Iowa City housing construction overwhelmed by demand for new houses amid staff shortages

Iowa City’s housing market has continued to increase for the past three years. Housing construction is struggling to keep up with the demand for new houses in the community.


Dimia Burrell

A Watts Group construction site is seen in Solon, Iowa, on Sunday, April 3, 2022.

Samantha Bielema, News Reporter

Johnson County construction companies are struggling to keep up with supply chain and staffing shortages, as the demand for housing in Iowa City is at an all-time high.

“It’s happening all over the country, but it’s been happening here for about three years and it doesn’t appear to have an end in sight,”, Ruhl and Ruhl Realtors Manager Mark Signs said.

Many construction companies are having trouble finding the supplies and staffing because the demand is so high and the market is competitive, especially in Johnson County, Signs said.

Johnson County is labeled as a seller’s market according to the Johnson County Housing report, meaning that home prices tend to be higher and sell faster.

Signs said Iowa City is now a popular area for not only young families because of its schools, but also for older adults because of its accessibility to quality medical care.

“People are buying holes in the ground from the construction companies,” Signs said. “This is the way things go sometimes — the trends always move up and down.”

The housing cost in Iowa City has increased by 11.8 percent in the last year, according to Zillow’s Home Value Index. For most people, Signs said their mortgage or rent is a primary expense, meaning their cost of living has increased as housing expenses have increased.

Because of the high demand for homes, construction companies have to charge more for supplies and labor, Adam Hahn, director of construction services at the Watts Group in Coralville, wrote in an email to The Daily Iowan.

“We have experienced increases in both labor and materials necessary to build homes,” he wrote. “Recent data from the U.S. Census Bureau shows construction costs went up by 17.5 percent year-over-year from 2020 to 2021, the largest spike in this data from year to year since 1970.”

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“I think in general, the industry thought that it was going to slow down substantially this year, and we’re not seeing that,” Signs said. “There’s still a very high buyer demand.”

Hahn wrote that it’s uncommon for people to take longer to sell their homes. It’s a trend now to sell over the asking price and ask for higher interest rates due to quicker closing dates.

The state of the housing industry right now has led companies to emphasize their pre-planning techniques, Hahn wrote.

“Items like cabinets, roof trusses, and garage doors that previously were delivered 2-4 weeks after order and now 10-12 weeks,” he wrote. “We went through a stretch where new garage doors were over a six-month lead time.”

Amanda Sabin, real estate coordinator at the Watts Group, said there are still many issues with the supply chain when receiving home interior and exterior.

“There is still an issue of getting houses completed on time, but builders are adjusting to the change and doing their best to ensure the customer has a good experience.”