It has been 307 days since there has been over 4 months of inventory for sale in the Des Moines real estate market. Months of Inventory is affected by two factors; the number of homes for sale and the number of offers accepted during the previous 30 days. In its simplest form, this is Supply and Demand.
What this means is that for the first time since January 25th, a buyer and seller have equal advantage. In a balanced market, home prices tend to stabilize and buyers have an adequate selection of properties to search and choose from. Most sellers in turn become buyers once their home goes under contract and this gives them the ability to go on the market knowing they will also be better equipped to find a home. This past year homes were selling quickly and most sellers would not even consider a subject to sale offer. The balanced market gives everyone a chance to breathe, search and potentially make offers contingent on the sale of another home. With a month to go, it is unlikely that the market will shift completely to the other end of the spectrum to a Buyers Market.
Other circumstances affecting the Des Moines real estate market is the long talked about rise of mortgage interest rates. Predicted to happen right after the Presidential election, rates began to rise on November 8th. Economists have continually said that mortgage interest rates were going to rise by the end of the year. The Federal Reserve has played a part in keeping rates low in an effort to prevent the economy from heading towards inflation. With the December meeting of the Fed coming up, it is uncertain whether rates will raise at that time, but one thing is for certain, the days of the 3% 30 year fixed rate mortgage is probably behind us.
Some interesting stats for the 2016 Des Moines real estate market as of November 30th include:
- Home For Sale inventory has consistently been down 10% from last year.
- Pending sale count (number of homes waiting to close) has been up 14.5% over last year.
- The spread between the number of homes for sale and homes under contract have kept us in a Sellers Market for more than 10 months in 2016.
- Days on Market has averaged 69 days this year.
- With all this activity, the Median Sale Price has only risen a modest 3% over last year.
2015 Total Sold Units has been surpassed by November 30th, 2016 making 14,000 transactions reachable by year end.
I expect real estate sales to begin quickly next year with buyers out as early as January. Rising mortgage interest rates will be the catalyst to this activity. However, I do not see home sellers reacting quickly enough by adding inventory to the market and this will quickly push us back into a Sellers Market.