(The Center Square) – Iowa’s housing market is the 17th most competitive in the country, according to a new study released Thursday by the Common Sense Institute of Iowa.
The Iowa Housing Competitiveness Index is based on four factors, the organization said: “The percentage of permits as a share of the housing deficit/surplus; the housing deficit/surplus as a percentage of the population; the hours required to pay a monthly mortgage; and the number of hours of work required to pay the monthly average rent.” Dr. Steven Byers, CSI’s chief economist, developed the index.
Iowa scored an 81 on the latest index up from 75 in 2011.
“While buying a home has become less affordable across the United States since the pandemic, Iowa’s housing market has remained relatively affordable compared with other states,” said Ben Murrey, CSI director of policy and research and a co-author of the report. “Central planners at the Federal Reserve and the federal government have printed trillions of dollars over the past four years, leading to record inflation and a lack of affordability in housing across the country. While Iowa has not dodged the pain, our research found that Iowa’s housing affordability has improved over the last decade relative to other states.”
Rents rose faster than wages in many states but Iowa is an exception. The number of work hours needed to pay rent in Iowa is 36, down from 40 hours in 2011.
Iowa still has deficiencies in its current and future housing supply, even though the state’s index score improved. The number of homes valued between $100,000 to $300,000 are well below demand, according to the report.
Iowa should take advantage of the competitive housing market, CSI House Fellow Peter LiFari, said in the report.
“While a significant percentage of the housing development value chain is out of the control of local and state governments, much can be accomplished at the local level,” LiFari said. “To ensure Iowa’s housing unit deficit does not grow, Iowa must promote a regulatory environment conducive to home development in high-cost market conditions. Iowans and their representative local governments would be wise to harness and bundle land use reforms that other states and cities have only turned to in desperation, long after the compounding impacts could have been easier managed.”
Rural communities could benefit from the Promote Rural Housing Affordability Act, which can provide access to capital, according to LiFari.
“Iowa may also consider investing in offsite housing manufacturing to reduce the cost of construction while investing in local small businesses that create jobs,” LiFari said in the report. “Colorado’s Innovation Housing Incentive Program could provide a roadmap for Iowa. The program provides loans for factory development, grants to assist with working capital, and per-unit affordable development incentives.”