While the Iowa City area real estate market has weathered the downward trend rather well compared to other locations, we are now seeing renewed activity in all segments of the market.  Especially significant is the activity in the higher price range, which was almost at a stand still for many months, while the lower priced homes have still been moving fairly consistently for the last couple of years.

Our local luxury market, or the 10% upper tier of our market, represents all homes at and above $330,000.  Once we get over $400,000, the average days on the market get longer and all properties above $500,000 have suffered from a definite slow down in sales and overall activity.

However, this trend is slowly changing and local realtors have enjoyed a renewed activity in the higher price range.  More local people are looking to move up from their existing homes, and more people are relocating to the area and are welcoming the good opportunities available to them in our local luxury market.

Renting vs Buying In Higher Price Range

Most out of town clients have always been eager to purchase in the Iowa City area, even when relocating for a specific period of time such as two to five years only.  However, during the last two years an increasing amount of them opted to rent executive rentals rather than to risk buying an expensive home only to see its value decline.

This has been challenging for the area realtors because of the limited choices available in the rental market, which is really geared for the most part to college students and younger professionals.  In an effort to find suitable executive rentals, realtors have knocked on builders’ doors to get their clients in new construction homes still for sale, or eager sellers who are willing to rent for a year or two rather than to reduce their prices for a possible sale.  Either way, this has been a win-win for everyone, with relocating clients and local sellers both finding common ground while the market regains vigor.

Luxury Homes Market Back On Track

This graph represents the average price for sale and sold homes from 4/10 to 6/11, in the $400,000 to $999,999 price range.   Note that the activity is on the up swing and that average sold prices are finally inching upwards.

With extremely low interest rates and eager sellers waiting to downsize or move on, this is a great time to purchase a home in the Iowa City area!  Contact Toni Rubin, Skogman Realty’s Iowa City Director Corporate Relocations and licensed realtor in the State of Iowa,  at 319-541-0190  for more information on our local market.

	Curnt vs. Prev Month			Curnt vs. Same Month 1 Yr Ago			Curnt vs. Same Qtr 1 Yr Ago
	Jun. 11	May. 11	% Change	Jun. 11	Jun. 10	% Change	Apr. 11 to Jun. 11	Apr. 10 to Jun. 10	% Change
Avg. Active Price	528	530	-0.4%	528	544	-2.9%	529	544	-2.8%
Avg. Sold Price	580	481	20.6%	580	516	12.4%	531	511	3.9%

Uncertainty and restraint are the order of the day in this economy, and that sense of caution is reflected in home owners’ return on their investment in remodeling projects, according to REALTORS® in 80 metropolitan markets surveyed by Remodeling magazine for this year’s Cost vs. Value Report.

Best Return On Investment

The majority of the 10 remodeling projects with the best return on investment nationally are a testament to pragmatism. Six of the 10 projects—siding and window replacement using a variety of materials—involve home maintenance that costs less than $14,000.

Two more—adding an attic bedroom or a wood deck—reinforce the notion that boosting the amount of livable space in and around your home will attract buyers who are increasingly looking for more room for their buck. In past years, converting an attic into a bedroom was a project that landed squarely in the middle of the rankings, but this year it leapfrogged over other categories into third place. It’s an admittedly pricey project, with an average national cost of nearly $50,000, but it generates an average national return of 83.1 percent and a better-than-100 percent return on investment, according to REALTORS® in 14 of the 80 cities surveyed. Adding a wood deck is much more economical, with an average national cost of slightly more than $10,000. Its average national return is 80.6 percent, but in six cities, its return is estimated at 100 percent or greater.

The six siding and window home maintenance projects in the top 10, combined with the project with the biggest return on investment—a mid-range entry door replacement—prove something that every sales associate tells sellers throughout the country: First impressions count. A mid-range entry door replacement, a project new to the survey this year, is the only home remodeling project that REALTORS® expect to generate a full return for the money nationally. It’s the least expensive of the 33 projects included in the analysis, yet it brings a whopping average national return on investment of 128.9 percent. It generates a better-than-100 percent return in 48 of the 80 cities, according to REALTORS® surveyed, and in several cities, its return is estimated at more than double its cost.

Restrain Is The Key

Additional data prove the value of restraint. Upgrading kitchens and baths is still a smart bet. However, home owners will recoup the greatest share of their costs by foregoing super-deluxe projects in favor of mid-range kitchen and bath remodels. A mid-range kitchen remodel brings an average 72.1 percent return on investment, while an upscale kitchen re-do returns only an average of 63.2 percent of the money invested. A mid-range bathroom project has an average 71 percent cost recovery, but the average recovery on an upscale bathroom project is nearly 10 points lower, at 61.6 percent.

The only upscale projects that cracked the top 10 were the home maintenance projects of fiber-cement siding replacement and vinyl window replacement. The average cost of fiber-cement siding is more than $13,000, but its return on investment reached 83.6 percent, placing it squarely in second place in the survey. The average cost of vinyl window replacement is nearly $14,000, and it generates an average return of 76.5 percent, or tenth place in the survey. Of the 12 upscale projects, nine landed in the bottom half.

Return On Your Investment

Overall, home owners recouped an average of 63.8 percent of their investment in 33 different home improvement projects, according to REALTORS® who responded to the survey. The expected cost recoup was generally down from previous years in line with the drop in home prices nationally (see page 23). The return on home owners’ investment in remodeling projects has declined an average of 3.5 percentage points between 2008 and 2009. That’s down from the 2.7 point drop between 2007 and 2008 and much less than the 5.5 point drop between 2006 and 2007 and the 10.5 point drop from 2005 to 2006.

Zooming in from the national to the city level, Honolulu sits atop the rankings for having the most projects—18—that generate at least a full return on investment. In Honolulu, adding a wood deck, completing a minor kitchen remodel, adding fiber-cement siding, and replacing an entry door bring the highest returns, ranging from 121.1 to 195.3 percent return on investment. San Francisco is closest behind with 10 projects generating at least a full return on investment. Adding a master suite, doing a minor kitchen remodel, and replacing an entry door have the biggest returns, producing between 112.2 and 119.1 percent return on investment.

One surprise: Despite the common perception that contractors are hungry for work and therefore willing to wheel and deal, the average national cost of every project surveyed has gone up, though at a slower rate than in the previous year.

By G.M. Filisko, Data courtesy of Remodeling Magazine

#1) Interest Rates Are LOW:

With interest rates hovering in the high 4’s and low 5’s, they have been near an all time low for over a year! Some of you out there may remember interest rates above 18% in the early 80’s. Combine that with the fact that you once were required to have 20% down payment and pay 2 points up front for that 18% rate, and it looks like we have it pretty good today! Many predictions have inflation kicking in by mid-2010, and we may see rates rise above 6%. While that is still pretty good compared to what we have seen in the past, consider that a 1% change in the interest rate on a $160,000 loan is a difference of over $100 per month, or more than $36,000 over 30 years!

#2) IRS Home Buyer Incentive:

Right now the IRS will give you up to $8,000 to buy a home if you are a first time home buyer (or up to $6,500 if you have owned a home in the previous 3 years). When was the last time the IRS gave you anything? This is truly a Tax Credit – it can be more than you paid in, and it is not repayable as long as you live in the home for at least 3 years. This is a huge incentive for any first timers sitting on the fence or for anyone considering “moving up!” The incentive expires on June 30, 2010, but you must have an accepted purchase contract by April 30, 2010.

#3) Bank Underwriting Guidelines:

The last 2 years have seen more changes in mortgage lending than the previous 20. Many procedures being put into place by the Federal government, though designed to be in the borrower’s best interests, may make the process more cumbersome. This may become a larger problem around April when many people decide to buy before the IRS incentive expires (see #2). If you are considering buying in 2010 you may be better off to do it early and avoid the bottleneck.

#4) Where Better Than Johnson County?

Large employers in Johnson County, such as the University of Iowa, have helped keep the job market stable in the area. Johnson County’s unemployment is much, much lower than the national average. This has meant a stable housing market in Johnson County, year after year. We do not see the big ebbs and flows that many other cities have, which has helped us avoid many of the problems visited on those same communities. So, if the strength of the housing market is one of your concerns, there are few better places than right here!

#5) Prices:

It is a competitive market out there. Sellers and their Realtors are pricing homes up front to move.

Eric Olsen, Your  Mortgage Lender Contributor/Mortgage Loan Officer
2346 Mormon Trek Blvd, Suite 1000
Iowa City, IA 52246
Cell (319) 330-6689 / Office (319) 358-6882 / Fax (319) 338-1234
eric.c.olsen@bankofamerica.com

Here is a snapshot of our Iowa City/Coralville real estate market.

Check out these numbers!   Not bad considering what ‘s going on elsewhere.  So far, we have been very fortunate in the Iowa City and Coralville IA real estate market  to be rather insulated from the fluctuations seen in other parts of the country.                                                                                                                                                                                                                   Of course, we also never experience the real “Highs” either, but I will trade that for stability anytime!  While our numbers are strong, there is a stronger perception that it is a real buyer’s market out there.

What do you think?   Have you felt the impact of the national downward trend on real estate values locally?

Are you sitting on the fence and not sure when to jump in,  take advantage of tax credits and the lowest interest rates we have seen in years!

Homebuyer Tax Credit plus Extended First Time Homebuyer Tax Credit

You probably know by now that the First Time Homebuyer Tax Credit has been extended, but did you know that there is now a Homebuyer Tax Credit that can help you move up from your present home?

If you are interested in selling or buying real estate in Iowa City, IA or Coralville, IA, find out more information on how these incentives can work for you.
Remember, prices are low and mortgage rates are at an all time low!

Contact Toni for a list of reputable local lenders to help you take the next step.

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