For much of 2021, the general theme of my writings has been how high or low different segments of the Central Iowa real estate market have performed. This month I am dusting off my crystal ball to help determine where 2021 will end up and what the future looks like for 2022.
#1 Prediction: The Number of Homes for Sale Will Rise To 2,700 by December 31st Up Must Come Down (and Vice-Versa)
It may not feel like it with such low home inventory, but the 2nd Quarter of this year marked the first time in 18 months that for-sale inventory levels began to rise. Prior to then, the last time the number of homes for sale count increased was during the fall of 2019 when there were over 4,200 homes on the market. At the lowest point in May of this year, we had a mere 1,643 homes for sale.
I would like to see this number reach 3,000 by year end but that would require an increase of almost 35% over the 3rd quarter inventory counts and I just don’t see that happening going into the slowest part of the year.
#2 Prediction: Overall Median Listing Price of $305,000 at Year End
The Median List Price has consistently stayed $30,000 higher than last year. That number was influenced heavily by historically low mortgage interest rates that allowed buyers to be able to afford higher purchase prices without also having substantially higher mortgage payments. The net effect of $30,000 increase calculates out to only about $20 per month more for a monthly payment. And for many it was feasible to justify that extra $20, especially since other monthly expenses are likely lower due to the pandemic related changes of work and lifestyle.
#3 Prediction: Pending Sale Counts Will Be At 2,200 By End of 4th Quarter
The number one indicator of future market activity is Pending Sale data. By looking at the number of homes under contract and in the closing process, it’s easy to make this prediction. If there is not a spike in home mortgage interest rates and we continue to see a buildup of home inventory, there is no reason to believe that buyer activity will remain very strong through the end of 2021 and into the new year.
#4 Prediction: Closed Sales will hit 18,000
There is no doubt that Central Iowa home sales will end up recording more closed transactions this year than ever by the Des Moines Area Association of Realtors. The number will be huge when compared to a decade ago when the number of closed sales didn’t even reach 8,000.
In 2020, home sales topped out at 16,490 as recorded on December 31st. With almost 15,000 closed sales in the books as October 31st, and the number of sales pending that are waiting to close, breaking through the 18,000 mark is very reachable.
#5 Prediction: Overall Median Sale Price of $255,000 at Year End
Based purely on the limited supply of homes on the market compared to the buyer demand, this number represents a predicted year over year increase of $25,000 over 2020 translating into an 11% increase in sale price. Much of this increase is due to new construction pricing as homebuilders were able to fill the gap of housing selection this past year.
#6 Prediction: Median Days on Market Will Bubble Up to (GASP!) 14 Days
Ok, there is a touch of sarcasm in this prediction. But that doesn’t mean that it’s not true! There will be a period after the first of the year that Median Days on Market will rise and if you’re not watching what typically happens in the market, you may panic. The first quarter of every year is so dependent upon the weather. The strength of the buyer pool will keep Days on Market extremely low until the first of the year.
Looking Forward Toward 2022
The future looks bright for at least the first 3 Quarters of 2022. The 4th Quarter has some unknowns in it that could play a big part in how the year will end. Economic inflation, employment challenges and an off-year election will all play a big role the last part of 2022.
I do predict that home sales will be as active as 2021 from March until July with a high likelihood of a repeat of this past year buying frenzy complete with another round of inventory shortages (although not as bad as this year) and periods of multiple offers on fresh listings and potential bidding wars. The key factor that could change everything is the cost of borrowing money in 2022. Mortgage interest rates are already on the rise and it’s entirely possible that we could be writing offers with mortgage rates a full percent higher next year.
This Month’s Graphics
Subscribe To SimplyDesMoines YouTube Channel Today!
For the latest information about the central Iowa real estate market, subscribe to https://www.youtube.com/c/LesSulgroveSimplyDesMoines
Catch The Latest 15 Minute Market Update
SimplyDesMoinesStats.com Is The Home For Local Des Moines Real Estate Stats!
~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.