What’s the latest news from our Central Iowa market as we look back on the first half of the year?
2019 has been pretty exciting so far. The real estate market has been strong despite all the crazy weather. Because of that, we didn’t hit our stride until the midway point of the year. With that being said, there are a few trends to keep an eye on moving forward whether you’re a buyer or a seller.
First of all, a lot of price reductions are happening. In fact, last June, 44% of all inventory underwent a price reduction. This tells us a lot of sellers were optimistic entering the market but then changed their expectations to meet a slower market demand. This is good news for buyers because it means there are a lot of motivated sellers itching to get their property sold and who are willing to negotiate. We have more properties on the market now than we did at this point last year—not because there are more sellers, but because inventory isn’t selling as quickly.
Second, just because a property is under contract doesn’t mean the deal is done. Year to date, we’ve seen nearly 20% of all deals fall apart after they’ve gone under contract. There are a lot of ways a deal can fall apart, but in my opinion, there are a couple reasons that explain this trend:
- You’re in a competitive price point. In a competitive price point where multiple-offer situations are more common, there’s a higher fallout rate during the inspection phase because buyers are pickier due to having to pay a premium. On our team, we have our Certified Pre-Owned Home Program in place to prevent this from happening.
- Buyers’ financing falling through. This is why, if you’re a seller, working with an experienced Realtor is key, because we know how to find out as much as possible about a buyer’s financial qualifications.
Third, there’s a lot of dichotomy in the market. In terms of days on market, there’s a big difference between homes listed above and below $300,000. The average list price for resale homes in our market is $265,000, which is a hot price point to be in as a seller. If you go anywhere above $300,000, though, it’s more of a buyer’s market.
The other dichotomy lies between resale and new construction homes. New construction homes tend to have more inventory and a much higher average days on market, and right now we have about seven months’ worth of inventory for these types of homes. Some of this makes sense—it takes a while for these homes to be built in the first place (typically four to five months), and with the crazy weather we’ve already seen, it’s no surprise that this build period may have been extended.
This is why, whether we’re working with buyers or sellers, we key in on the specific market you’re focused on.
The bottom line is we’re seeing a strong-but-changing market as we move through 2019, so we’ll have to be extra diligent at keeping an eye on what’s happening in other markets as well.
If you have any other questions about our market or you’d like to know what your home is worth, don’t hesitate to reach out to me. I’d love to help you.