Real estate is always changing, and that's because everyone has different needs. It's important to note that our desire to own a home does not match everyone else's — we want to live in neighborhoods close to amenities and needs that are important to us, and we want to be able to maintain a stable mortgage payment throughout our lifetime. That said - whether the market is considered hot or not, may not matter to you. There will always be people buying and selling regardless of the market, yet it's important to understand the state of the real estate market in Des Moines if you're considering a sale, purchase or investment into real estate.

With that in mind, we turning to our friends at Simply Des Moines Real Estate by Les Sulgrove (https://desmoinesmarketvalues.com/) to get a better look at what's going on in the market. We individually track market stats each week ourselves (which you can find in our Monday Market Update YouTube videos), yet Les does an AMAZING job at putting similar data into beautiful graphics and going even a step deeper. We're so thankful to have Les as part of our local association! Now lets dive into this graphic and talk about what it all means.

The Existing Home Market

If we look specifically at the Existing Home Market in the Des Moines, IA metro area, it's sitting at 2.6 Months of Inventory, (which the National Association of Realtors (NAR) indicates once a market is at a three months of inventory it's really acting more like a balanced or even market). At 2.6 months of inventory we're very close in our Existing Homes to be coming into a balanced or an even market. Having more existing home inventory is a welcome addition to our local market, as we saw many owners refinancing as rates were historically low during much of 2020 and 2021. That meant that there were FEWER existing homes for sale because many owners happy with their homes chose to forgo purchasing and opted to lock in a low, low rate.

While it's still true that existing inventory is lower than the amount of new homes on the market, the ratio of available existing homes to new homes have risen as many would-be buyers have stepped out of the market due to rates and as builders have slowed down their production of new homes. While there will always be competition between existing homes and new homes, we will likely continue to see many buyers favor existing homes over new homes, simply due to the rising cost of construction.

The New Homes

If you've watched our Monday Market Update videos, you may recall Ryan talking about the new construction market, specifically comparing last year to this year, there is a lot more inventory in new homes available than previously. During 2020 and 2021, despite supply cost increases and price increases in new construction, we saw builders racing to build new homes, many of which were sold before they were event complete (specifically talking about spec homes - or homes built for the purpose of sale).

While 2022 started off with higher rates, albeit lower than the current interest rate, we saw builders continue to move forward with planned spec builds in anticipation that the market may continue at a similar pace, though possibly a little slower. Much of that changed as the Federal Reserve started aggressively raising interest rates. While the FED rate increases do not directly impact real estate interest rates, speculation around rate increases does tend to have an effect on mortgage lending and rates offered. That said, as interest rates rose, and as they've continued to rise, coupled with the seasonality of the market, sales continued to slow and supply continued to rise. In new construction, this meant having a lot of homes in progress (many now completed or near completion). Slowing demand, while increasing supply in the new homes category, has lead this category into a strong buyers market - meaning buyers have a lot more options to choose from.

The All Homes

When we look at everything compared together, both new and existing homes, we see that we're at four and a half at Months of Inventory where the market is currently favoring all buyers and sellers. This means if we do not take into account whether a home is new or existing - there are, generally speaking, a more even number of buyers and sellers. However, when we start to look into price point and type of homes (existing versus new), that is not necessarily the case. We continue to see more demand for lower priced homes, especially as interest rates fluctuate and buyers are able to afford less than they may have been able to a year ago.

Conclusion:

We are now closing the year 2022. The local real estate market is entering the winter months of 2023, and you may be wondering what does this all mean.

Simply put, if you're a buyer looking to buy, you'll likely see more options and potentially less competition than the last two years. While your rate may be higher, we've been seeing sellers more open to offering concessions in the form or price reductions, seller paid closing costs, warranties and even rate buy downs (this is where the seller pays to buy the rate down either temporarily or permanently to help the buyer get into the home). If you have questions about these items, let us know and we'd be happy to discuss or connect you with a mortgage professional who can help you better understand some of the lending options that are available.

For those that are selling, you're likely to see your home sit on the market a little longer. However, contrary to the past two years, it's pretty normal for your home to be on the market for a few days or longer. In order the get the most out of your home and the quickest sale, you should be focused on price and condition compared to your competition, quality photography and strong presentation. Of course if you'd like more details on what this means, feel free to reach out.

If you are planning to sell your property or planning to buy one, then we hope that this resource guide would help you in the decision-making process. Just the same way, we always welcome your comments suggestions and questions. And of course, if you'd like us to go into more detail about how we can help you with your home buyer or home selling needs in Des Moines and the central Iowa area, please feel free to reach out. We'd love to talk with you, and as a thank you for reaching out we'll provide you with our 7 tips to successfully prepare your home for sale. And for those buyers who reach out, we'll share our homebuyer strategy guide!