1st Quarter of 2025, Des Moines Metro Lot Analysis
I was excited about six weeks ago when I was reading an article in The Des Moines Register covering the recently released U.S. Census annual population estimate for the year 2024. The Des Moines metro’s population has grown to 753,913 people. That’s up 6.3% from the year 2020. It’s now the 81st most populous metro in the U.S., and the fastest-growing major metro in the Midwest!
I was born in Des Moines in 1985. At that time, the metro sat at approximately 281,000 with minimal growth. Hand to heart, when I was 10 or 11 years old, I remember asking my parents if they thought I’d be alive when “the Des Moines area” hit 1,000,000 people. Boy they thought that was funny. “Only if you plan on living for a really, REALLY long time,” they said.
It’s a great place to live and I’m happy to be here. I understand that I’m extremely biased, but my wife and I really couldn’t ask for a better place to raise our four daughters.
Housing has played, and will continue to play, a significant role in the metro’s growth. The local development community are those that truly put their money where their mouth is and bet on the continued and successful growth of the metro. We all know that real estate is cyclical, and right now is a bit slow, but I fundamentally believe that the metro will continue to grow for the rest of my life, and the increasing population will need a place to live.
Speaking of needing a place to live, let’s examine some of the numbers… First Quarter of 2025 lot sale numbers are slightly down from that of First Quarter of 2024. I believe this is due to two factors. The primary reason being that new construction sales are down, and often, builders won’t put in more inventory until they’re confident in the sales of their current supply. Also, many builders still have lots that they have purchased over the last couple of years, and until they can build through those lots, they’re not going to close more lots.
Next, First Quarter of 2025 building permits (single family and townhome) was slightly down. I’d say that the reasons for this again are slower home sales, and I’d add the weight of decreased profit margins on new builds.
The next graph shows First Quarter of 2025 new construction sales. Sales are down 12% from first quarter of 2024. I’ll keep it short and say that this is likely due to continued “high” mortgage rates and an overall concern for the broader economy from potential homebuyers.
The final graph shows the metro’s existing supply of finished lots. There are currently 7,552 lots that are ready to be built on for single-family and townhomes. That’s up 14% from a year ago.
I want to mention something that I have brought up numerous times in this quarterly article in the past. It’s that a “healthy” lot market has about a 30-month supply of lots in the ground at any given time. Last year I noted that the previous five-year-annual-average of townhome and single-family new construction permits for the metro is 3,815 permits/year (averaged out to 318 permits/month). Even though the existing lot inventory has increased 14% year-over-year due to the slowdown of the market, at 7,552 finished lots, it is still 21% below where the 30-month supply of finished lots “should be”.
As a fifth-generation Iowan, I am proud to say that I am a product of my environment. To take that a step further, something that I love about real estate development is that the developer, in a sense, gets to make their environment into a small product of themselves.
I think the metro will hit a million people before I die. I really do! 6.3% for a five-year period is an aggressive growth rate, so conservatively, let’s use 3.5%… at that rate, by 2070, which if I’m lucky, I’ll be 85, the metro will have a population of 1,027,506. Long term, there are a lot of houses to be built. I’ve got my fingers crossed, hoping I’ll be around to see it!
Nathan Drew, Broker/Owner of Drew Realty, a lot and development ground brokerage, has been in the business of lot and land acquisition and disposition since 2008. He keeps an ongoing inventory of all vacant lots and land throughout the Des Moines Metropolitan Area, and puts together a quarterly email blast with an interpretation of the metro’s lot market. Email Nathan to join his email blast list at Nathan@DrewRealtyUSA.com and follow him on Twitter @DrewRealtyUSA, on Facebook @DrewRealty, and on Instagram DrewRealty.