With three months of 2022 in the books, many of the real estate stats are looking different from previous years. From record low inventory of homes for sale to record high list prices, the concept of Supply and Demand has never been better defined. And this year is just getting started!
Your $1,200 Principal & Interest Payment would have bought $276,777 in January – At the end of May it only buys you $220,765! Mortgage Rates continue to rise!
Les Sulgrove – VIA Realtors Statguy
How Long Will This Market Last?
If you are a follower of my weekly or monthly market reporting, you will know that I have talked about the cycle of real estate and how, just like the cycle of nature, there are periods of highs and lows separated by periods of growth or decline. In my opinion, I believe that the Central Iowa real estate market is reaching its peak. I made that same statement in early 2020 (before March 1st of that year). Then Covid-19 entered the picture and proved to be a market disruptor and stimulator as we all discovered and has continued through 2021 and so far into 2022.
But I am beginning to see signs like what I had noticed in early 2020. And that, along with my observations this month is the topic as we begin the 2nd quarter of 2022.
Homes For Sale
One of the best methods to analyze our market is by looking at historical data in quarterly increments. This evens out the highs and lows and lets us see the trends clearer.
One observation of the market would lead you to assume that since there are so few homes currently for sale, that must mean fewer homeowners are listing their homes. In our current market, this low inventory count is largely due to a substantial homebuyer pool snapping up freshly listed properties within days, if not hours of them hitting the market. The result is an appearance of low inventory but is really from high demand.
The average listing count for the first quarter of 2022 was 1,751. That is 175 fewer homes on the market on average than 2021 but if you look back to 2020, the average count of homes for sale then was just shy of 3,500 homes on the market. That’s a drop of 50% in just 24 months. In fact, the three years prior to 2020 showed consistent growth of inventory, and that is what I based my market peak prediction on in 2020.
The median list price of homes prior to the first quarter of 2021 historically never surpassed $300,000. That changed the second quarter of last year and has continued to climb to an astounding $365,945 as of March 31st of 2022. Much of this rise is from the increase in new construction homes filling a void in our market this past couple of years
Homes In Sale Pending Status
The buildup of pending sales is another measure of market activity. While buyer demand remains very high, I am beginning to see what could be considered the first crack in the markets shell. After three years of consistent growth, pending sales at the end of this first quarter is 11% lower than last year.
One consistent factor remains in the sale pending world. The median price of a home as it goes under contract has risen for nine quarters straight with the end of the first quarter of 2022 recording an astounding price of $295,000.
The pace of closed sales for the first quarter has now risen for four consecutive years, however the sale count for 2022 first quarter was just barely ahead of 2021. Quarters 2 and 3 are traditionally when most transactions close in our market which coincides with the spring and summer seasons.
New construction is driving the overall median sale price this year bumping this first quarter of 2022 as the highest median sale price on record so far at $263,500. This number is 12 ½% higher than the same time a year ago and even beat the overall 2021 high median sale price of $262,250 (Q3 2021).
The number of days it takes a home to go from just listed to offer accepted is a number that has constantly moved downward in this covid influenced enviroment. Looking at all homes for sale, including new construction, homes listed are only spending 6 days on the market right now. Remove the new homes from this count and it’s down to less than 48 hours in many cases. As long as we have massive buyer demand, this is not likely to change through the spring real estate market.
Factors that will certainly change our market moving forward is the fast rise of mortgage interest rates by over 1% from last year’s record low and ongoing economic inflation in the country.
This Month’s Graphics
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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.