Renters in the Des Moines, Iowa area may find some relief in rising rent rates. With higher vacancy rates, landlords are looking to fill an unprecedented number of new apartments.
Vacancies are at the highest level in nearly a decade, leading to slower rental rate increases, according to a survey by CBRE/Hubbell Commercial.
The average monthly price for a one-bedroom apartment in the metro area increased 1.5% to $792. The average price of a three-bedroom apartment fell 0.3% to $1,178 per month.
The slowdown in rent increases is significant. In recent years, the metro area has seen a steady increase in rent rates, with some as high as 8%. A boom in apartment construction is partly to blame for the high vacancy rate. More people are purchasing homes outside of the metro area, with more homes for sale in Mason City and rural areas of the state.
In the Des Moines area, the rent rate slowdown will likely continue in the near future, as more apartments open. Experts expect rent to remain flat or in the 1.5%-2% growth rate.
The metro area’s apartment building boom will likely continue this year. Last year, more than 3,000 apartments opened their doors. In 2016, nearly 2,000 apartments opened, according to CBRE. Another 3,000 apartments will open this year, but construction is expected to taper off in the next two years or so.
With vacancy rates at a decade-long high, developers and property managers are trying to woo potential tenants with gift cards, free parking, televisions, iPads and even free rent. About a quarter of all new market-rate projects have offered some type of rental concession to new tenants, according to CBRE.
New apartment projects will also lead to renovations of older apartments as they try to keep up with the competition.
While the Des Moines metro area is seeing a boom in vacancies, southern Iowa is experiencing the opposite problem. Rural areas are experiencing a housing crisis. Demand for housing is so great that some communities are offering incentives or creative financing options for new homes and renovations.
Demand for housing in rural areas is increasing despite more than half of the state’s population living in 10 counties, all of which are metropolitan areas.
Many rural communities go years without seeing a single new housing unit or apartment complex built. Those who already have homes are holding onto them. When those homes finally make it to the market, they often need a lot of repairs and upgrades.