What A Difference A Year Makes
Roughly 15 months ago the world was turned upside down. Covid-19 was spreading across the country and around the world and lockdowns were just beginning. Schools closed, businesses moved workers to home and essential workers were defined. Real estate brokerages and agents were deemed as essential as homeowners scrambled to complete transactions and evaluate the new additional purpose of the family home.
Fast forward to month of June 2021
In the United States, 316 million vaccinations have been administered, 148 million fully vaccinated representing just over 45% of the population. In Iowa doses are approaching 3 million and just under 1.5 million fully vaccinated putting Iowa at 46.8% fully inoculated with one of three different types of vaccine. Mask mandates have been relaxed and people have begun to return to a more normal way of life even though we are not completely out of the woods yet, there is renewed hope and optimism.
How Covid-19 changed central Iowa real estate by the numbers
There are and will be many long-term effects of the coronavirus pandemic. This month I will compare key components in the Des Moines and Central Iowa real estate market. The data in this report is as of June 19th, 2021.
Homes For Sale
One year ago, there were 2,973 homes on the market. Today, the number of all homes for sale in the Des Moines Area Association of Realtors MLS is 1,861, a drop of over 37%. On a positive note, this number has gradually been building from June 1st and is up by a scant 200 homes from the first of the month. This is the first month since the pandemic that we have seen a positive net rise in For Sale inventory.
Single Family New Construction provided a lot of the much-needed inventory in the first 5 months of 2021 and it wasn’t until the past 30 days that we began to see an increase in Single Family Resale properties entering the market. This has been a welcomed sight to starved home buyers, especially in the under $250,000 price points where multiple offers and escalation clauses have become a normal way of buying homes.
With the record low inventory came record high list prices in the new construction areas of the market, primarily due to the rise of pandemic related material costs of lumber. Single Family Resale pricing however dropped below 2020 pricing by the start of the spring market in April. This drop was primarily due to the lack of resale homes on the market and resale buyers taking advantage of record low mortgage interest rates that allowed them to buy new homes in the higher price point. The median price of a Single Family New Home today is just over $355,000 compared to a year ago when the median price was only $312,000.
Pending Sales
One would think with a substantial lack of homes for sale that the volume of pending sales would also be down. However, it has had just the opposite effect. The number of all property types in sale pending status is up by almost 24% from this time a year ago. Currently there are 4,287 homes in the various stages of inspection, appraisal and underwriting. Every single category of housing has more homes in Sale Pending today than a year ago with New Construction leading the way. Pending sales of Single Family New Homes are up 58% from this time last year with almost 1,200 homes in the process of being completed. New condo/townhome properties are also well ahead of 2020 up by almost 54% over last year.
Because final pricing isn’t disclosed until closing, I can only show that the overall price of properties at the time the homes went under contract were up 15%. This number is almost certain to be higher after closing as the number of homes selling for more than list price in the resale categories and the add-on’s to new home builds will certainly be higher.
Closed Sales
Every single category of the Des Moines real estate market is experiencing record year-over-year sales. All property sales combined are up almost 16% with 7,062 home sales closed year-to-date. Along with the high number of closings, the median days on market of a Single Family Resale home is only 2 days on the market. 3 days for resale condo/townhome properties.
A year ago, the median days on market for a Single Family Resale home was 14 days. This fast-paced marketing time has had a lot to do with existing potential home sellers from entering the market due to the fear that, while they could easily sell their current home, the ability to find the next home in a frenzied buyer market is making them stay put for now. For this reason, I predict that 2022 and 2023 will be busy with home sellers finally deciding that it’s time to make the move.
The last thing to talk about in the Closed Sales area is pricing. Obviously with record low home inventory and record high buyer demand, prices have gone up over the past year. The only thing that has taken the sting out of this is the cost of borrowing money. Mortgage interest rates have remained around the 3% level allowing home buyers the ability to buy more (pay more) without stretching the budget too far.
The overall increase in sale prices are up 10.9% from this time last year. The median sale price of a Single Family Resale home is up just over 14% from last June at $247,250, while New Construction Single Family properties are only up 4.6% from the same time a year ago at $324,660.
In Summary
The real estate market is not out of the woods yet. It continues to be a strong and vital part of the economy from local all the way up to national. There will be plenty of time to evaluate the future direction of the market and what the trends are showing as we move into the second half of the year. In a year or two we’ll look back at this market and I think we will be amazed at how we all survived some of the craziest times in real estate in our generation.