I think I can speak for many of my real estate colleagues when I say that even though it’s only the end of July, it feels like we have been running a marathon since about February 1st. This year has been nothing like normal in Des Moines real estate and I don’t expect anything to change for the foreseeable future.
The Past—January through June
In my last article for BUILD Des Moines, I talked about the Imperfect Storm. Imperfect because of the deep Sellers Market we were heading towards. I can say that many if not most of the buyers I’ve worked with so far this year found the home buying process frustrating and very stressful.
It has been common for a home to come on the market one day and be sold the next. Buyers continue to pay for home inspections on their purchase, but unless a safety hazard is discovered, sellers are rarely making any concessions over condition items. Both Buyers and Sellers know that if a buyer walks away, another buyer (or possibly more) is right there to take their place. There has been intense buyer demand for homes under the $300,000 price range that continues to this day. Home values are on the rise across the board by as much as 8% in some areas and the number of homes sold are up over 10% during the same period of last year. All of this is happening with inventory levels 11% below last year.
The Present—July 2016
Summertime in Iowa traditionally means that real estate sales dip as Buyers and Sellers head off on vacations and summer activities. We did see a slight pause right around the 4th of July weekend, but for the most part home sale activity is as strong as ever. As July home inventory levels finally started to grow, more buyers appeared, proving the fact that if you are considering selling your home this year, now is the time to get it on the market. Mortgage interest rates remain low, partially due to the world economy (Brexit) and I also believe due to the upcoming Presidential election. This has given buyers the ability to afford more than they may have expected, which in turn helps the price of homes for sale to continue to rise.
The Future—Through the end of 2016
This is where I dig out my crystal ball. And it is going to be fairly easy to read the future.
- Number of Homes For Sale will continue a slow increase but not rise anywhere close to last years highest inventory count of almost 4,000 homes on the market at one time. Buyers will continue to be required to act quickly on a purchase decision as buyer demand will remain strong through 2016 and into 2017.
- Total Number of Homes That Will Sell in 2016 will be very close to 14,000. You may not be impressed with this number until you look back at recent years when we struggled to hit even 8,000 sales in 2011, a number that we should achieve this year on or before August 1st.
- Months of Inventory, also known as the Balance of the Market, will remain at or near 4 months by year end. Less than 4 months of inventory is a Sellers Market and 2016 has only had 30 days where we were in a Balanced Market.
- And the big one, Home Values. 2015 recorded some of the highest increases in year over year home values and I believe that 2016 will do the same. While not every segment of our market will experience a rise in home values, the majority of owners, especially in the under $350,000 price range should take joy in knowing that the old business rule of “Supply and Demand” is hard at work in our marketplace. How much increase you ask? I will go out on a limb and conservatively predict around a 5% increase by years’ end.