Byron Menke has been selling houses for a long time, but he cannot recall a time when “sold” signs replaced “for sale” signs before the dirt around the post hole had time to settle.
“I’ve been doing this for 21 years, and our inventory is at the lowest level I’ve ever seen,” says Menke, president-elect of the Iowa Association of Realtors. “It’s that way around the state. We have less than a month’s supply of homes in most places.”
And that includes rural areas throughout much of the Midwest, says Menke, a broker with Menke Auction & Realty in the southwest Iowa community of Treynor,
“Days on market for homes in rural communities are much less than they were a year ago,” he says. “When you get into metropolitan areas like Omaha, homes are being sold in a matter of hours, and at prices above the listing price.”
This spike in home sales is here despite the COVID-19 pandemic. Menke says after a sluggish March and April in 2020, sales started increasing. Historically low interest rates are a key factor in the surge, he says.
“We really didn’t know what the pandemic was going to do to the market, but most Realtors I’ve talked to had their best year ever,” Menke says. “We could sell a lot more homes if they were available.”
Emily Swinford, a Realtor with Better Homes & Gardens’ Good Life Group in Glenwood, says according to the Southwest Iowa Association of Realtors, there were 155 active listings for members in February — 110 less than a year ago.
“We are down 41% from 2020,” she says. “It’s definitely a tough market for buyers because of the shortage of homes.”
Swinford says lower interest rates are allowing buyers to afford more expensive homes. Realtors are having more consultations with buyers, reinforcing the importance of things such as being pre-approved for a mortgage and other financial factors.
“Being pre-approved allows you to move fast when you want to make an offer,” she says.
Swinford adds it is also a good time to refinance homes to take advantage of lower interest rates.
She says the increased costs of lumber and other building materials has also pushed buyers to more carefully consider buying an existing home, rather than building a new home.
“We tell buyers to work a lot of cushion into their budget,” Swinford says. “If you are pre-approved for $175,000, look at $150,000 or so to make sure it fits into your budget.”
According to a report from the National Association of Realtors released March 22, existing home sales declined in February after two months of gains. Those numbers were down 6.6% from January.
However, home sales are still 9.1% higher than a year ago. The report said all four U.S. regions saw year-over-year gains.
“Despite the drop in home sales for February — which I would attribute to historically- low inventory — the market is still outperforming pre-pandemic levels,” Lawrence Yun, NAR’s chief economist, said in a news release.
He cautioned of a possible slowdown in growth in the coming months as higher prices and rising mortgage rates will cut into home affordability.
“I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy,” Yun said. “Many Americans have been saving money and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”