By Steve Smith
Spring is finally here!
I’ve been in real estate for over 25 years and I can honestly tell you that my body clock is all messed up. Usually as March Madness wraps up, we begin the traditional buyers and sellers season. We emerge from winter and families begin to think about a move so they can be settled for the next school year.
Normally after a secondary selling season in the fall, we experience a lull in real estate over the holidays before things pick up as the weather warms up. But this is not like any other year. In fact, our lull came LAST March and April as we all tried to figure out what the pandemic was. As we slowly came to understand the importance of hand sanitizer, washing our hands, social distancing, mask wearing and so much more, real estate sales took off in May and June and haven’t slowed since.
Here is an outline of how COVID-19 impacted our normal sales cycle:
● At the start, buyers and sellers pulled way back before May and June.
● Mortgage rates dropped to historic lows giving first-time buyers an incredible opportunity.
● “Move up” buyers, who had built home equity and enjoyed appreciation (increase in their home’s value) also took advantage of low rates, which dropped to the mid-2% range – to purchase larger homes, ones in more desired areas, etc.
● College towns like ours saw an influx of interest as so many saw the opportunity to return to South Bend and exit more congested areas.
● Demand has outweighed supply.
● Prices rose.
So here we are! We made it to April! As I’m going to do each month, I want to localize the national real estate news as much as I can. After all, real estate is such a local business and activity can literally be different neighborhood by neighborhood. Of course, we will use the statistics from the previous month, in this case February.
Let’s start with the national numbers for February. The National Association of Realtors just reported that inventory (the supply of available homes) is down 29.5% year-over-year to an all-time record low of just 1.03 million homes. A year ago at this time, there was a 3.1 month supply of homes. Now it is just 2.0 months.
In St. Joseph County, we have an even tighter market with just 282 currently on the market, an incredibly low 0.9 month supply. Here is how this inventory concern impacts buyers and sellers:
Buyers: They are coming into one of the tightest markets ever. Consider this. In 2019 at this same time, we had 606 homes for sale. It was 393 last year. This is a reduction of 53.4% and 28.2%, respectively. Think about what that means? Over 2019, buyers have seen the supply to choose from drop by more than 50%! This means that buyers must act quickly when a home that is the proper size with the desired amenities comes on the market. That is why being pre-approved for a mortgage and working with a great agent who knows what homes may be coming on the market is so important. And because many buyers are competing against other buyers, you need an agent skilled in negotiations to close the deal for you.
Sellers: While sellers are in the driver’s seat in this “seller’s market,” they often experience the challenge of having to sort through a variety of different offers. That is why they also need a strong agent. Remember, the best offer may not be the highest price. There are a variety of scenarios to consider including proper timing, quality of the offer, etc.
Home prices are also an interesting story. Nationally, the median price (middle of all homes that sold in February), jumped by 15.8% over last year to $313,000.
Looking at prices, St. Joseph County has seen a rise of 14% over last year at this time. This jump is led by a 17.4 % gain in Mishawaka, followed by South Bend and Elkhart (14.6%) 13.5% in Elkhart City and Granger at 11.8%, 11.9% in Elkhart City, South Bend (11.1%) and Elkhart (9.2%).
It is incredible to see the appreciation in just a couple of years. For example, the median home price in St. Joseph County in 2019 was $119,000. It’s $150,450 today!
We also did not see many homes come on the market in February. In fact, only 229 homes were added to our inventory in February, 64 fewer than in 2019 and off 9.1% from a year ago. South Bend was off 13.7%.
As you would imagine, not only is the lack of supply fueling higher prices but we also see homes selling incredibly quickly. The average time on market in the county was just 37 days in February, a decrease of 27.5% from a year ago. It was just 26 days in Elkhart City and Mishawaka, down 51.9% and 29.7%, respectively.
We are obviously living in unique times and I can safely say the real estate market agrees.
If you are considering buying or selling a home – or have any questions – please feel free to talk to me or one of our agents. You can reach any member of our team at 574-360-2569 or email firstname.lastname@example.org and we will get right back to you.
I’ll be back with another update next month.