I doubt anyone saw how 2020 would go back in January. Despite coronavirus, the real estate market is in full swing here in Des Moines; in fact, we have been so busy that we pulled up the active and pending listings as of July 2nd (two days later than usual).
We adore the numbers behind the real estate here at Home Sweet Des Moines (for past market updates, click here: 2020 1st Qtr Update, 2019 Update). This quarter, our numbers are quite intriguing. Undoubtedly, the pandemic has impacted real estate, but not by triggering a slowdown (for now).
The chart below shows where we have been in 2020. As always, whether we have a seller’s market (less than three months of inventory available), a balanced market (three to six months of inventory available), or a buyer’s market (more than six months of inventory available) varies widely based on the price point. You can see the seller’s market, balanced market, and buyer’s market price points below.
The average price JUMPED from $231,879.94 for all of 2019 to $245,585.29 for the second quarter of 2020. And as a reminder, our average price in the first quarter of 2020 was $224,963.44. Why are we seeing this jump? Primarily due to interest rates. People that can move are taking advantage of extremely low interest rates to make the jump. In fact, if the remainder of the year is like the second quarter, we could see many more houses than in the past two years in the moderate to high price points.
Right now, we are back to seeing sellers’ markets and balanced markets for prices of $500,000 or less. We have not recorded those types of markets here at Home Sweet Des Moines since 2017.
Furthermore, if a house is priced correctly in the lower price ranges (say about $300,000 or less), it sells. Many of our clients that don’t have to move are choosing to do so, to take full advantage of the equity they have.
We Desperately Need Houses
In July 2019, we had 3,795 active listings and 2,474 pending listings. As of July 2nd of this year, we have 2,833 active listings and 3,566 pending listings. Our active houses for sale have dropped by ~25% year-over-year.
Listings under $250,000 are frequently selling with multiple offers. Listings in the $150,000 range are even selling with 10, 20, or 30 offers on them. Our real estate friends in other parts of the country, by the way, are reporting similar happenings.
Why is this happening?
- Interest rates are encouraging people to jump in the market if they are secure with their income and their savings despite the pandemic.
- Listing your home while living in it can be problematic. With many corporate employees working from home for the foreseeable future, it is difficult to vacate for showings in the middle of the day… especially if you must take kids and pets with you.
So, what should you do? Well, if you are considering selling, it is time to give selling some serious thought. Our buyers will thank you.
Our “Current” New Normal
Like almost all professions, real estate is still navigating our new normal. Here is a snapshot of what we are seeing:
- Showings: In the second quarter, we have seen showings come back. We are even starting to see multiple showings at the same time at hot properties, a practice which was on the decline three months ago.
- Loan Complications: Lenders are performing employment verification as close as possible to closing day, to ensure that buyers have not had income impacts from business closures. Credit requirements are tightening up; if you are not ready to buy yet, maybe it is time to check into credit repair if possible.
- Loan Paperwork: By the way, if you are in the process of buying a house, be prepared to submit a lot of paperwork. Loan officers are not trying to drive you crazy; they are keeping up with the ever-changing requirements from banks and mortgage brokers.
- At some law firms, closings are still being done in the parking lot, to minimize people going into the buildings. In general, closings have continued throughout the spring and early summer; most of our transaction folks have a rhythm down.
The Bottom Line
Sellers / Potential Sellers: We NEED your house, especially if it is priced around $250,000 or less. Desperately!
Buyers / Potential Buyers: Be ready to make decisions quickly on making offers, especially if your budget is $250,000. We can help you get all your ducks in a row before you see homes in person, so you are as prepared as possible.
And if you want to plan to make a move later in the year or beyond, we can help you prepare. We are happy to meet (virtually or socially distanced) for a coffee and chat.
* Sales prices in thousands. This data includes all residential properties in the Multiple Listing Service (MLS) for the Des Moines Area Association of Realtors (DMAAR). For Sale By Owner homes may not be included.
** Seller’s markets are those with 0-3 months of inventory. Balanced markets are those with 3-6 months of inventory. Buyer’s markets are those with 6+ months of inventory.
*** Months of inventory determined by the last three months of sales numbers.