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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, firstname.lastname@example.org or follow her on twitter @CharStefanski