Oh, hello housing inventory! We’ve missed you!
It seems you can’t turn on any news programs without hearing about the incipient “housing slowdown”. Are we having déjà vu? Is this 2008 over again?
Quick summary: Mortgage rates have gone up drastically since this time a year ago. They hit 6.5% briefly and are now hovering in the mid 5% range. What has the mortgage rate change done to the Des Moines market?
In the second quarter of 2022, we had more sales than in the first quarter, which is normal for Des Moines. We are starting to see a slow down in houses being sold, however. Houses that would have gone for $20,000 above list price in hours are now taking a few days to sell, in some cases. In addition, the full weight of the mortgage rate changes won’t be reflected in the sold homes until the third quarter.
We are still seeing in the second quarter that prices went up. The average home price for homes sold in 2022 Q2 is now above $300,000. That’s approximately 22% higher than average prices were at the end of 2020.
However, we are starting to see inventory come onto the market. At the end of the 1st quarter of 2021, we had 1,667 homes on the market. We now have 2,365, an increase of 41%. But is this enough to satisfy all the buyers out there?
Not yet. In looking at the quarter 2 numbers, we still have a strong seller’s market in almost every price range.
Let’s look at the actual numbers (as of 7/12/2022). The chart below shows where we have been so far in 2022 (active and pending snapshots are as of 06-April-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.
And this chart shows the difference between 1st quarter and 2nd quarter sales in 2022, by price range.
What does this mean, and what’s happening next?
It’s important to remember that sold homes can lag behind the current market by 30-60 days. We don’t have as clear of a picture as I’d like of late June and July yet. Anecdotally, here’s what we’re seeing:
• Buyers are more selective in determining whether to write an offer. To coax an offer, the home must be presented well and priced right. It’s no longer sufficient to put a sign in the yard and wait for the buyers to bid the price up.
• Sellers are still pricing their homes based on two months ago. I’d recommend, in this market, that sellers use past sales to determine the price, and then lower it a bit for the current market. Remember: if a home is underpriced and you have enough time on the market for buyers to see it, the market will bid the price up.
• The number of showings is dropping dramatically for each new listing. First-time homebuyers, especially, seem to be more cautious about looking to buy with the rates so much higher than what they’ve seen in recent years.
• If you’re not looking to either sell in 2022, then continue to maintain your house thoughtfully. That way, you’ll be ready whenever it is time to sell. But, no need to worry about a housing slow down until you’re closer to making a move.
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!
Have a fabulous summer!
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Home Sweet Des Moines – RE/MAX Precision
* 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.