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It’s All About Motivation!
There have been many opinions of this topic ranging from the economy, sellers lacking confidence, rising mortgage interest rates, and a correction in the national real estate market.
2008-2009 was an obvious turning point in the real estate market, but why did it take so long after the real estate bubble before the number of homes for sale dropped? So far in 2017, we are averaging just under 3,000 homes for sale, almost half of the inventory counts in 2009.
After listening to local & national economists and researching countless industry articles and reports, it finally became clear that many homeowners have lacked motivation to sell.
- Post real estate bubble, many home sellers had lower equity in their homes.
- Homeowners delayed putting their homes for sale while they evaluated their own personal home equity positions.
- Record low mortgage interest rates were not enough motivation to get sellers to jump into the market.
- Post 2009, home values had not yet began to rise, leaving home sellers with the prospect of making a lateral purchase. (Sellers typically move up in a price range not to a home of equal value)
- Some homeowners had put off completing normal upkeep and improvements during and immediately after the real estate bubble.
- Millennial home buyers became old enough to be able to enter the real estate buying market. However, the number of home residents rose as college graduating children struggled to save for a down payment and moved back in with mom and dad or had never moved out to begin with.
- In 2016, mortgage interest rates began to rise causing home sellers to do some quick math. Many sellers calculated that they could sell their current home for more money, but with the combination of the rise of mortgage interest rates and increase in home prices for the subsequent purchase, home sellers were yet again in a position of making a lateral purchase.
As the economy continues to improve and home values rise slowly, we are beginning to see a normalization of our real estate market. The pace of sales will continue to grow in the next couple of years even if home buyers slow down a bit. There are some home buyers that are simply not even looking for a home until the inventory levels rise. The best scenario would be for a swing back to a balanced market, which I believe will not happen until at least 2019.
The Des Moines real estate market has hit its annual peak this month and home buyers should begin to find more homes to choose from in the coming months.
Months of Inventory By Three Categories
(Click Graph To Download)
Months of Inventory by $100K Price Ranges
(Click Graph To Download)
Homes For Sale Inventory Begins To Build In May
(Click Graph To Download)
Pending Sales Peak Below 2016 Record High
(Click Graph To Download)
Closed Transactions Continue To Stay Ahead of 2016
(Click Graph To Download)
Balance of Market Stays Near 2 Month Level In May
(Click Graph To Download)
~Les Sulgrove, Broker
VIA Group REALTORS
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2016 Des Moines Residential Real Estate Annual Report
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.