It’s a wrap! Now that 2019 is behind us, it’s a good time to take a look back at the performance of our Des Moines Metro housing market last year.
From recent conversations I’ve had with leaders in the real estate and homebuilding industries, there seems to be a mixed bag of opinions about the state of the market and expectations for the coming year. Some feel that they are the busiest they have ever been and see GREAT POTENTIAL for 2020. Others are feeling a bit slower than previous years and see signs of a slower real estate market.
As we start peeling back the data, what we can see right away is an overall low supply that has persisted in the Des Moines market for several years. The total inventory of active single-family homes, for instance, has hovered just under a three-months supply since 2015, and is down to a 2.8 months supply today. In fact, the number of single-family homes on the market recently fell to 2,099 in Q4 2019 from 2,577 in Q3 2019, a decrease of more than 18 percent. Compared with a year-ago, the active inventory is down by 4 percent, or 91 fewer single-family homes.
When we turn our attention to new construction inventory, which is down to a 6.1 months supply from a 7.2 months supply a year ago, the data tells an interesting story. The lack of supply used to be in price points from the lower range ($200,000-$249,000 and $250,000-$299,000) and builders were smart to follow that demand. But now, due to a shift in the product, we are seeing some smaller inventories in the $350,000-$399,000 and $400,000-$449,000 price points, indicating that for some builders in certain communities there may be good opportunities here.
The chart below provides a comparison of the data over the past three years. Or, by CLICKING HERE FOR A LINK TO MY Q4 2019 housing statistics, you can drill down for a full assessment of each community and price point. It is also interesting to look at the cities in which new construction is being built with Ankeny, Waukee, West Des Moines, Urbandale and Norwalk topping the most recent list.
In 2019, the combined total number of sales for existing single-family homes and new construction homes was 8,877, which was still a great year albeit down by 218, or 2.4 percent, compared to the previous year. Some of the decline could be attributed to a lack of inventory for buyers to purchase.
For each of the past four years, the Des Moines metro has sold more than 1,500 new construction homes that are tracked through the MLS, with 2017 being the peak year. Compare that with 1,544 new construction homes sold in 2019, and we are only 136 new homes off the high mark two years ago.
In summary, the data both locally and nationally tell us we are hitting a plateau in terms of total inventory being sold, and price growth (appreciation) has also been slowing. From my perspective, the builders and developers and realtors who are business planning, researching the market needs and picking the right projects are the ones that are seeing their businesses continue to take off and numbers increasing.
In the Des Moines market, keeping a close eye on and reacting appropriately to demand for various price points in our unique communities could be one of the keys to unlocking your best 2020. Taking a peek at the first quarter, there has already been a good sign that pending sales have increased from this time last year.
To hear more about the current state of the market and economy from a national and local perspective, we would love to have you attend the 2020 Builder and Developer Luncheon on Friday, February 28, in West Des Moines. This year’s keynote speakers include Frank Nothaft, chief economist with CoreLogic, and Serenbe founder Steve Nygren with remarks relatable to Diligent Development’s Middlebrook “Agrihood” community in Cumming, Iowa.
Save the date and register now at https://app.tikly.co/events/3321. Meanwhile and as always, you can contact me directly to continue the Des Moines-area real estate and homebuilding conversation at [email protected].