Housing in Iowa

Five counties in Iowa had subprime loans accounting for more than 40% of first mortgages in 2005. Polk County fell in the 15% to 25% range. This is just some of the information available in a 2007 report by Heather MacDonald of the Graduate Program in Urban and Regional Planning at the University of Iowa. The report, Affordable Housing in Iowa: Meeting New Challenges, was prepared for the Iowa Finance Authority and paid for by the Iowa Department of Economic Development and Fannie Mae. Johnson County is one of four counties with less than 10% of first mortgages being subprime loans. However, “Johnson County is the only metropolitan area where rents have inflated faster than housing values [between 2000 and 2005], and estimated gross rents in the county are now the highest among central metropolitan counties.” Iowa City is located in Johnson County.

The report focused on two main questions: (1) “How have Iowa’s housing markets changed between 2000 and 2005?” and (2) “How effectively have state and federal programs responded to those changing needs?” Three recommendations were offered: (1) prepare a statewide housing policy, (2) provide stable and predictable funding, and (3) increase developer capacity and make it easier for them to build.

The movement of Iowans out of the state and from rural to urban/suburban areas is one of the challenges ahead. Many of the mulitfamily affordable housing units are in rural areas but the need for such apartments is growing in the metropolitan areas. The report states that providing direct rental assistance to households instead of offering assistance through specific housing “avoids this problem.” In contrast, assistance to homeowners is given to the individual and not to the community.

Real wages have declined since 2000, even as housing prices rose. As with many of the statistics, the report identifies these as suggestive rather than conclusive because the data comes from two different sources. The American Community Survey (ACS) is replacing data from the long-form decennial census. In addition to being a smaller sample size, the ACS has a different definition of residence than the census. This means that some snowbirds might not be counted in the state’s population but some seasonal migrant farm workers could be included.

Depending upon which numbers are used there either has been little change in housing affordability or increases for all incomes. The report opines that this might be due to the larger number of households with incomes over $75,000 that are homeowners. Among those households only 3.2% are cost burdened, up from 1.7% in 2000. In contrast, 23.1% of households with incomes between $35,000 and $49,999 are cost-burdened, up from 15.2%. However, because there are so many more homeowners with incomes above $75,000 the average affordability did not worsen significantly.

The report noted that considerable funding support for affordability programs comes from the federal government. Because the focus of the report was state policy, it did not explore local funding such as tax abatements and tax increment financing (TIF).

M.R. Field is editor of Leading Voices: Iowa.