As I wrote in this column a couple months back, the Des Moines real estate market has seen a virtual 180 turnaround.
Home sales in the metro are up 13 percent compared to this time last year, which was actually considered a pretty good year. In Clive, sales are up a whopping 24 percent compared to 2012. And due to a dearth of inventory, most sellers who price their home properly are selling within the first 30 days of listing — with many selling in the first week.
This blistering sales environment has, in turn, resulted in home price appreciation not experienced in many years in Des Moines. Thus far we’ve seen an 8 percent increase in sale prices across the metro with an average sale price at an all-time high of $182,000 (compared to just $167,500 last year). In Clive, prices have likewise increased by 11 percent this year alone. Homes that were selling in the mid $290s last year are now routinely selling in the $320s this year. The turnaround has been nothing short of spectacular.
However, it remains important to keep these numbers in their proper historical context. The recent recession and housing downturn from 2008 – 2011 caused prices, in general, to drop between 7 and 10 percent overall. Thus, our one-year 8 percent increase is really more of a correction bringing us back to “level.” In Clive, our average sale price in 2007 was $296,000; it dipped to as low as $240,000 in 2009 but has once again risen to $284,000 this year. So while we’re seeing momentum and prices are clearly on the upswing, in reality we’re merely digging ourselves out from the hole dug as a result of the recession.
The biggest challenges for many potential home sellers are threefold:
• Finding the next home. Believe it or not, selling is often the easy part these days because there are so few homes for sale, finding the right next home can actually be the bigger challenge.
• Price appreciation cuts both ways — it’s great on the selling end but it also means you pay more when you purchase.
• Interest rates have gone up by almost a full point thereby impacting buyer purchasing power. The combination of these three factors requires advance planning to ensure you’re searching in the proper price point and the type of home desired is available. In some cases, new construction may be the best option.
If 2013 follows the normal trend, fall sales will likely ebb compared to the spring and summer, but this year that forecast may be tempered somewhat by the fact that we have so much pent up demand. Many buyers have been patiently waiting for the right house to come onto the market, and when it does they’re ready to pounce. Most national economic forecasts indicate a slowing of appreciation rates in 2014 back to “normal” levels of between 3 – 5 percent. So, with the combination of low inventory levels, pent up buyer demand, current price appreciation, and the expectation of future rising interest rates, it remains a seller’s market and an excellent time to sell a home.
Information provided by Ted Weaver, ReMax Real Estate Group, 271-8281, firstname.lastname@example.org.