Note: This is part four of a series detailing the effects of the impending recession on Johnson County.
Home prices in the Iowa City area have risen rapidly over the past year. Realtors don’t know when buyers will find relief.
As of June 2022, the housing market in Iowa City has been a seller’s market. Home prices are higher and homes are selling faster than normal. The median selling price this summer is $285,000 in Iowa City, up $47,500 from June 2021.
Realtor Mark Kamps, who works at Coldwell Banker in Iowa City, said the market has been extremely competitive in recent months.
“I’ve been in real estate for over 38 years and I’ve never seen anything like it,” Kamps said. “People are willing to pay well above the asking price and will always be outbid.”
Kamps said even cash buyers with no contingencies lose out to other buyers. Mortgage rates have also increased, making it much more difficult for buyers to afford homes in their specific price ranges.
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“I had a couple who just bought a house last weekend. They searched for months and lost four offers before finally finding a home. They were extremely frustrated; the competition is tough right now,” Kamps said.
Another realtor, Mark Paterno of Urban Acres in Coralville, said he also saw the extreme competition among buyers.
“I had a property that I was selling with nine offers,” Paterno said. “People are desperately trying to buy homes with very limited options.”
Paterno said the real estate market is operating very differently than it has in the past.
“Usually we have a person or people who schedule a viewing of a house and then they might make an offer. Now we get so many offers on one property that we have to say something like ‘I’m not looking no offers until Monday”.
Housing market prices in Iowa are up more than 13% since this time last year. Paterno does not know when buyers will be able to find relief.
Tracy Adams, another Coldwell Banker realtor, thinks there is hope in the near future for Iowa City buyers.
“Compared to the rapidly changing market we’ve been dealing with for the past few months, the competition is starting to thin,” Adams said.
30-year fixed interest rates currently sit at just over 5.5%, up from this time last year when interest rates were below 3%. Adams said that means buyers can afford to borrow less. Home prices may drop due to these conditions and provide less competition for buyers.
“Fewer competing bids mean properties are less likely to sell for significantly more than the asking price,” Adams said. “With this, some buyers are already seeing better results.”
Although Adams says some buyers are beginning to feel some relief, no one knows exactly when the market will return to the state it was in during the recession.
Paterno said he thinks it will happen, but he doesn’t know when.
“It’s normal for prices to fluctuate, but over the past two years it’s been different,” Paterno said.