Six Months That Felt Like A Year

Des Moines Home Values Appreciated During Covid-19

With new record low home mortgage interest rates, homebuyers are able to spend more on their home purchases in 2020. The ongoing question this spring from homeowners contemplating listing their homes is whether their homes are worth more this spring than a year ago. The short answer is Yes – No – Yes – Yes. Let me explain.

The Difference Between Average Sale Price and Annual Appreciation of Home Values

Calculating home values is a complicated process. On one hand, if you simply look at supply and demand, you would say that with so few homes for sale and so many homebuyers out shopping, the price of homes should be skyrocketing. On the other hand, the real estate industry has a checks and balances process in place predominantly for the mortgage industry. I’m referring to homes being appraised as part of the majority of home purchases. (Even many buyers paying cash for their homes are paying to have the home appraised as part of the purchase).

Without an appraisal (and without real estate professionals producing a comparative market analysis) there would be no consistency in the pricing of homes. Mortgage lenders require the appraisal so that they know that they are not taking on excessive risk by loaning more money than what the home is worth.

Simply looking at the average sale price of homes in a specific period compared to the previous 6 to 12 months does not take into account whether larger homes are being sold, if a change in mortgage interest rates are allowing (or limiting) homebuyers purchase ability, or if there are other outside factors involved.

The best way to determine annual appreciation of values involves comparing recent sales of like size and like style homes within a general proximity to the same period a year ago. There are other factors to consider as well, such as whether the home is single or multi-family and if the home is new construction or resale.

With that said, let’s look at the Des Moines metro market and break it down by four categories.

Single Family Resale

Overall, sales of existing single-family homes comparing March 1st to May 31st of this year to 2019 are seeing just short of a 3% rise in home values. The two most popular style homes sold across the board in the metro are Two-Story and Ranch homes. Two-Story home values have appreciated 1.6% and Ranch homes by 4.2% The average sale price during that time period was $236,236.

Condo-Townhome Resale

This category is the only one that is not seeing an overall appreciation during the March to May time period. Home values are effectively flat year over year. The exception in this group is Two-Story properties. They actually are seeing a rise of almost 3% in value year over year. The average sale price of Condo-Townhome properties is $185,870.

Single Family New Construction

As we move into the new construction categories, appreciation of values is really more due to increase in material costs year over year. The average sale price of a new Two-Story this spring is $304,200 which translates to flat year over year appreciation. Ranch style new home values rose by 1.6% and overall New Single-Family home values rose by 2%.

Condo-Townhome New Construction

At an average price point above Single Family Resale homes, new Condo-Townhomes are selling this spring at an average price of $250,500. The appreciation of value overall in this grouping is 3.6% over last year.

Recap

A strong local real estate economy appears to have kept the Des Moines market from suffering the full effects of a global pandemic. Yes, there have been changes and adjustments to the way real estate is marketed and purchased in central Iowa, but all things considered, the Des Moines metro real estate market home values are up 2.4% overall moving into the summer months.

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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.

About Les Sulgrove

Les is an Iowa native born in Des Moines and raised in the southwest Iowa town of Bridgewater. He has been a resident of Des Moines since 1982 and has been married to his wife Linda for over 35 years. Together they have 3 grown children, 7 grandchildren and make their home on Des Moines south side. He has been a licensed REALTOR® since 1990 and is Vice President at VIA Group, REALTORS®. Les is the 2011 Past President of the Des Moines Area Association of REALTORS® (DMAAR) and received the award of Salesperson of the Year by DMAAR in 2007 for his involvement and service to the Association. Additionally, he is active at the Iowa Association of REALTORS® and serves on local, state and national committees. He also owns and operates the national technology networking group CyberProfessionals. This group of real estate professionals meets twice annually across the United States to learn from each other and share new marketing ideas with heavy emphasis on current and future technologies and their use in the real estate business. Les’ hobbies include golf, photography and sarcastic humor. He and Linda spend many Saturday mornings from Spring to Fall at the Des Moines Downtown Farmers Market. He enjoys spoiling his grandchildren at every opportunity.

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