Everything You Need to Know About Buying a House in Iowa

Iowa, the Hawkeye State, is pretty well known for its thriving agricultural industry and scenic farmlands. But, sometimes many people tend to remember Iowa for its friendly environment with rolling landscapes, historic small towns, and lively urban areas.

Let’s say one of these appealing features sticks to you and somehow convinces you to take up a living space for yourself—how well does the real estate market here fair for you?

With over 40,000 people moving from different cities and states to Iowa between June and August 2024, it’s not unusual to worry about the impact of this inbound migration on the housing market.

If you’re interested in buying a house in Iowa, you need to know about its real estate market, top neighborhoods, safest spots, and the laws on home-buying.  

Here’s what you need to know!

The Scoop on Iowa’s Real Estate Market

Buying a house in Iowa now might be your best decision, especially as a first-time homebuyer. Compared to last year, there has been a 3.5% year-over-year increase in Iowa’s median home sale price. 

Not only is this reflective of an upward demand for homes in Iowa, but it also hints at an appreciative real estate market. It is especially beneficial for those who are looking for more value for their money.

Luckily, the state offers a mix of single-family homes, townhouses, and condos, of which townhouses cost more on average. However, all home types in Iowa have prices significantly below the national average of $433,229.

How Iowa’s real estate market performed in the past few years

Like much of the U.S., the Iowa housing market saw a significant boom post-pandemic year 2020. 

From a median price slightly above $150,000 in June 2020, the price soared to around $210,000 in June 2021.

Low interest rates and a rush to suburban living boosted home prices — from 2020 to early 2023, values increased nearly 35%. 

That’s a big leap for a state where the cost of living is traditionally quite affordable.

Current market trends

Things are leveling out a bit in 2024. Interest rates have risen, and outbound migration somewhat cancels out inbound migration, cooling demand. Even though only 24.2% of homes sold above list price in 2024, down 5.1%, Iowa’s market remains competitive.

As of August 2024:

• Median Home Value: $240,700
• Housing Inventory (Y-o-Y): +10.9% — over 12,000 currently available for sale.
• Median Days Homes Stay on The Market: 30 days

However, the inventory is relatively tight in desirable urban and suburban areas like Des Moines, Iowa City, and Cedar Rapids.

So, if you find a house you love, don’t wait too long to make an offer. You can use the storage services of Iowa movers pending when you settle on a home.  

Home Buying Laws in Iowa

Buying a house anywhere comes with a few state-specific rules and regulations you should know. 

Here are some of the first time home buyer Iowa requirements that give you a quick overview of the legal landscape:

Seller disclosures

Iowa requires sellers to provide a property disclosure form outlining the condition of the home, including details about the roof, foundation, and heating system.

The property disclosure form should contain information on whether the house has had issues like flooding or water damage. 

Since Iowa is tornado-prone, this form becomes expedient. As a first-time homebuyer, be sure to ask for and review this form carefully.

Financing and taxes

If you have a burning question like, ‘How do I buy my first home?’ You should know that Iowa offers a variety of home loan programs for buyers. 

Each type of loan has different requirements and qualifying individuals. Some of them include:

• Conventional loans require a 20% down payment and are great for homebuyers with strong credit scores.

• FHA loans require only a 3.5% down payment, which works great for first-time homebuyers.

• The Iowa Finance Authority provides financial assistance for low-income residents

• USDA loan, with no down payment requirement, if you want to buy a home in a rural area.

Another thing to note is that property taxes in Iowa are generally higher than the national average. Plus, they tend to vary by city and county. 

The occasional weather extremes in Iowa, like tornadoes, may increase your home insurance rates. So, prepare your budget with these in mind.

Read more: Can I use my own realtor with NACA 

Earnest money and contracts

When you make an offer on a home, you may need to provide earnest money — it’s a small deposit that shows you’re serious about buying. 

Note: you may forfeit this money if you back out of the sale without a valid reason. 

Another option is buying a house on contract in Iowa. With this option, you make installment payments to the seller, who retains the deed to the house until you make full payment. 

The truth is Iowa’s contracts are fairly standard but it’s best to always read the fine print.

Read more: What is an option contract in real estate?

Best Areas to Buy a Home in Iowa

There are quite a few other things to consider when buying a house in Iowa. 

For example;

Which city is the most affordable? 

Which area has the most value? 

How about curb appeal? Safety ratings?

Iowa is full of beautiful cities and many neighborhoods with scenic areas. Whether you’re after big-city energy, small-town charm, or something in between, here are some top picks for home buyers:

Des Moines

Iowa’s capital, the state’s largest city and business, culture, and dining hub. The housing market here is hot but still more affordable than in other major cities. 

Areas like Beaverdale and Waveland Park offer beautiful homes, while neighborhoods like South of Grand and Waterbury offer upscale living. 

If you are a young professional, you should look for a home in Des Moines.

Iowa City

Home to the University of Iowa, Iowa City is a college town with a mix of historic homes and modern developments. 

The Northside neighborhood offers artsy vibes ideal for creative types, while areas like Coralville provide a more suburban feel.

Cedar Rapids

It’s pretty much the perfect city for families with a revitalized downtown, parks, and great schools. 

The New Bohemia district has transformed into a hotspot for culture and food. Plus, homes in neighborhoods like Bowman Woods and Stoney Point are well-priced and close to nature.

The Beautiful River Towns

If you prefer a more peaceful setting, consider towns along the Mississippi River, like Davenport, Keokuk, Burlington, and Dubuque. 

These areas offer breathtaking views and more affordable homes than the state’s larger cities. They are also some of the most affordable places to live in Iowa after Waterloo. 

Safest Places to Buy a Home in Iowa

Safety is, of course, a top concern for any homebuyer. Luckily, Iowa has a crime rate lower than the national average. 

However, for that extra bit of security, some of the safest areas include:

• Waukee
• Ankeny
• Johnston
• Clive

Endnote: Buying A House in Iowa

Buying a house in Iowa allows you to live in a state known for wide-open spaces, buzzing cities like Des Moines, or the safer and quieter Ankeny and Johnston.

Also, the state has affordable home prices and helpful first-time buyer programs. The closing process in Iowa typically takes about 30-45 days and costs between 2% to 5% of the purchase price. 

So, it’s pretty much a smooth, sailing state to invest into once you put your mind to it. Just make the right plans and you can start being a homeowner in Iowa. 

Written by Billy Guteng. October 6, 2024

Billy is a content writer for Kukun. He was born in France, and has lived in multiple cities around the world ever since. He loves art, design and architecture as well as construction and real estate.