With three-quarters of 2014 in the books, it is apparent that the Des Moines real estate economy has made the turn towards a normal market. All major indicators show that overall, home values are on the rise and days on market are shorter. And this is happening with fewer homes on the real estate market for buyers to choose from.
The pace of sales confirms that we are in a Balanced Market with about 4½ Months of Inventory. A Balanced Market is defined as if no new homes were to come on the market, it would take between 4 and 6 months before buyers ran out of homes to purchase. Less than 4 months is a Sellers Market and more than 6 months is a Buyers Market. Des Moines will experience all three market types depending on the time of year.
It’s become an annual tradition at the end of each September for me to predict where Des Moines’ real estate market will end up on December 31st.
Number of Homes For Sale
2014 has consistently had fewer homes for buyers to choose from with approximately 2½% less inventory over 2013 and almost 9% fewer homes compared to two years ago. My prediction is that Des Moines will continue to see low inventory into the end of the year but watch for consumer confidence to kick back in gear during 2015.
Median Sale Price
Des Moines has seen a consistent rise in the Median Sale Price since 2011 and 2014 is also a solid year. As of the end of September, the median sale price YTD for 2014 is $165,000. That is just short of a 3% increase in overall home prices from last year. My prediction is that Des Moines will continue to see slow and steady overall appreciation of values of between 2.75% and 3% as we finish 2014.
Average Contracts Written
This number is often ignored, but it can be one of the more telling indicators of the markets health and activity. Average Contracts Written, also referred to as Pendings, is the best indication of future closed home sales. We are currently approximately 2½% behind last years Pendings. My prediction is that we will end 2014 slightly behind in Average Contracts Written.
Total Home Sales Closed
With my prediction of Average Contracts Written being down at years end, I also believe that the total number of homes sold for 2014 will be down, however it will be very close to 2013’s record of 10,750. So my final prediction will be a slight drop in closed home sales but everyone will agree that it’s close enough to feel like we had a very good year in real estate sales for Des Moines.