The IBM in Dubuque project is great, but we received a reminder today that Dubuque is not completely immune to the harsh economic realities of the world. In an announcement today, Deere & Company announced layoffs within the construction and forestry divisions that will have a major, and hopefully temporary, impact on the Dubuque area.  Per a breaking article in the Des Moines Register this afternoon:

The layoffs are effective March 30 and are broken down at 220 in Dubuque and 105 in Davenport. Workers were told of the layoffs at meetings Friday afternoon.

The latest layoff comes after 200 workers were laid off at the Deere Davenport facility and another 180 in Dubuque since the beginning of the year. Deere is Iowa’s largest manufacturing employer, with about 12,000 workers.

On the heels of the newly released figures this morning of a national unemployment rate of 8.1%, the Deere announcement pushes the point home that we’re all interconnected in the national & global marketplace.  Having now lost 400 employees at John Deere Dubuque Works, this certainly puts a blunt on the euphoria we’ve been feeling since the IBM announcement on January 15, 2009.

How will this impact the local real estate scene?  I’m no fortune teller, but a basic understanding of economics will tell you this will be a drain not only real estate, but nearly all local businesses to a degree.  We’re talking restaurants, service providers, car dealers - the list go on and on.  IBM and the upcoming Hormel Processing plant will most likely still allow for growth in nearly all sectors of the Dubuque economy, but the Deere troubles will slow that growth a bit.

The bigger question is how will we, as a community, react?  I doubt we’ll ever revert to the doom and gloom we experienced in the late 70’s and early 80’s in the Dubuque area.  The old phrase “last one to leave Dubuque, turn out the lights” should by no means enter the picture.  Remember, we hit nearly 24% unemployment in 1982.  Back then Dubuque seemed to revolve only around the fortunes of  John Deere and The  Dubuque Packing Company.

Our local economy is way more diverse today.  With Dubuque becoming a hub for technology, banking, and obviously tourism, I am fully confident that, while this is going to hurt a lot of good folks, especially in the short term, we’ll have other good opportunities.   Deere & Company hopefully will be able to bring their workforce back up to full speed once the larger economy starts to recover.

OFHEO.gov (Office of Federal Housing Enterprise Oversight) is an invaluable resource to anybody and everybody involved in real estate.  Not only should agents, appraisers, and mortgage lenders be familiar with OFHEO and its mission, but homeowners and those hoping to someday be homeowners should be in the know about the great data OFHEO.gov provides.

According to the OFHEO.gov website, OFHEO’s mission is:

…to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae (Federal National Mortgage Association)  and Freddie Mac (Federal Home Loan Mortgage Corporation).  OFHEO works to ensure the capital adequacy and financial safety and soundness of two housing government-sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are the nation’s largest housing finance institutions.

One of the ancillary services OFHEO provides is monthly, quarterly, and annual tracking of appreciation rates, known formally as the House Price Index, with appreciation (or depreciation) rates broken down by national, state, major metropolitan areas.  I personally make a point to visit OFHEO.gov at least once a quarter to download the latest report.  The most recent report available to the public is the Quarter 4, 2008 report, released last week on February 24th, 2009.  In it I found, as usual, some interesting facts about housing price trends.

Click to Enlarge

• Nationwide, house prices fell by 3.4% in the 4th quarter and fell by 8.2% for the previous full year
• This is the 6th straight quarter (18 months) of nationwide price declines, coinciding with the actual start of the recession in the fall of 2007, see chart below.
• Iowa ranks 8th best among the states with a slight decline of .64% for the 4th quarter and decline of .95% for the year.
• Illinois ranks as the 32nd “best” state with a quarterly decline of 3.03% and an annual decline of 5.75%
• The three worst states, no surprise, were Florida, California, and Nevada with respective annual declines of 23.86%, 25.52%, and 28.24%.  Sorry, Mr. DiCaprio, your $8.9 million-dollar mansion is now only worth a paltry $6.6 Million
• 44 of the 50 states saw annual declines for the previous year, see chart above.

Click to Enlarge

Sounds and looks pretty grim, right? Well, in good old Dubuque Iowa we haven’t been doing all too bad.  In fact, we actually saw in increase in prices for both the 4th Quarter (up .04%)  and the annual figure (up .57%).  Granted, these aren’t exactly big gains by any means, but at least we’re holding mostly steady against the national trends.  You’re not getting mea-rich owning real estate, at least not right now.  If, for example, you bought a home for $150,000 on December 31st, 2007, that same home “should” have been worth about $150,900 at the end of 2008.

At least we’re not Merced, CA, - they had a one-year decline of 49.5% – truly amazing.

 You can access the full OFHEO.gov report here. 

As always, I encourage your questions or comments via the comments function available in every post.

An awesome analysis of how Dubuque landed the IBM project from Tom Daykin of the Milwaukee Journal-Sentinel today that discusses not only the intimate details of how the IBM-Dubuque-Iowa partnership came about, but talks about Dubuque in general, it’s economic history, and the great transformation we’ve made from a strictly industrial-manufacturing community into a hub for banking, technology, and tourism.

Milwaukee Journal-Sentinel Article Here

I especially love the tone of the article in which the author uses the Dubuque example as a waypoint for Milwaukee’s leadership to guide them, hoping to assimilate the success the Dubuque area has been taking part in, not only the IBM project, but also Hormel’s new production facility, the newly-opened Diamond Jo Casino, and the (renovated and now re-named) Mystique of Dubuque.

It’s been a little more than month since the IBM in Dubuque announcement was made, so I thought I’d do a quick-link round-up of a tiny portion of the continuing coverage of the project.  Even yours truly has been mentioned for my personal coverage, especially the multiple posts I made to River Banks to Corn Fields on the day the project was announced.

THOnline article with the sidebar mention of RBtoCF.com here.

The incentive package that helped being IBM to Dubuque has certainly had it’s share of scrutiny, including within the article I linked above.  Here are some other reactions as well as a loose timeline of the process to cement the arrival of IBM to Dubuque.

Des Moines Register IBM Incentive Details – January 16th, 2009

THOnline.com IBM Incentives Approved – February 20th, 2009 (including some key numbers in sidebar)

THOnline Roshek Building Renovations on Fast Track – February 24, 2009

Rockford, Illinois views the Dubuque – IBM model as path to similar success February 14, 2009

IBM, as well as Dubuque and other Iowa representatives are fanning out to all the area colleges, large and small, holding  job fairs.  Computer World reported the mass number of applications pouring in as well:

DMRegister.com  IBM Center Provides Welcome Jobs – February 20th, 2009

Computer World Reports that Applications are Pouring In

EmploymentCrossing.com even has a video short on YouTube about the IBM Service Center here:

Then, finally, there’s this gem from our good friends in Wisconsin (Go Hawks!). Neil Heinen, in an editorial for WISC Channel 3000 states “We’re talking Madison vs. Dubuque! We’ve been competing with Raleigh-Durham, Boston, Denver and Silicon Valley? Or so we thought. IBM could have located here and chose Dubuque? That’s just not right.”

Well, at least you have Capitol Brewery, Mr. Heinen.

The Iowa Workforce Development office in Dubuque is sponsoring athe Dubuque Apprenticeship Job Fair on Wednesday, February 18th at at 680 Main St. 2nd floor, from 10-2 p.m (Veterans only from 10-Noon).  Refreshments will be served.

Representatives from the following building trades will attend: area Armed Forces recruiters, carpenters cement masons, electricians, HVAC, insulators, millwrights, pipe fitters, plumbers and sheet metal. Additional trades may be added to the list until the day of the event.

Complete Details Here (IWD Press Release)

With all the IBM talk locally and the dour economic news nationally, it can be hard to guess which way local housing prices will go.  Take a second to answer this poll and we’ll see what readers of River Banks to Corn Fields think… 

[poll id="2"]

 As with any post, your comments and questions are encouraged…

UPDATE (2/5/09 @ 1:00PM CST) The poll is now closed and it seems the consensus is that the Dubuque market will stay about the same, with a couple folks believing will go up slightly, and a few believing it will fall back slightly.

Personally, I’m in the Up a Bit column.  The IBM thing is great and will definitely impact the local market, but the drag being felt by national economic conditions will hold us back a little further that we normally could expect with a project as big as IBM coming to Dubuque.

Now that the dust is settling on the announcement of IBM’s project in Dubuque (see previous posts here, here, here, & here), I thought I’d write a follow up about the impacts I’m already seeing.  I’ve noticed decided changes in behavior by both our buyers & sellers in just the last week and a half. 

Buyers who have been already in the market for some time, or those thinking about jumping in, are stepping a little faster these days.  They see the incoming IBM workers, managers, and executives as a reason to hurry up and make a purchase decision, especially with still-historically-low interest rates available. 

Private showings and open houses are definitely seeing more traffic.  In fact, one of my open houses on Sunday at 2791 Oak Crest saw a headcount of approximately 25 visitors in an hour and a half.  Our other open at 9043 Olde Davenport Road saw more visitors than in either of the previous open houses despite the day’s temperature hovering just above zero degrees.

For our sellers, I’m also seeing changes in behavior.  Creating up to 1,300 now positions in a community will clearly impact the local housing market.  Knowing these workers will be here in the upcoming months is changing sellers attitudes about their prospects for sale.  Some Dubuque homebuilders have actually raised their listing prices on their spec (speculative) listings. 

As a personal note, I was involved in a number of negotiations last week that demonstrated our sellers’ new resolve.  In each case, the sellers were not as accommodating in negotiations as they had been even a few weeks ago (pre-IBM).  That’s not to say sellers are demanding full list prices, but buyers should be aware that counter-offers will not be as generous as they have been in the last year or more.

Over the last year, MLS stats show that, on average, the greater Dubuque market gives up in negotiation 3.3% off the current listing price.  In real terms, a home listed for $200,000, based on Dubuque averages, would expect to sell for approximately $193,400.  Going forward, I expect that 3.3% figure to shrink as demand for housing strains the current available supply.

As with any post, your comments and questions are encouraged…

Final round-up of the day about the IBM to Dubuque project.  With all this hulla-baloo (a word?) I forgot to include links to how to actually apply for any of the jobs that are going to be created as a result, whether they directly are with IBM or any other jobs that become available in the wider Dubuque area economy.

Access Dubuque set up an IBM Profile Page with a very cool video by IBM embedded within. Clickitty-Click Here to View.

If the IBM thing isn’t for you, there’s plenty of other Dubuque area opportunities, Click Here to View the Main Access Dubuque Jobs Page

Greater Dubuque Development played this AWESOME Dubuque video at the IBM Annoucnement Event today – I highly recommend you watch it here.

And lastly, I would be remiss if I didn’t include Katie Wiedemann’s Report on KCRG tonight of the IBM Announcement Event (thanks Katie, and have fun at the Inauguration!)

First up the series of article in the Dubuque Telegraph Herald today:

1,300 Jobs by Eileen Mozinski (Hi Eileen!)

Big Blue Deal Means Big Domino Effect by Eileen Mozinski

Who is IBM? by M.D. Kittle

What’s the cost? by Eileen Mozinski

If you’re familiar with Google News, there are, as of this post, 124 IBM-Dubuque articles available HERE

Video Report from KWWL News’ Lauren Squires:

Today’s TH Coverage of the Grand River Center IBM Announcement Event Here

I’ve got a couple reports of AccessDubuque.com (the most well-known jobs site in Dubuque) as being quite busy with folks looking into employment possibilities with IBM.  Be patient – IBM wants to know if you’re interested and if would make a good candidate for one of these new postitions.

If it’s good enough for print, you most likely have to believe it’s true…

IBM Coming to Dubuque