If you’ve been looking around AT ALL, you’ve probably realized that the housing market is changing. This is happening nationally, and we’re seeing the first signs here in the Des Moines market.
Here’s the tl;dr (too long, didn’t read) version:
- Mortgage rates have inched past 7% for many buyers.
- We have way more active listings than pending listings on the market as of today. This has not happened since prior to the pandemic.
What does this mean? It’s easier for buyers to get an offer accepted, and harder for sellers to get an acceptable offer.
Now, let’s dig into the details. And if you need a refresher on the 2022 market for the past quarters, our updates are here:
- July 2022 Update (2nd Quarter 2022 Numbers)
- April 2022 Update (1st Quarter 2022 Numbers)
- January 2022 Update (2021 Numbers)
How was the third quarter of 2022?
If you’re just looking at closed sales during the third quarter of 2022 (i.e. homes that closed between Jul 1 and Sept 30), you might continue to think the market was red-hot. And in some price ranges, it was! Overall, we continued to see the same trend lines on closed sales among the first, second, and third quarters in 2022, closing a total of 4,359 homes during this quarter.
The average price point also continued to inch up to just over $310,000. Compared to an average price point of $245,000 for homes sold in 2020, and an average price point of $275,000 for homes sold in 2021, this average price for a home continued to show an appreciation of 12%, year over year. Appreciation over 10% is very high on an annual basis here in Des Moines historically.
Let’s look at the trends over the past three quarters:
However, the homes that closed this past quarter went under contract earlier. In some cases, these were high end custom homes that went under contract months before this quarter.
What’s happening in the market right now?
If we look at the current numbers, however, I’m seeing a very quick slowdown in buying activity.
There are significantly more homes that are available on the market than houses under contract. Overall, this is due to multiple reasons:
- Rates are double what they were back in the spring. These rates are really hurting buyers’ ability to afford a new home. We are seeing buyers having to drop out of the search due to the higher rates.
- Again – prices have appreciated 12% each of the last two years. Buyers are unable to afford what they really want.
- Sellers are still feeling that they can ask for sky-high prices and expect a quick sale. That’s no longer the case.
Let’s look at the actual numbers. The chart below shows where we have been so far in 2022 (active and pending snapshots are as of 09-October-2022). 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. If we use the 3rd quarter sales, we’re still seeing a seller’s market or balanced market in every price range. I believe the 4th quarter numbers will show a shift in these market designations.
What does this mean to you?
- If you love your home and intend to stay there forever… the market doesn’t matter directly to you. Just know that if you want to take out a home equity line of credit, the rates may be higher than you expect.
- If you’re planning to sell in the next few months, start preparing now! You’ll need to prepare both your mindset and your home in order to compete.
- If you’re in the market for a home right now, depending on your price range, you may still have to compete for the most desirable homes. While the market is shifting, we do still have a strong seller’s market in lower price ranges.
- Homes still cost more than they used to cost. Be prepared.
- The interest rate changes will impact your payments and your targeted price. If you haven’t chatted with a mortgage lender, now is the time! Even if you’re pre-approved, check back in with your lender to make sure there are no surprises.
- I can’t emphasize this enough: Be prepared! Make sure your house is in tip-top shape because every showing counts. In addition, when setting a sales price, don’t look at previous sales. Plan to be more conservative.
- When choosing a REALTOR®, make sure you’ve got one who will have your back every step of the way. It’s no longer enough to put a sign in the yard and sit back and relax.
The Bottom Line
If you think 2022 is the year for you to move, contact us! We are happy to meet for a coffee and chat.
Considering a move? If you have a REALTOR®, that’s great. If you don’t, the Home Sweet Des Moines team (brokered by RE/MAX Precision) is ready to help. Here’s how to contact us:
- Jeannie Crosby: email@example.com, 636-288-1761
- Nora Crosthwaite: firstname.lastname@example.org, 515-783-9815
- Tawnia Martin: email@example.com, 515-867-4436
- Jessica Shanley: firstname.lastname@example.org, 515-707-5750
We’d love to help.
And even if you’re not moving, feel free to say hi. We love all our clients, past, present, and future!
Enjoy the fall and PSL season!
Home Sweet Des Moines – Realty ONE Group Impact
* 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 and lot listings 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.