After all the snow last winter and the flooded basement in 2008 and now, I am positive we want to move to a loft downtown when my son graduates from Urbandale in 4 years. I could really live without all the home repair, mowing, snow removal, etc. My question is when would be the best time to buy. Seems like things are over built right now, and if I could get a deal I would look at buying a place and renting it for 3-4 years. Would only do it if I could save a bunch of money, so looking for any expert opinions.
Housing market in DSM
- Thread starter tiberius
- Start date
Disclaimer: Not an expert.
Everywhere is overbuilt. Unbelievable deals on houses that people are taking much less money for, not to mention an abundance of them out west just sitting empty.
Everywhere is overbuilt. Unbelievable deals on houses that people are taking much less money for, not to mention an abundance of them out west just sitting empty.
I would highly suggest you move downtown for a year or two to see what downtown DSM is like. I lived downtown for a year and just moved to Waukee here a few weeks ago, but did highly enjoy my time downtown.
This. You 100% need to live here for a full year before deciding to buy downtown. I have lived here for about 5 or so years and it is really great if you dont mind certain things that you don't get in the burbs. This includes a crazy ammount of noise if you are near court ave from the bars and people in general. The train that shakes all of the buildings at all hours of night. The constant roar of idiots on Harleys ect. Also, obviously you have to deal w/ having people living in your building assuming you live in a house now. Also, you are never alone, there are alllways a bunch of people all over downtown so if you are one of those "get off my lawn" types it doesnt work well. Plus you also wont have a "Garage". You might have a parking space in a garage but it isnt a garage garage if you know what I mean. Plus only a few places offer underground parking. Other than that I love it but it takes getting use too. But you HAVE TO live here before you buy. As far as when to buy, the downtown housing market is over built and prices have dropped dramatically in the last while. They keep building and people arent flocking downtown like they thought they would.
Here are major considerations if you plan to rent it for three to four years before moving downtown:
-The biggest thing here - you won't have the proceeds from the sale of your current house to use as a down payment.
-The property would be considered an investment property, not your primary residence. Because of this, you will have a higher interest rate (more risk since you have two mortgages at this point, I'm assuming) on the loft downtown.
-You will have to have more money down, most likely at least 15% of the purchase price if doing conventional financing.
-The condo project must be approved by either Fannie Mae or Freddie Mac to be able to have them buy the loan after it's closed. If you finance with Wells Fargo, or another big lender who portfolios their business, you may be able to get around this.
-You have to be able to make both payments on your current income, you cannot calculate the rental income as income when determining your debt to income, because you don't own the condo/loft at this time. Therefore, you must have enough income to make both payments, cover any HOA dues on the loft, and taxes and insurance.
-Your debt to income needs to be around 41% - meaning 41% of your gross income pays debts (house loan, car loan, credit cards, student loans, home equity lines, alimony, child support). This 41% must include the payment for the condo/loft too.
-You cannot use money from a Home Equity Line of Credit for the down payment, because it just increases your debt to income.
-Your down payment needs to be liquid, preferably in a savings account. If you plan to use retirement, your gross amounts will be calculated at 60% of the face value i.e. your 401k has 100k for asset purposes, its calculated at 60k. You also will have to show proof of liquidation if you use a retirement account, same thing for a money market, sale of stocks, etc.
-You need to make sure any loft you look at is in a building with over 80% of the units owner-occupied vs. rental (owned by the builder). If there are more rental units than owner-occupied, most lenders won't touch it because it screams apartment complex, even though its not.
-You need to check the HOA guidelines on anything you buy, because they may not allow for rentals.
-You need to determine what the parking situation is, some units downtown charge up to an additional 20k for one parking spot.
-Your lender will to a comparative rent analysis on the property to determine the average rent, this will give you an idea of what you can charge.
Away from the financing - have you considered the wear and tear on a rental unit, and how much work may be involved after your renter has moved out?
There is never a best time to sell, Realtors will tell you if you live a family driven neighborhood, the best time to list your home is in April or May, so people can move after school is out. I don't necessarily agree with this, because people are always looking for houses. You have to decide when the right time to list your house is, I would suggest staying away from listing in November or December.
There are several lofts/condos downtown for sale, however what you will run into is a lot of builders have had to rent them to make some type of income to pay the mortgage. It really depends on where you want to live, do you want sky walk access or at least close by, or do you care if you have to walk outside to get to work. In the building our parking garage faces, there are at least two for sale, and I'm pretty sure there are a few more for sale right around our building. It really comes down to choice and how willing the builder/seller is willing to play in determining what kind of deal you're going to get. I wouldn't go in thinking you're going to low ball an asking price by 50-100k, but I'm guessing people/builders are willing to negotiate.
10 year tax abatement which helps if you want to take advantage of the market.
I sold a home built in 06 this week for 200 that went for nearly 300 new.
Last edited:
housing is soft all over right now. LOTS of SFR for sale. Take your time, take your pick.
If you are looking for a loft downtown, I'm sure you can take your pick, and I bet banks own a fair share of condos downtown, but that is just my guess.
I'd love to live downtown...just not the right time for my family yet. You should be able to find some great deals, and you don't have to buy near Court Avenue (if you're worried about noise). Liberty Building, Grand Avenue Brownstones, the newer building in the East Village (can't recall the name...Baby Boomers is on the ground floor) and a few others don't put your right in the middle of the action (if that is not what you're looking for). It is true the market is soft, but not soft enough to stop Hubbel from breaking ground on a set of new townhomes next to their Grand Ave Brownstones (a couple blocks south of Wells Fargo Arena). These are supposed to be much more modestly priced the the already completed units.
Also, don't forget there are some really nice high rise condos along Grand Avenue (just west of downtown) too.
Also, don't forget there are some really nice high rise condos along Grand Avenue (just west of downtown) too.
In Florida, you can't get a mortgage on a condo. You pay cash for one or rent it-period.
You are correct. And I'd add that most "investment properties" will require a 20-25% down payment. Plus, like you said, a higher interest rate.
There is a lot of good info in Three4Cy's post.
When I bought our current house in Johnston nearly 5 years ago we considered buying a condo downtown. We seemed like the perfect couple to do this since we don't have kids and I work downtown. Here is why we didn't:
We were coming from a townhouse. We were lucky to have good neighbors but just like apartment living, it's not always that way.
Association fees. Just another added expense. It does bring down your insurance but not enough to justify the cost.
Downtown. Downtown is just not there yet. Yes, there are great bars, Iowa Cubs, other events, etc. but what about every day stuff like grocery stores?
Resale. Looking back this was probably a good move. Right now you may be able to get them cheap but 5 years ago not so much.
SQFT/$. For $300K you could get a nice 1,500 SQFT condo. On the other hand for $300K you can get a 3,000 sqft house with a yard and a 3 car garage. I understand the premium prices that you pay for a condo in NYC or London because they are out of space. Space isn't an issue with DM.
There are a lot of great reasons to buy a condo in downtown DM but for me the negatives far outweighed the positives.
We were coming from a townhouse. We were lucky to have good neighbors but just like apartment living, it's not always that way.
Association fees. Just another added expense. It does bring down your insurance but not enough to justify the cost.
Downtown. Downtown is just not there yet. Yes, there are great bars, Iowa Cubs, other events, etc. but what about every day stuff like grocery stores?
Resale. Looking back this was probably a good move. Right now you may be able to get them cheap but 5 years ago not so much.
SQFT/$. For $300K you could get a nice 1,500 SQFT condo. On the other hand for $300K you can get a 3,000 sqft house with a yard and a 3 car garage. I understand the premium prices that you pay for a condo in NYC or London because they are out of space. Space isn't an issue with DM.
There are a lot of great reasons to buy a condo in downtown DM but for me the negatives far outweighed the positives.
I like the Brown Camp Lofts the best but look at these prices.
Email View
$500/Month association fee
$355,000 for 1,441 SQFT
Email View
$500/Month association fee
$355,000 for 1,441 SQFT
HOw is the grocery store situation different in the "West Glen area" vs downtown? It is not. In both cases, you'll need to drive (and in either case, not very far). Non-issue.
Pretty easy to bike to target/wallyworld. Depending on which ones you're in, walking to target is viable as well.
Lets say you live at brown camp lofts and you want to get groceries at Dahls or Hy-Vee. That's a 2.6 mile walk each way.
Now compare that to West Glen Condo's. You're about 3 seconds from target.
I'd still rather live downtown but it is something to consider.
Now compare that to West Glen Condo's. You're about 3 seconds from target.
I'd still rather live downtown but it is something to consider.
Last edited:
