Des Moines home sales in 2020 set record; market named among the most resilient
Housing expert: the housing market is a major beneficiary of the pandemic
The pandemic has had many negative impacts on the economy, but the housing sector is still showing strength.
It was a record year for real estate sales in the Des Moines metro.
Historically low interest rates that have increased the purchasing power of buyers, coupled with a desire for more space as people work from home due to the COVID-19 pandemic, have fueled sales in the Metro. The region is expected to end 2020 with 16,000 expected sales – the highest number on record, said Lance Hanson, president of the Des Moines Area Association of Realtors.
The news comes as the National Association of Realtors named Des Moines one of the top 10 real estate markets for pandemic resilience.
Given the good year and expectations of a strong 2021, Hanson said he was not surprised to see Des Moines appear on the national list of realtors, joining huge metropolitan areas such as Atlanta. , Dallas and Phoenix.
âIt was phenomenal,â he said. “When we started the year we were on an uptrend like never before.”
Even before the pandemic, Des Moines’ real estate market was already on its way to breaking records, said Les Sulgrove, vice president of VIA Group Realtors, which tracks the market for other real estate agents in the region.
In March, the market slowed as partial school and business closures took effect to slow the spread of the coronavirus. But real estate was seen as a core business, and local agents worked together to find ways to show homes safe and secure sales, Hanson said. This process includes the requirement for masks and gloves; asking sellers to open all doors, drawers and cupboards before visits so that potential buyers do not have to touch the handles; set up virtual tours to assess whether buyers are interested in a home before inviting people inside; and let clients make their own way to the screenings.
âThe effect was that we had a large market,â Hanson said.
In typical years, sales start to decline in July before school starts and continue to decline as people prepare for winter. This year, realtors have been busy all fall and winter.
The 16,000 projected sales of the Des Moines metro for 2020 are approximately 2,000 more than each year between 2016 and 2019. The latest record was set in 2017, with 14,600 sales.
Although homeowners reassessing their living situation as they spend more time at home this year may be a factor in strong sales, Sulgrove credited the increase in purchasing power. Someone who couldn’t afford a more expensive home can now spend more, thanks to historically low mortgage rates.
For example, the typical monthly payment for principal and interest on a $ 300,000 home with a 20% down payment at the 30-year average mortgage rate of 4.54% in 2018 was $ 1,222. Currently, at an average rate this week of 2.885%, the monthly payment for a home purchased on the same terms would be $ 997, a savings of almost 20%.
But there have been a few challenges, namely a huge lack of inventory for sellers to choose from. There are currently 2,400 homes on the market, compared to the typical 4,000, Hanson said.
It’s the lowest Sulgrove has ever seen.
So while the lower interest rates have encouraged more buyers, it may also be the reason there are fewer homes on the market: more homeowners are taking advantage of lower rates by refinancing their current home instead. to move.
Sulgrove believes more people will be interested in selling in 2021.
âI think we’re going to see a lot of these sellers, who have been away this year, working more from home and wanting to put their house on the market for something bigger,â he said.
And there is also an affordability challenge: 47% of the current market inventory is new build, which typically sells for $ 300,000 or more.
Des Moines has few homes for sale under $ 180,000, now considered affordable due to historically low interest rates, and even fewer for sale under $ 150,000, which will be considered affordable when rates go down. interest will inevitably rise.
âIf we go up 1%, the door is going to slam on a large group of people wanting to buy a house,â Hanson said.
Only 3,000 of this year’s sales were from homes under $ 180,000, according to data from the Multiple Listing Service.
âThere are very few homes on the market in this price range, and it’s a crisis,â said Stephanie Murphy, executive director of the Neighborhood Finance Corporation, which works to provide assistance to the community. down payment and repayable loans for home improvement in some Des Moines. neighborhoods in the region. “This housing stock is simply not available and the prices are going up.”
The new year can also present greater challenges when it comes to affordability. Prices for smaller, cheaper homes are rising faster due to increased demand, Hanson said. And raw material shortages, which push up the prices of items such as lumber, appliances and shingles, will push construction prices up from $ 10,000 to $ 15,000, Sulgrove said.
But interest rates are expected to stay around 3% in 2021 and 3.25% in 2022, according to the National Association of Realtors, which could help boost the market and continue the bullish trajectory in Des Moines.
âThere is no reason to believe that pent-up demand will go away,â Hanson said.
The most resilient markets
Here is, in alphabetical order, the National Association of Realtors’ list of the 10 real estate markets that it believes have shown the most resilience during the COVID-19 pandemic and are expected to continue to thrive in 2021.
- Atlanta-Sandy Springs-Alpharetta, Georgia
- Boise City, Idaho
- Charleston-North Charleston, South Carolina
- Dallas-Fort Worth-Arlington, Texas
- Des Moines-Ouest Des Moines, Iowa
- Indianapolis-Carmel-Anderson, Indiana
- Madison, Wisconsin
- Phoenix-Mesa-Chandler, Arizona
- Provo-Orem, Utah
- Spokane-Spokane Valley, Washington