Real Estate Market Update: (February 17, 2021). The 2021 real estate market is off and… walking. We’re far from running at this point. There are only 114 houses available for sale in Delaware county. There are only 198 within the entire MEIAR region which is 3 counties). That’s an unprecedented low number. We’re down about 8% in inventory from last year. In years past, at this time of the year, you might see 400-500 houses available with over 1,100 available in the summer months. However, in 2020 we hardly had over 290 homes available with the inventory of homes in the summer months hardly over 200. Fortunately, we’re seeing nice appreciation which comes from strong demand and limited supply. In Delaware County (Muncie and Yorktown, IN) the average price of a home was $133,091. Sale prices were up 10% from the previous year, with the number of homes sold up 8% to 1,402, and volume sold up 19%. Bank rates are still very attractive. This is causing many to consider buying over renting, and refinancing continues to be in strong demand. Now, more than ever, is a perfect time to have a REALTOR® help guide you through the complexities of buying and selling. — Steve Slavin, Broker and MEIAR Board Member.
I’m particularly excited to announce this new website that I’ve developed for the Muncie Delaware Chamber of Commerce. As a Board Member, they tasked my Image Committee to create a better Relocation Guide for those new to Muncie and this is the start of this website. There’s a ton of great info here! We’ll be tweaking it more over the next months. Enjoy!
I’m always happy to offer my insights to the local newspaper. This was a good article. It’s a challenge out there… I’m here to help! — Steve
A ‘perfect storm’: Local real estate experiencing high demand, low inventory
MUNCIE, Ind. — Ashley Replogle had been searching for a home for three months. She was a first-time buyer, looking for a larger space.
She looked all over, from Muncie to New Castle, then Parker City and Spiceland. But everywhere she went, houses seemed to be flying off the market.
“This process has been more stressful than I originally thought it would be. Properties are selling faster than I could have ever imagined,” Replogle told The Star Press. “Most properties are pending before I can even get off work to look at them.”
With the help of her Realtor, Austin Rich, Replogle put in three offers on three different properties. Every time, she lost out.
After multiple showings declined and offers lost, Replogle was finally able to outbid other sellers on July 13 and find a property in Muncie.
‘Almost a perfect storm for the housing industry’
But Replogle isn’t alone in her struggle with the local housing market, with many local Realtors noticing buyers struggling to snag a spot.
Rich, who started his own company, NextHome Elite Real Estate, in 2020, said the market is currently experiencing an increase in demand with a low inventory.
As of Tuesday, Delaware County had about 138 homes on the market, Rich said.
According to the Mid-Eastern Association of Realtors, Delaware County had 133 new listings in the month of June. In both March and April, there were only 89. As for sold listings, there were 105 in June, 93 in March and 89 in April.
“When I started in 2014, we had an inventory, in Delaware County alone, of over 900 homes,” Rich said. “In today’s time, of July 2020, we have less than 200 homes in the inventory.” Both of those factors have led to an increase in house prices. On top of that, buyers are trying to out-bid each other, offering way more than the asking price.
“It creates almost a perfect storm for the housing industry,” Rich said.
Low supply, high demand a nationwide issue
It’s not just in Indiana. A report by USA Today said that during the pandemic, a low supply and high demand caused home prices to rise across the country.
The report cites data released in May from the National Association of Realtors, which showed that median single-family home price increased year over year in 96% of U.S. markets in the first quarter of 2020, versus 94% in the first quarter of 2019.
Like Replogle, many buyers are experiencing a time crunch. Some houses will be listed in the morning or afternoon and be under contract by that evening.
In the last 40 days, Rich said it has been normal to sell a home within 40 to 96 hours. Sometimes, it’s less than 24. Before COVID-19 hit, the longest time a home of his had been on the market was 27 days.
“You have buyers who see a property they like, they want to view it, see if it fits their criteria,” Rich said. “By the time they get off work in the evening, the home has already had multiple showing, multiple offers and the sellers have accepted an offer before clients could even get into the home.”
Housing crunch started pre-COVID-19
Stephanie Cooper of Coldwell Banker Real Estate Group said she began seeing the change even before COVID-19, about nine months ago.
Recently, she’s had two buyers from Colorado and Kentucky reach out, wanting to leave the big city life and move to the Muncie area.
Cooper said she has five buyers wanting homes in Yorktown, some desperate to get into the school district. She and her coworkers have been scrambling to find homes available, reaching out to friends and neighbors to see if anyone is selling.
“I saw it well before COVID. Surprisingly enough, during COVID, that’s really when it picked up,” Cooper said. “People can’t even believe it; in the middle of a pandemic… the housing market is crazy.”
Her clients are getting frustrated, wondering where they went wrong in the buying process. In order to buy a house on this market, Cooper said, people have to be prepared.
“You have to have your loan all set up. You have to have your plan, you have to be ready to jump,” Cooper said. “If people aren’t prepared, you’re definitely not going to get a property.”
Low inventory an ongoing problem
But why has there been such low inventory lately?
Many factors can change the real estate market, including elections, COVID-19, federal interest rates and even generational groups deciding to downsize our buy their first homes. That makes it hard to pinpoint the exact reason.
Steve Slavin, another Realtor with Coldwell Banker Real Estate Group, said low inventory isn’t a new trend. For the past eight years, he’s seen it become a greater problem. Like Rich, he remembers when there were 1,000 homes on the market.
“The first quarter started off gangbusters,” Slavin said. “There was lots going on, but there wasn’t a lot on the market, but as soon as COVID hit, everyone just started sitting on their hands.”
Out of the 137 houses currently in the local market, Slavin said only 34 of them are more than $200,000.
More marketable product was sold in March, and now, many Realtors are stuck with harder to sell properties. Typically, they’re either a high price point or overpriced, Slavin said.
“You get people coming into town, wanting to look for homes that are $225,000 in Yorktown,” Slavin said. “Well, good luck, you’ve got next to zero options. In fact, if I’m looking at numbers, there’s nine options.”
While he believes COVID-19 has played an impact, it’s not necessarily due to lower income or job loss during the pandemic. It’s more about uncertainty.
For example, Slavin said some buyers might have a growing family and want to transition from their $100,000 home to something larger. But, if there’s such a limited supply and the homes available don’t meet their criteria, they might stay put.
Like Rich, Slavin also has had clients miss out on homes due to their work schedules, and right now, the market is too competitive. Another issue has been multiple offers, where buyers become afraid of bidding wars because they don’t want to pay more than what is listed.
“No question, they’re frustrated. Things are selling so fast,” Slavin said. “When the better ones hit the market, and they’re at least fairly priced, they are gone in a matter of hours sometimes.”
Is the end of the trend in sight?
In an ever-changing market, it’s hard for Rich, Slavin and Cooper to say how long this trend will last.
For Rich, he said he feels like an upward trend will continue up until the November election. From there, politics on a national level will trickle down into the state, and eventually, the county.
However, he doesn’t necessarily see the impact causing a drastic change.
“The housing market will either slow down or at least plain out to where people can get into homes to view them,” Rich said. “I don’t foresee them selling as fast as they are currently.”
Slavin expects to stay busy for the rest of the year, but for the volume to be less than in 2019. He also sees low inventory and higher prices continuing.
“Unless we see a wave come back in COVID where everyone is really back to being sequestered in their homes, my guess is we’re going to continue to stay active; it just may not be robust,” Slavin said.
Charlotte Stefanski is a reporter at the Star Press. Contact her at 765-283-5543, email@example.com or follow her on twitter @CharStefanski
Good morning! As America opens up, the real estate business has never closed. This is the time. The Season is here. Buying, selling — let’s get together and talk! Right now, the pace of our market is brisk, to say the least. In fact, in the midst of this pandemic, for the last 30 days, it’s been surprisingly good. Housing demand is so important to so many. Our biggest issue right now is the lack of inventory. I have many buyers looking, and few options to show them. As a result, what hits the market is often sold in hours (yes, you read that right). Our sweet spot seems to be the $125-$225k range regardless of schools. As ever, I’m happy to help with your real estate needs. Just call me at 317.701.5006 and we’ll start the process. — Stay safe… Regards, Steve
Are We Going To See Another Housing Crash?
In times like these you need a voice of reason and the last thing we need to do is panic. The graphs below will help you better understand our current real estate market and how it is much different this time in comparison to the housing crash we endured back in 2006-2008. It is an Apples to Oranges comparison.
With all of the volatility in the stock market and uncertainty about the Coronavirus (COVID-19), some are concerned we may be headed for another housing crash like the one we experienced from 2006-2008. The feeling is understandable. Ali Wolf, Director of Economic Research at the real estate consulting firm Meyers Research, addressed this point in a recent interview:
With people having PTSD from the last time, they are still afraid of buying at the wrong time.
There are many reasons, however, indicating this real estate market is nothing like 2008. Here are five visuals to show the dramatic differences.
1. Mortgage standards are nothing like they were back then.
During the housing bubble, it was difficult NOT to get a mortgage. Today, it is tough to qualify. The Mortgage Bankers Association releases a Mortgage Credit Availability Index which is a summary measure which indicates the availability of mortgage credit at a point in time. The higher the index, the easier it is to get a mortgage. As shown below, during the housing bubble, the index skyrocketed. Currently, the index shows how getting a mortgage is even more difficult than it was before the bubble.
2. Prices are not soaring out of control.
Below is a graph showing annual house appreciation over the past six years, compared to the six years leading up to the height of the housing bubble. Though price appreciation has been quite strong recently, it is nowhere near the rise in prices that preceded the crash.
There is a stark difference between these two periods of time. Normal appreciation is 3.6%, so while current appreciation is higher than the historic norm, it is certainly not accelerating beyond control as it did in the early 2000s.
3. We do not have a surplus of homes on the market. We have a shortage.
The months supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued appreciation. As the next graph shows, there were too many homes for sale in 2007, and that caused prices to tumble. Today, there is a shortage of inventory which is causing an acceleration in home values.
4. Houses became too expensive to buy.
The affordability formula has three components: the price of the home, the wages earned by the purchaser, and the mortgage rate available at the time. Fourteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased and the mortgage rate is about 3.5%. That means the average family pays less of their monthly income toward their mortgage payment than they did back then. Here is a graph showing that difference:
5. People are equity rich, not tapped out.
In the run-up to the housing bubble, homeowners were using their homes as a personal ATM machine. Many immediately withdrew their equity once it built up, and they learned their lesson in the process. Prices have risen nicely over the last few years, leading to over fifty percent of homes in the country having greater than 50% equity. But owners have not been tapping into it like the last time. Here is a table comparing the equity withdrawal over the last three years compared to 2005, 2006, and 2007. Homeowners have cashed out over $500 billion dollars less than before:
The good news is, home values actually increased in 3 of the last 5 U.S. recessions and decreased by less than 2% in the 4th.
During the crash, home values began to fall, and sellers found themselves in a negative equity situation (where the amount of the mortgage they owned was greater than the value of their home). Some decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area. That can’t happen today.
If you’re concerned we’re making the same mistakes that led to the housing crash, take a look at the charts and graphs above to help alleviate your fears.
The Coronavirus (COVID-19) has caused massive global uncertainty, including a U.S. stock market correction no one could have seen coming. While much of the news has been about the effect on various markets, let’s also acknowledge the true impact it continues to have on lives and families around the world.
With all this uncertainty, how do you make powerful and confident decisions in regard to your real estate plans?
The National Association of Realtors (NAR) anticipates:
“At the very least, the coronavirus could cause some people to put home sales on hold.”
While this is an understandable approach, it is important to balance that with how it may end up costing you in the long run. If you’re considering buying or selling a home, it is key to educate yourself so that you can take thoughtful and intentional next steps for your future.
For example, when there’s fear in the world, we see lower mortgage interest rates as investors flee stocks for the safety of U.S. bonds. This connection should be considered when making real estate decisions.
According to the National Association of Home Builders (NAHB):
“The Fed’s action was expected but perhaps not to this degree and timing. And the policy change was consistent with recent declines for interest rates in the bond market. These declines should push mortgage interest rates closer to a low 3% average for the 30-year fixed rate mortgage.”
This is exactly what we’re experiencing right now as mortgage interest rates hover at the lowest levels in the history of the housing market.
The full impact of the Coronavirus is still not yet known. It is in times like these that working with an informed and educated real estate professional can make all the difference in the world. I’m here to help! — Steve