Can you believe we are already halfway through the year? Time’s flying as businesses are opening back up, giving us a sense of normalcy. This season we’re back with our friends and family and enjoying summer activities. Speaking of summer — it’s been a HOT one! And the real estate industry has been following very similar trends to this year’s summer forecast.
Hot, high temps, and we’re in a drought: the market remains hot, prices are high and we are in a drought with home inventory!
Though lumber prices are slowly declining, prices still remain high; we have a shortage of material; and also are seeing labor shortages — all of this plays a factor in the increased prices of homes. What’s promising is, we aren’t seeing a slow in demand thanks to low interest rates.
It’s safe to say we’ve done a lot of pivoting this past year, and the pivots are greatly showing in home buyers. Trends are showing that people are more serious about house hunting rather than looking at houses for fun. This trend has also made open houses less prevalent as buyers need to make quick decisions on homes and resale inventory being few and far between.
In the CNBC article U.S. housing shortage will be around for ‘years to come,’ says Taylor Morrison CEO says, “Consumers change their behavior, and they’re not extending themselves the same way you might have always seen years and years ago. We actually see the consumer has a lot of room in what they can afford to buy and what they’re buying.”
We are seeing the trends here in the Des Moines Metro with growth in what consumers are looking for, and even customizing what they are looking for to fit their needs.
As mentioned previously, resale inventory is few and far between and we see this with the number of active homes at the same number as it was earlier this year. The number of homes under contract are strong as ever, with 2,777 pending vs. 2,250 pending a year ago.The total number of active single family homes is trending downward and getting lower and lower. We are currently sitting with only 1.2 months of single family homes on the market. This change is significant compared to July 2019, where we had 2,370 on the market — and even 2020, where we had 1,508 homes on the market.
The new construction inventory is at 2.9 months, which has dropped from 4.5 months a year ago. Also notable is 51% of the current inventory is new construction. This says a lot about the trends in low resale inventory. The disruption in the supply chain and low resale inventory may be playing a factor in the increase in new construction pending vs. from a year ago. Today we sit at 986 new construction homes under contract vs 692 a year ago.
The hot market and demand shows in the total single family YTD with 4,948 sold homes in 2021 vs 4,660 last year at the end of Q2. Sold new construction, single family made up 21% of total sales this year at 1,036 vs 861 sold by July 2020, and 755 sold by July 2019.
The pandemic has shown that home buying trends are changing and people know exactly what they want and need. Decisions need to be made as quickly as trends change in this seller’s market.