'FHAs, VAs – they're not sexy, but they're reliable'

City that hosted The Rolling Stones, Queen, Pink Floyd and George Strait sees property market 'rock on'

'FHAs, VAs – they're not sexy, but they're reliable'

With a growing population of over 60,000, a thriving university and entertainment scene – as well as a hotspot venue for bands like the Rolling Stones, Queen, George Strait and Pink Floyd – Ames, Iowa, is a bustling mix of traditional charm and modern architecture.

Nestled in the heart of the Midwest, Ames is also home to a thriving property scene – one which is enjoying a quick turnaround despite the harsher economy at large. According to Zoopla, homes are selling after an average of 20 days on the market, compared to 12 days the previous year, with 131 homes for sale in Ames as of November, marking a 9.7% decrease from the previous month.

Speaking to MPA, Fred Kreger (pictured), senior mortgage loan officer at Global State Mortgage, said that the region is something of a “Steady Eddie” in terms of home price trends.

“Ames, Iowa, is not like California or Colorado,” Kreger said. “In those states, you could see home appreciation jump 20%, then drop 30%, or maybe increase 10% and then fall 5% on average. Here, it’s steady. We’re looking at about a 5% average gain in home prices, which means we don’t experience those wild swings.”

‘Don’t stop me now!’

This stability has positioned the Midwest as a resilient housing market, even during periods of economic uncertainty, with Kreger adding that life events, not market speculation, often drive buying decisions in his region.

“People have life – whether they’re gaining families, changing jobs, or moving for other reasons, life still happens. So regardless of the market, they’re asking, ‘What does the actual house payment mean to me?’

“Twenty years ago, people would ask, ‘What’s the maximum I can buy?’ and then they’d go after that house. Now, people can afford a bigger payment, but they don’t want to. There’s a fear factor about the unknown – what they’ll have to pay for down the road. That’s a big difference from before.”

And this cautious approach is reflected in local trends. The average home price in Ames is around about $375,000, with very few buyers putting 20% or more down. As such, people are leveraging down payment assistance programs (DPAs), grants, and other tools to make homeownership more accessible. While nationally some buyers are exploring adjustable-rate mortgages (ARMs) or buydowns, these options haven’t gained much traction locally.

“When you’re talking about a $150,000 to $200,000 mortgage, the difference between a fixed rate and an ARM isn’t significant,” Kreger said. “Fifteen years ago, when I was in California, with homes in the $700,000 to $1 million range, ARMs were a game-changer. Now? Not so much.”

‘Under pressure’

The same could be said for buydowns. Kreger and his team created flyers and marketing materials for buydown options – and zero people took advantage. Why? He believes it often comes down to the upfront costs.

“A permanent buydown might make more sense than a temporary one, but it’s not catching on here in Ames,” he said. “[Alternatively] FHA has been around forever – it’s a proven product. VA loans are fantastic, offering 100% financing and no down payment for eligible military personnel. These programs are not shiny or new – they’re not sexy – but they’re reliable and still make homeownership possible for many. And, when rates eventually come down [hopefully] next year, again – whether it's an FHA or a VA loan streamline refinance, we could get it done in two weeks and with hardly any paperwork.”

This streamlined and efficient process is something that’s not just nice to have in today’s mortgage lending world, it’s a client demand. The rise of technology adoption in the sector means that people are less willing to wait over two weeks to secure their loans – however, they’re also reluctant to allow a robot to do all the manual labor. Instead, it’s about a marriage of humans and tech coming together to get the job done with both care and haste.

‘Another one bites the dust’

According to data from ICE Mortgage Technology, just 9% of clients prefer a fully digital mortgage borrowing experience, with data from Boon Brokers finding that 83% of clients admitting that they simply don’t trust AI to accurately assess their individual mortgage needs. Even Millennials, as tech-savvy as they are, are seeking in-person interaction, according to Kreger.

“They don’t trust AI. They think any conversation happening online or via email is artificial intelligence,” he said. “So they want to sit down with someone face-to-face to ensure they’re working with an empathetic person. [Instead], we’ve implemented a strategy called the strike rate. It’s a concept we got from Tim Braheem of the Performance Experts. Essentially, we pre-approve clients and agree on a target interest rate. When that rate is hit, we lock it in and move forward. It eliminates the back-and-forth and provides clarity. A lot of times what people want to know is that they are dealing with some compassionate person who’s looking at them. And I think that is gaining more traction in terms of how we look at our pipeline too.”

Kreger told MPA that the future is looking shiny in the Hawkeye State – with rates likely to drop in the New Year, paving the way for more first-time buyers to make their move on the ladder.

“Rates will eventually come down – maybe next year. When they do, programs like FHA and VA will make refinancing quick and cost-effective. [Essentially], at the end of the day, people want to work with someone they can trust. Whether it’s a first-time buyer or a seasoned homeowner, our job is to guide them through the process and help them make informed decisions.”