Low interest rates are giving borrowers more buying power
The Des Moines housing market has had a record-setting year for home sales, which local Realtors credit to low mortgage rates, the work from home phenomenon and Des Moines’ affordable lifestyle.
In October, home sales in Des Moines soared 34% compared to last year, with 1,547 sold properties compared to 1,150 in 2019, according to the Des Moines Area Association of Realtors.
“The Des Moines October real estate market was moving fast again with properties selling very quickly,” DMAAR President Lance Hanson said in a statement. “Over 1,000 properties sold in less than 30 days. We’re continuing to see a high number of sold properties. The busy fall is likely due to the pent-up demand from the slow Spring due to the uncertainty of the pandemic. The low interest rates continue to make conditions ideal for homebuyers.”
Michael Martin, broker and owner of Des Moines Realty Group, said that there has been an increase in new construction, with home price points ranging from $250,000 to $300,000, which also attracts first-time homebuyers. That, along with the tech jobs Des Moines has to offer and low mortgage rates, means new builds are more affordable for younger buyers.
“I’ve seen an uptick of new homebuyers, first-time homebuyers,” Martin said. “…there are a lot of new homebuyers for some odd reason. I’m assuming it’s because their parents are telling them rates are so good you gotta buy now.”
Not only are homebuyers leaving big cities for more space, but Alisha Stewart said that she’s helped lots of locals, too.
“I have three or four clients that just bought their current houses with me in the last year or two and they originally planned to stay there for maybe five to seven years,” Stewart, broker at Goldfinch Realty Group in West Des Moines, said. “Now they’re already listing and making the move just because they can afford more now with interest rates so low. So, it’s been absolutely nuts.”
Stewart also said her clients want acreage and bigger yards because everyone is inside at home, working or schooling.
“[There is] a lot of upsizing right now,” Stewart said. “I haven’t had anybody so far downsize.”
Housing inventory in the Des Moines housing market is tight. According to DMAAR there is 36% less inventory this year than there was this time last year.
Chris Ranallo, a RE/MAX Concepts agent in Des Moines, said that this year will be record-setting for home sales and said he thinks that the first quarter of 2021 will remain strong.
“We do see the power hour, we’ll see where these houses are listed and there’s three, four offers on them,” Ranallo said. “They happen fast and you kind of have to jump on them.”
Ranallo said the low interest rates have given first-time borrowers more buying power and some are skipping what would traditionally be a first home to level up to a more expensive house, “which has also driven up pricing in general.”
The median sales price in Des Moines has risen 19.7% in the last year. In October, the average home price was $235,000 compared to $196,400 last October, according to DMAAR. In addition, the average number of days on the market in the city was 43 days in October, compared to 53 days the year prior.
“Bidding wars, we typically see that if there’s a price point…probably under that $300,000 price point,” Ranallo said. “A lot of it is on those kinds of starter homes, people buying their first home. A lot of that is because there’s just low inventory or people are trying to come in and get the same house. At first it used to be hard to find something kind of under that $200,000 mark in our market. Now it’s under $300,000.”