Last month I dusted off my crystal ball and made some year end predictions. Specifically, where we would end the year with homes for sale, homes in sale pending status and total sales for the year. Since this last article, 2020 closed sales surpassed 2019 year-end numbers (as predicted) and we are indeed on our way to 16,000 transactions by the end of the year. But what segment of the market is actually carrying the weight?
Resale (Existing) Homes vs New Homes
Over the past 10 years, the sale of new homes vs resale homes in the Des Moines market has been split on average 84% Resale to 16% New Homes. That is pretty typical when compared to recently released data from the National Association of REALTORS® Profile of Home Buyers and Home Sellers annual report.
They reported a 10-year average within 1% of Des Moines with 85% Resale and 15% New Homes. Nationally, you have to go back to the early 2000’s (just prior to 2008 housing market crash) to find higher new home sale counts. At the highest point from 2000 to 2008, at the national level, New Home sales made up as much as 28% of all sales in 2003.
2020 Has Been Different
It may not seem like much when you look at percentages, but with this past year going through a global pandemic, tremendous buyer demand and record low number of homes for sale, even the smallest change has significance.
This is most evident when you break down New Homes by Single-Family and Condo/Townhomes. So far in 2020, Single-Family New Homes have been filling part of the void left by owners of existing homes staying out of the market. In 2019, New Home sales were split 12% Single-Family and 3% Condo/Townhome. In 2020 Single-Family New Home sales jumped by 2% while Single-Family Resale properties dropped by 2%.
The significance of this swap of business from existing homes to new is the ability of the home building market to adjust when it needed to. The cost of borrowing money plays a big part as well making the jump to new construction pricing within reach of traditional resale buyers.
Unit Sales Up Across the Board
Single-Family Resale homes this year are projected to be up by nearly 900 sales (8% increase) and Single-Family New Homes on track to be up by over 400 (a 25% increase over 2019). Total sales in 2020 are on track to reach 16,000 sales by year end which will be over an 11% jump from 2019.
Moving Forward To 2021—High Buyer Demand Continues
The best measure of future sale activity in the real estate market is to look at homes in Sale Pending status. These are homes that have accepted offers and the buyers are going through the financing stage of the purchase. All four Sale Pending categories are up over the same time last year. Single-Family Resale homes are up 30% year-over-year. Resale Condo/Townhomes are up 44%. New Condo/Townhomes Pendings are up 66%, but the big leader in the pack doubling the Sale Pending count with a 108% increase over 2019 is Single-Family New Construction.
As we move into 2021 with continued low mortgage interest rates and a supply of homebuyers to meet demand, New Construction is providing buyers with options, at least until existing home owners decide it’s time to jump back into the market with both feet.
Oh, By the Way—Just One More Thing (Apologies to “Columbo’s” Peter Falk)
Based on the current Sale Pending counts, where can you find the most Single-Family New Construction homes under contract right now? The Top 7 communities in the Des Moines metro with sales pending are:
- Ankeny with 510 (+34% over last year)
- Waukee with 218 (+15%)
- West Des Moines with 144 (+12.5%)
- Norwalk with 128 (+15%)
- Urbandale with 123 (+11%)
- Altoona with 121 (23.5%)
- Grimes with 108 (+5%)
(Bonus points if you know who Columbo and/or Peter Falk is without Googling).