by Sam Sutton, Senior Finance Major
For this post, I decided to step away from the usual topic of farming or immigration and discuss…real estate! How fun! Actually, as the only business major (finance) in our class, I do enjoy the thrilling world of housing, land value, and interest rates. What might Storm Lake reveal on these subjects?
Recently, our class spoke with BVU President Dr. Brian Lenzmeier. In that discussion, one of my classmates asked if there was a particular issue that continues to frustrate him as president. President Lenzmeier singled out housing as the subject that especially frustrates his students (and, by extension, him). “Upperclassmen housing is not where it needs to be,” he said, noting that the market in Storm Lake is so tight that there is no apartment-style housing available. I researched and found that the university offers traditional campus housing and also a number of suites that house six persons per unit (3br, 3ba) for upperclassmen. While students are for the most part required to live on campus, there are many exceptions that make it likely for them to live off campus, too.
This prompted me to look at the city’s housing trends and how the university affected them (and related industries). Storm Lake is a renters’ market. The percent of population in Storm Lake that rents housing is 48.3% while the national average is around 36%. So why has a developer, BVU alumnus, or even a community member not taken advantage of this opportunity in the market, especially with a generally hot real estate market?
Most people think about buying in the market today, especially with such low interest rates. According to Realtor.com, the median sold home price in Storm Lake was $170k while the national average in 2021 was $453k. This significant difference is most likely due to the types of homes in Storm Lake versus the U.S., along with other factors. Similar to real estate market trends, the Storm Lake market has increased through the Covid pandemic and hit an all-time high in Winter 2021-22.
As a sort of real-world test, I searched for available apartments to rent. I could only find about 10 units for rent online. According to a report from 2017 by Maxfield Research & Consulting, the rental housing vacancy rate in Storm Lake is around .5% while market equilibrium is 5%. Although this data is a few years old, the trends seem to be similar today as they were then. It confirms that there is a high demand for rental housing in the Storm Lake area.
There is great opportunity in the Storm Lake renting market, especially with all of the industries in the area and new plants coming such as the Platinum Crush project, which is expected to create 51 jobs nearby. The U.S. Census Bureau reported Storm Lake’s population in 2020 was 11,300, which was a 6.3% increase from the decade before. (There are certainly many more undocumented residents.) With this new project, the 51 jobs created will increase the population by .5%, and it does not factor in the extra family members brought in with the new jobs, typically 2-4 people per job.
When researching about talks of new housing developments in the area, I found a couple news articles on the development of single family homes. A 170-unit rental townhome community, Sunrise Pointe by Kading, is set to open this coming summer. However, there is obviously still a need for more rental housing, not only for college students, but for members of the working community as well.
The need for affordable housing has caught the attention of the city and has resulted in a $150,000 available grant for the creation of many different housing choices, including multi-residential and rental homes. On March 31, Storm Lake Radio reported that the City of Storm Lake is now accepting housing grant proposals, due in May. However, it seems that not only is the city trying to push for more housing developments, but also the state has taken an interest. Developers, such as the Kading Group, which is finishing the Sunrise Pointe community, have been asking for approval from the Iowa Economic Development Authority for workforce housing tax credits and tax abatements on multi-residential developments. These tax credits and abatements are great incentives for developers and have historically been used to stimulate new construction.
Why am I trying to promote more investment in Storm Lake multi-residential real estate? Other than these obvious “data driven” reasons to invest in a development in Storm Lake, there are also other reasons that make it a gem of a place to invest. The city is a diverse community of welcoming people and has great opportunities and programs such as the school district’s dual language program. With much of the county centered around Buena Vista University, Tyson Plants, the Buena Vista Regional Medical Center, etc., it creates multitudes of stable jobs in the area. Finally, through all of our class interviews with former and current citizens of Storm Lake, the consensus is that it is a great place to live, raise a family, and perhaps even invest.
Sam Sutton is a senior from Bowling Green, Kentucky, majoring in Finance and minoring in Accounting and History. Outside of class, she is a part of the Miami University Varsity Swim team, is a member of the Asset Management Club, and she enjoys traveling and going to the lake. After graduation, Sam will be working at Fifth Third Bank in their Commercial and Credit Leadership Program.
