When Is The Best Time To Buy A Home?
An old proverb says: “The best time to plant a tree was 20 years ago. The second best time is now.”
The same analogy can be applied to real estate. To begin building equity and wealth as a homeowner, you must first become a homeowner.
Mortgage Interest Rates Rise And Fall, But Home Values Consistently Rise Over The Long Term
With all the concerns over mortgage interest rates and the economy, it’s easy to become nervous or discouraged about buying or selling a home. However, it’s important to reflect on history to gain some perspective on the effects of a recession and mortgage interest rates.
This graphic provided by Keeping Current Matters, shows mortgage rate activity going back to the last six recessions illustrating that mortgage rates end up falling as a result. This is encouraging news with our current rate trend and shows that there is hope for the future when it comes to the cost of borrowing money for a home.
Appreciation Is Slowing, Not Depreciating
Many in the national media are writing flashy headlines of doom and market crashes. Through the covid years, the Central Iowa real estate market has continued to perform well. Median sale price percentages have risen every year since 2016. Prior to 2020, the median sale price was going up around 5% to 7% per year. 2020 was the only year that this percentage went into double digits at just over 11% primarily due to the pandemic. The first three quarters of 2022 show that we are on track to return to what we may well consider a normal real estate market.
Home Inventory Is On Its Way Back To Pre-Pandemic Levels
2022 has been the year of inventory growth. After a record low count of 1,630 homes for sale in March, the listing count has grown as high as 2,784 at the end of the 3rd Quarter and in just the first two weeks of October, we are knocking at the door of 3,000 homes for sale. It will be a huge accomplishment if we can double the record low count before year end. We still have a ways to go before we can say we are back in a normal inventory market, but we are finally going in the right direction.
Pending Sales Counts Slow
As someone that follows the rule of thinking slow and asking “why” when looking at a market change, a first glance at the number of Pending Sales by quarter would make you think that buyers have stopped buying. It is true that 2022 has seen three straight quarters with the number of pending sales declining. But the drop in sale pending counts has a lot to do with the shortened time from offer acceptance to close. What had been 30 to 45 days for lenders to take a sale from offer acceptance to closing during covid, is now consistently under 30 days. The result is a lower number of homes in the sale pending process.
Closed Sales Lag Behind 2021, But Still On Track With 2020
From my report at the end of the 2nd Quarter I stated that year-to-date closed sales on June 30th were barely ahead of 2021. That lead has been erased and we are now tracking behind 2021 but not at a concerning pace. As of September 30th, closed sales for 2022 were behind last year by 631 transactions, but still ahead of 2020 by 384. That lead will likely be lost as we move toward year end, but I stand by my prediction of 16,000 closed sales by the end of this year.
On A Personal Note
This will be my last monthly article for Build Des Moines. Beginning November 1st, I will be taking on the role of Director of NoCoast MLS. This is a new venture by the Iowa Association of REALTORS® and is aimed at bringing together and serving multiple listing services to all of Iowa’s 8,000 plus REALTOR® membership, which will in turn benefit real estate professionals, homebuyers, and sellers all across our state and beyond.
I have enjoyed bringing my monthly market stats and analysis to this publication going back as far as 2015 and while I will no longer be able to continue to write this article each month, I will be maintaining a local presence within the Central Iowa real estate market with weekly market updates and a new end of month review at DesMoinesMarketValues.com. Moving forward, this website will continue to be a resource for weekly market videos and graphics pertaining to the Central Iowa real estate market.
Thank you all for trusting me to bring you valuable market data analysis and I appreciate your kind words over the years. I have always been a believer that the more information we have to offer, the better our clients and customers will be in the end.
—Les Sulgrove