Des Moines Just Set a Price Record. Downtown Condo Buyers Are Living in a Different Market.

If you are closing on a condo in Downtown Des Moines or the East Village this fall, ask your lender one question before you get attached to a closing date: has this building gone through Full Review yet.

That question did not exist eight days ago in the same way it does now. On August 3, 2026, Fannie Mae and Freddie Mac eliminated the streamlined Limited Review process that most established condo buildings used to get a mortgage approved. Every conventional condo loan in a building with more than ten units now goes through Full Review, which means your lender has to pull the homeowners association's budget, its reserve study, its delinquency numbers, its board minutes, and its master insurance policy before your loan can close. Any one of those documents can slow things down. Any one of them can also kill the deal.

That change lands on a corner of the Des Moines market that was already behaving strangely. The city as a whole just posted a record home price. Downtown condos did not get the memo.

What Full Review Actually Checks

Limited Review used to let a lender approve a condo purchase with a short questionnaire, no deep look at the association's finances. It worked because it was fast, and it worked because it rarely surfaced problems that would derail a sale.

Full Review does not skip anything. Lenders now have to verify the HOA's current budget and reserve contribution, confirm delinquency rates among owners are under a set threshold, review recent board meeting minutes for anything material, and check the master insurance policy against updated coverage standards. If the numbers don't hold up, the building can lose its warrantable status, which means buyers there are pushed into portfolio or DSCR loans instead of standard conventional financing, typically with 20 to 30 percent down and rates a point or two higher than a conventional loan would carry.

The practical effect for a normal transaction: a condo closing that used to take 30 to 35 days is more realistically running 45 to 55 days now, because lenders are working through a document list that simply did not exist under Limited Review. If you are writing an offer this month, build that extra window into your contract and lock your rate with it in mind.

There is a second number buried in the same rule change that matters just as much. HOA reserve funds have to reach 15 percent of annual assessment income, up from 10 percent, though associations have until January 4, 2027 to get there. Full Review already checks whether a building is on a documented path to that number, which means the underwriting scrutiny started well before the compliance deadline.

The Record Price Doesn't Live Downtown

Greater Des Moines set a new price record in June 2026. The median sale price across the metro reached $319,000, according to Des Moines Area Association of Realtors data reported by the Business Record, up from $306,000 in May and $305,000 a year earlier. Sales volume was strong too: 1,690 homes sold that month, the most since June 2023, with 72 percent financed conventionally and 14 percent paid in cash.

None of that momentum shows up in the same way in the Downtown Des Moines condo market. Over the three months ending May 2026, Downtown Des Moines homes were taking an average of 225 days to sell, compared to 152 days over the same period a year earlier, and the average sale price in June 2026 was down 23.0 percent from a year before even as the median for the broader three-month window ticked up. Only 8 homes sold there in May 2026, down from 16 in May 2025. That is not a market absorbing inventory quickly. That is a market where buyers are walking away, or where deals are taking far longer to get to the closing table.

Read the median and average side by side in that Downtown row and you'll notice they disagree with each other. The median went up. The average went down by nearly a quarter. That is not a contradiction in the data. It is what happens when a segment of the market is thin enough that a single high-priced sale or a single distressed one can swing the average without moving the median at all. Eight sales is a small enough number that one loft that closed above asking and one unit that closed at a steep discount can both be true in the same three months, and the two headline numbers built from that same set of eight sales can point in opposite directions.

That is the real story hiding under the metro's record price. It is not that Downtown condos crashed. It is that there are so few transactions happening there right now that the top-line numbers stop meaning what they normally mean, and anyone pricing a listing or writing an offer off a single quoted figure is working with less information than they think they have.

Why Iowa's Condo Boards Are Walking Into This Blind

Here is the detail that makes the timing worse for Des Moines specifically. Iowa has no state law requiring condo associations to commission a professional reserve study on any set schedule. That means a meaningful share of the smaller associations governing loft conversions and older mixed-use buildings across the East Village and the Downtown core may never have had one done. Under the old Limited Review process, that gap rarely mattered. Under Full Review, a lender that cannot find a reserve study has to document the "highest recommended reserve allocation" some other way, and that documentation has to come from somewhere. If it doesn't exist yet, someone has to commission it, and that takes time the closing calendar may not have.

There is a second wrinkle specific to how the East Village is built. Many of its condo buildings, places like SoHo Lofts on East Locust or the residential floors above ground-level retail throughout the neighborhood, sit on top of restaurants, shops, or offices. Conventional financing now caps commercial space at 35 percent of a building's total square footage. Most of these mixed-use conversions were built for character, not for a lender's spreadsheet, and a building that has always leaned more heavily commercial on its lower floors can find itself outside conventional guidelines entirely, pushed toward the same non-warrantable financing path as a building with underfunded reserves.

None of this means every downtown building has a problem. It means the buildings that do have one will surface it now instead of later, and buyers and sellers who ask the right questions before they sign anything will save themselves weeks of frustration.

What Sellers Should Pull Together Before Listing

If you own a condo in Downtown Des Moines, the East Village, or a similar association-governed building anywhere in the metro, get these documents organized before your first showing, not after you get an offer:

1. The current year's HOA budget, with the reserve contribution called out as its own line item
2. A reserve study if one exists, or written confirmation from the board about when one will be commissioned
3. The building's delinquency rate, meaning the share of owners more than 60 days behind on dues
4. The most recent 12 months of board meeting minutes
5. The current master insurance policy, including per-unit deductibles, which are now capped at $50,000 under rules that took effect July 1, 2026
6. Documentation of the building's owner-occupancy percentage, since spot approval for non-warrantable buildings generally requires at least 50 percent owner-occupied units

Handing a buyer's lender all six of these on day one of a Full Review is the difference between a 45-day close and a 55-day close, and in some cases the difference between a deal that closes and one that doesn't.

What Buyers Should Build Into Their Offer

If you are house hunting for a condo downtown, ask for the reserve study and the current budget before you write an offer, not during your inspection period. Divide the reserve contribution line by total annual assessment income. If that number is at or above 15 percent, or if a reserve study's recommended allocation is being met, the building is in good shape under the new standard. If it is below that and there is no documented plan to get there, ask your lender about timeline risk before you get emotionally attached to the unit.

If the building does turn out to be non-warrantable, you still have options. Spot approval can work for individual units in buildings that are at least half owner-occupied, adequately insured, and free of major litigation, though it typically takes 30 to 45 days and requires the HOA's cooperation. Not every lender offers it, so ask specifically. And a building that fails the reserve test today is not permanently disqualified. If the board votes to raise dues and hit the 15 percent threshold, the building can become warrantable again, though that kind of change usually takes months to implement.

A Few Questions Worth Answering Before You Sign Anything

Does this affect single-family homes too, or just condos? This rule applies specifically to condominium and co-op financing. Single-family homes, including the historic houses in Sherman Hill or the townhomes further out, are not subject to Full Review. If you're comparing a downtown condo to a single-family option elsewhere in the metro, the financing timeline is one more real difference between the two, not just a matter of taste.

Is my downtown condo suddenly worth less? Not necessarily, but it may take longer to sell and may attract a smaller pool of financeable buyers if the building's reserves or insurance don't clear Full Review cleanly. That's a liquidity problem more than a value problem, and it's exactly why gathering your HOA's paperwork before you list matters more this year than it did last year.

What if my building's reserve study says we're underfunded? That is not a disqualifying answer by itself. Lenders are looking for a documented path to the required allocation, not perfection today. A board that has already voted to raise the reserve contribution and can show that decision in its minutes is in a very different position than one that has never discussed it.

Every building downtown is different, and the fastest way to know where yours stands is to ask the questions above before a deal is on the table instead of during one. If you are weighing a purchase or a sale in Downtown Des Moines, the East Village, or anywhere else in Central Iowa and want a second set of eyes on the timeline before you write or accept an offer, Laura Major would be glad to help you sort through it. Let's Connect.