especially during 2020–2022. The median price went from ~$161k in 2018 to ~$220k+ by 2023. That ~37% increase in five years is far above the ~10–15% (est.) increase that occurred in the five years prior (2013–2017).
First-Time Buyer Share and Buyer Profile
The 2008–2017 period saw an initial boost for first-time buyers around 2009-2010 thanks to federal homebuyer tax credits. Nationally, the first-time buyer share spiked to about 47-50% in 2010 (unusually high), then settled. Through the mid-2010s, first-timers were typically around 30–35% of buyers in a given year.
In contrast, in 2018–2023, the first-time share shrank to record lows (nationally ~26% by 2022). Additionally, the age and income of buyers rose in the latter period – by 2023 the typical buyer was older and richer than those a decade prior. This indicates that buying a home became relatively harder for younger, lower-income households in 2018–2023 compared to 2008–2017.
Economic Context and Motivations
In the Great Recession era, distress and necessity sales were more common – some people sold or lost homes due to financial hardship, and there were bargains to be had in foreclosures (though Iowa had fewer foreclosures than the Sun Belt). People were cautious; many who could wait on buying did so until recovery.
2018–2023 was the opposite in sentiment: confidence and even FOMO (Fear of Missing Out) drove buyers in 2020–2021. Instead of worrying about falling prices (as in 2008–2012), buyers in 2020 worried prices would keep rising and rushed to buy. The pandemic brought new factors like remote work that spurred moves to bigger homes or different locations, which wasn’t a factor in 2008–2017.
Housing Supply and Construction
After the 2008 crash, construction in Iowa slowed to a crawl around 2009-2011 (builders pulled back). From 2012 onward, building resumed gradually. By the mid-2010s, Iowa was building more homes again, but the pace was measured. Inventory in 2015–2017 was actually quite balanced by many accounts.
In contrast, 2018–2023 saw inventory hit record lows due to a surge in demand that far outpaced construction. Builders ramped up in 2020–2021, but they also faced constraints like labor and material shortages (the 2021 lumber price spike and supply chain issues). New construction could not keep up with the sudden demand spike in the pandemic years.
In summary, 2008–2017 vs 2018–2023 presents a story of recovery to frenzy. The earlier decade was about healing from a crash – slower sales, flat prices early then moderate growth, easier buying for those with means. The later period was about exuberance and new strains – rapid sales, rapidly rising prices, intense competition, and then a sharp pivot to high-rate environment.
References
- 2018 Sales Statistics – Iowa Association of REALTORS® – The Greater Mason City Board of REALTORS®
- Year end report shows home sales and prices up in 2019 – Radio Iowa
- High prices, competition over low supply expected to stay in 2022 housing market – Iowa’s News Now (CBS2)
- Iowa Home Sales Fall 28% In July – iHeart Radio (KASI Ames)
- Contract for deed: The promise of homeownership that often leaves Midwest buyers out in the cold – Iowa Public Radio
- Housing Affordability in Iowa – Common Sense Institute
- Median home prices up 10-percent in Iowa – iHeart Radio (WHO Des Moines)
- Market Activity for the Iowa Association of REALTORS® – Iowa Association of REALTORS®
- First-Time Home Buyers Shrink to Historic Low of 24% as Buyer Age Hits Record High – National Association of Realtors
- Rural Iowa gaining momentum with workforce, housing initiatives – Iowa Association of Business and Industry
- How Iowa’s Baby Boomers are Changing Housing Patterns – Home Stratosphere
- Home Ownership Matters – Iowa Home Prices Continue Upward Trend – Home Ownership Matters
- Iowa Housing Market: House Prices & Trends – Redfin
- Evaluating the Housing Market Since the Great Recession – CoreLogic
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