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PLUS Bonus – Year End Predictions
November proved to be a month of change in the Des Moines real estate market. Homes above $200,000 felt the pace of a slowing market with price points $300,000 and up in a Buyer’s Market, $200,000 to $300,000 in a Balanced/Even Market. The only prices still in a Seller’s Market moving into the final month is the under $200,000 price ranges. With virtually all properties in this lowest range resale homes and 80% of those homes single family, Sellers still hold the advantage of short times on the market and higher list price to sale price ratios. This price range also makes up almost 30% of all homes for sale.
**PREDICTION** December will continue to see a normal seasonal slowdown is the overall market, however home buyers that are able to find their dream home in December will pay less in mortgage interest rates as Federal Reserve continues to raise prime lending rates ultimately affecting home mortgage rates as the new year begins.
Monthly Market Snapshot as of November 30th
(Click Graphic To View Full Size)
First of all, you’re wondering “What’s with the back circle on the right graphic?” My answer – “The real estate market broke my chart!!” Most of my stat graphics are automatically calculated and when New Construction Months of Inventory went past 12 months, my needle graphic in essence over-spun itself… As you can see, the number 15.2 in the middle of the graphic shows that there is over 1 year and 3 months of homes for sale in the New Construction category. Also a little difficult to read is the number “80 DOM”.. The Median Days on Market for new construction is 80 days… meaning half of all new construction properties sold in the past month were on the market for more than 80 days. Not totally unexpected as new home sales are inherently on the market longer since they typically start out as proposed properties on vacant lots. Resale properties in all price points as represented on the left show that there are currently only 3.3 Months of Inventory and a Median Days on Market of 17 days.
The other stat on this graphic that should be noted is the number of closed sales year to date. Of the 13,270 total sales this year so far, 11,239 have been resale and 2,031 new construction. That equates to 85% resale and 15% new construction. YET, look at the number of homes for sale of resale to new construction. Of the 3,869 properties currently on the market as of November 30th, 38% are new construction and 62% resale… Over 1/3 of all listings are new homes yet they only account for 15% of year to date sales.
**PREDICTION** As the year comes to an end, watch for great deals on new construction homes as builders begin to discount pricing or offer greater incentives to purchase. Buyers in particular looking in the $300,000 to $400,000 can take advantage of an 8 1/2 month of inventory supply. The majority of the increase in home inventory for sale in 2018 has come from new construction homes. Watch for more owners of existing homes to enter the market in 2019. With rising mortgage interest rates, they would be smart to do so early in the first quarter of 2019.
2018 Year Trend Reports
Active – Pending – Sold – Balance of the Market
Compared To 2017
(Click Graphic To View Full Size)
Every quadrant of this monthly ongoing graphic is telling a different story from last year.
- Daily homes for sale counts in the upper left in green shows higher inventory levels all year long. But remember as I just mentioned above, most of this increase is due to new construction inventory, not resale.
- Pending Sales in the upper right in yellow shows that Pending sales are lower for most of the year – but not due to fewer sales.. a couple of months back I explained that homes are simply going from Pending status to Closed status quicker than in years past. What is more interesting is the October bump in sales that will essentially give us the push to close as many sales this year as we did in 2017. Without that October rush of activity, we probably would not be talking of another 14,000 closed sale year in 2018.
- The lower left quadrant shows year to date Sold Count. It’s a little hard to see on the graphic, but if you click on the image, the full size stat will show you that closed transactions have been trailing behind last year. The Pending Sales bump from October are now closing and the month of December should show us catch up to 2017 numbers.
- The Year to Date Balance of the Market in the lower bottom corner indicates when the Des Moines real estate market began to slow down. As we change overall from a Sellers Market to a Balanced (or Even) Market, sales activity naturally slow. You can see in the month of October where the purple graphic dipped below last years activity coincides with the October bump we experienced. And as quickly as it started, it changed back and by November 1st, we were in an ever increasingly slower market.
**PREDICTION** 2019 will see more resale properties come back and enter the market, giving hungry homebuyers new product to choose from and as a result, the first quarter and possibly into the 2nd quarter of 2019 will be the most active time of 2019. Also expect a more modest increase in home value appreciations as the addition of more existing home sales and the increase in new construction inventory will begin to saturate the market. More supply will initially create demand, but by the time 2019 is over, buyers will be gaining more advantage of homes to choose from and that will result in the second half of the year sellers keeping pricing down to attract homebuyers. I also predict that if the inventory supply does increase, so will sales and 2019 will end up beating 2018 and 2019 closed sale counts.
Home Inventory and Pending Sales Compared Over Time
(Click Graphic To View Full Size)
This graphic is of historic value. Each bar from left to right is a comparison of the market inventory levels of homes for sale (top in green) and pending sales (bottom in yellow) as of November 3oth vs specific points in the past. For example from the left, you can see how today’s homes for sale inventory compared to yesterday, 1 week ago, 1 month ago, 3 months back, 6 months back and the highlighted bar of 1 year ago. To the right of the highlighted 1 year bar, it then shows you the comparison to 2, 3, 4, 5, 6, 7, 8 and 9 years back. This is great for determining the trends in the market. For example, the number of homes for sale today is over 17% higher than November 30th of 2016. In fact, you have to go back to 2013 before you find that we had more homes for sale than today. Click on this and any other graphic to see it in full size high resolution.
**PREDICTION** 2019 will surpass the homes for sale counts of 2013 and pending sales will continue to be shorter as mortgage lenders continue to perfect the under 30 day closing time frame.
Months of Inventory
Buyer Pool and by Price Point
(Click Graphic To View Full Size)
The most active price point in November was the $100,000 to $200,000 price range with 2.4 Months of Inventory. The only Balanced Market (Even Market) category was the $200,000 to $300,000 price point and all prices above $300,000 were in the Buyers Market range. The slowest price point was $700,000 to $800,000 with 43 homes for sale and only 4 closings in the month.
**PREDICTION** 2019 will continue to see a Seller’s Market predominantly under $300,000. Balanced/Even Market from $300,000 to $400,000 and Buyer’s Market above the $400,000 price points. New construction inventory will continue to rise with no more buyers for the over-ample supply during the year. Condo/Townhome Inventory in the Des Moines downtown area will grow dangerously to an oversaturated level. Ankeny and West Des Moines will duke it out to be able to claim the title for the most sales in the suburbs. Within the city of Des Moines boundaries, the northwest area (defined as north of University Ave, west of the Des Moines River and bordering Windsor Heights, Urbandale, Clive and Johnston) will come in third in overall sales. – If you want to sell your Beaverdale Brick, give me a call… this area and style home remains one of the most desired homes in the entire Central Iowa market.
~Les Sulgrove, Broker
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.