What Will Real Estate Look Like After Covid-19?
A year ago, at this time, the Des Moines real estate market was in its final push of business before the holiday and end of year slowdown. We were on a track that would result in just over 14,000 closed sales, a count just lower than 2018. The year saw for-sale inventory climbing over the previous two years and there were fewer pending sales compared to 2018. By all accounts, it looked like 2020 was going to be a stable year with more homes for buyers to choose from.
The First 13 Weeks – The Optimism Before the Storm
2020 arrived and an early weather warm up had jumpstarted the spring real estate market. Buyers were eager to get out and look at homes, even before sellers were in the mindset to put their homes up for sale. The economy for all practical purposes was strong. Unemployment numbers were at record lows and the Kansas City Chiefs had won the Superbowl. It was going to be a great year. Then there was talk of something called Covid or Coronavirus.
Covid-19 actually began to affect the Des Moines real estate market around the 2nd week of March but few buyers and sellers were paying much attention. The week ending March 8th saw the beginning of the spring listing season when 426 homes were added to the for-sale inventory. The following two weeks added an additional 690 homes pushing the total for sale inventory to just under 3,500 properties on the market. This was all that anxious buyers needed to see to jump into the spring buying market frenzy. By all accounts, this was the beginning of a busy spring real estate market.
The Next 26 Weeks – The Covid Effect on The Des Moines Real Estate Market
Even as social distancing was being talked about along with the recommendation of wearing mask and gloves, the number of pending sales were still climbing. By late April, schools and colleges were being let out. Some were ending their academic years, others putting classes on hold. Employers began directing employees to begin working from home. All of a sudden, the typical home became an office and a home school. Suddenly there wasn’t nearly as much room for a traditional family to live and work in. Home offices became a necessity along with upgrades to internet service that would allow working and learning from home. It also had a very unexpected effect on central Iowa real estate. People were wanting (and needing) to move into larger homes.
From April 1st through September 26th, 2020, the central Iowa real estate market has been setting records. It will be impossible to look back years from now without seeing an asterisk next to virtually every market stat for 2020. Here are just a few of the stats making news for this year.
- Median Days on Market – Homes were on the market on average 5.5% fewer days.
- # of Homes For Sale – For Sale inventory counts have been down over 21%.
- Median List Price – The price of the average home for sale during this period remained even with 2019. (The lack of change in the median list price is largely due to the lack of upper priced homes staying on the market. Virtually any home that is priced between $250,000 to $350,000 has sold extremely fast this year)
- Pending Sale Count – This one category has the largest variance as the number of homes under contract waiting to close is a whopping increase of 29.5%
- Homes Sold During This Period – As a result of the increase in Pending Sales, the number of homes sold during this same period is also up by just over 11%.
- Median Sale Price – Thanks predominantly to historic low mortgage interest rates (currently below 3% for 30 year fixed) the Median Sale price is up 5% meaning that buyers are spending on average an additional $10,000 on their next home during the pandemic.
Entering the Final 13 Weeks of 2020
There are so many variables to take into account as we begin to wind down the year. In a more traditional year, we would be seeing the final push of market activity during the month of October and into the first couple of weeks of November. From that point on, the most serious of buyers and sellers would remain in the housing hunt. This year still feels like a spring market in the mid to lower price ranges.
Also, this year has a highly watched and divisive national Presidential election. There are mixed messages of how Covid-19 will be dealt with as we begin to move back inside preparing for colder weather. Schools and colleges are back in session, although most remotely as employees and students alike have staked out spots in their homes for work and school. Then there is the moratorium on rental evictions mandated by the federal government lasting through the end of this year. How will that affect housing nationwide as 2021 arrives?
To answer the question of this month’s article headline, I don’t fully know what to expect. There will always be a need for housing and the real estate business will continue to be an essential service. I would love to have a new crystal ball that looks well into the future but for now all we can do is keep our eyes on the horizon and be ready to act – or react as 2021 approaches.
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~Les Sulgrove, Vice President
VIA Group REALTORS
If you are interested in selling your home or purchasing a home, give me a call! I will help you determine your best strategy based on your local market data.