By Steve Smith
I’ve lived in South Bend for almost my entire life and I don’t think I’ve ever said it’s hot here in February. We are usually in the “dog days” of winter! But when I look at the real estate market, “hot” is the only word that comes to mind. In fact, when I look at industry activity reports, we are not seeing a traditional winter slowdown. We are in full late May/early June mode.
There are several reasons for this phenomenon, which can be explained with market statistics:
- Mortgage interest rates remain at historic lows and are bringing first-time buyers into the market.
- South Bend has become increasingly attractive to those looking to escape confined urban environments during the pandemic.
- We simply do not have enough homes for sale.
Let me explain a bit further:
Mortgage interest rates are at a national average of about 2.75%. Using this as a guide – and not including down payment, fees, expenses, etc. – this means that you would pay $816 a month for a $200,000 home. Wow!
These low rates are also enticing “move up” home buyers who have equity in their homes (the difference of what your home is worth and what you owe on your mortgage). They can take advantage of these low rates and purchase larger homes, those closer to work (for when things return to normal, post-pandemic), closer to family and friends or for other reasons.
But here is the challenge. With so many looking to buy, we don’t have enough homes for sale. The simple supply vs. demand imbalance is driving activity and prices higher. And we have not even factored in the influx of Fighting Irish alumni, along with parents of current area college students looking at properties. Remember, college towns are quintessential America, and as far as we’re concerned, nothing is better than South Bend!
The statistics tell the story. Let’s start with a look at the national level and then focus on what is occurring locally. The National Association of Realtors just reported in its Existing Home Sales report that there is a record low of just 1.04 million homes for sale in the U.S., down 25.7% from last year. This means that buyers have ¼ fewer homes to choose from. This is only a 1.9 month supply.
In Indiana things are even tougher. The Indiana Association of Realtors recently shared that there are only 8,225 homes on the market, down a whopping 47.6% from the same time last year. We are now down in the Hoosier State to an extremely low one month supply.
Here in St. Joseph County, when I looked at our most recent report, we have only 393 homes on the market, equating to a 1.2 month supply.
This information is so important for potential sellers to understand. If you are thinking of moving, the demand is there. Think about this — if you are a buyer in the county, you have 35% fewer homes to choose from than last year. This is causing multiple bids in some neighborhoods and an increase in home prices.
Looking at prices, St. Joseph County has seen a rise of 13% over last year at this time. This jump is led by a 17.4 % gain in Mishawaka, followed by Granger at 13.9%, 11.9% in Elkhart City, South Bend (11.1%) and Elkhart (9.2%). Our rise in home prices is a bit below that 14.3% increase nationally that has the median home (the middle of all homes sold in January) priced at $303,900. And we are also below that state mark of $190,000 which is up 11.8% over last year.
Think about that — even with prices rising here, we are still one of the most affordable places to live in the nation. Our current price for St. Joseph County is 44.2% more affordable than the national number, at $169,450. The chart below breaks things down even further and shows that South Bend is our most affordable market at just $140,000.
I’ve been in real estate for 16 years and I have never seen our supply so low.
This is causing sales to move very quickly, and we are mirroring what is occurring across the nation. Nationally, homes are selling in 21 days compared to 43 days last year. We are at 27 days countywide compared to 36 last year.
Elkhart (21 days vs. 43 last year) is almost identical to the U.S. figure while Mishawaka (20/41) is right there along with Elkhart City (23 vs. 50). It takes about 42 days to sell a home in Granger compared to 51 days a year ago. This makes sense. Usually the higher the price of a home, the longer it takes to sell, as the buyer pool may be smaller.
I encourage anyone thinking of selling their home to talk to me or one of our agents. You may be surprised to know how much your home is worth today. And that is especially true for those near Notre Dame. Thankfully we have new developments being built to handle increased demand. Whether you are looking for a villa, condo, or single family home we have a neighborhood for you! Check out our neighborhoods including The Hills at St. Joe Farm, Woodbridge Villas, Greystone Villas, Keenan Court Flats, and The Echoes.
I want to stress the importance of working with a professional real estate agent. These agents, even in an unprecedented market like this, know how to properly price a home. Across the board, we are seeing agents and their sellers list properties at a 98.2% ratio to the sales price, extremely close to the magical 100% mark. This means that a home priced at $300,000 is selling at about $294,000.
This percentage also gives buyers a sense of what they likely will pay when they see a home listed on our website.
Please do not hesitate to reach out with any questions. You can reach any member of our team at 574-360-2569 or email at firstname.lastname@example.org and we will get right back to you.
I’ll be back with another update next month!