Aug. 30, 2021
By Amy Stockberger
Here’s something we haven’t talked about in the housing market for more than a year: a slowdown.
It has been heading that way steadily since Memorial Day for first time since April 2020, and while it’s certainly not a complete stall, it’s definitely a shift.
I feel the reason for the shift can be related to the fact that some buyers, after losing out on five, 10 and even 20 multiple-offer scenarios, decided to take a break and just rent for a short time. The evidence for that is fairly clear, as Sioux Falls currently has nearly 100 percent occupancy in multifamily housing.
The other cause of the slight shift can be related to the fact that many buyers also took a step back and enjoyed their summer after travel had been on hold for some over the past 18 months.
So here’s what happened: The Sioux Falls four-county metro area saw a 25 percent decrease in closed sales in July compared with a year ago.
We have seen more homes hit the market, and multiple offers have been less prevalent, so it is an incredible time for buyers to jump back into the market with a lot more ease.
Year-to-date inventory is still down 12 percent compared to 2020, but it feels a lot like our 2020 market right now, which ironically was steady and calm around this time too.
A normal seasonality we see is that as our kiddos get back into the school calendar, the market typically slows for about one to two weeks as families get back into their new schedules.
Our relocation business has not slowed at all though. And the trend we have seen, since 2020 even, is that it isn’t just one family moving to our area. They are bringing their grown siblings and often grandma and grandpa, too, so the whole family unit is relocating.
July saw pending sales in the Sioux Falls region up 12 percent. The price range with the largest gain in sales was the $700,000 to $800,000 range, which increased 109 percent.
The price range that tended to sell the quickest remained the same in the $200,000 to $250,000 range at 74 days; the price range that tended to sell the slowest remained the same as June as well in the $900,000 to $1 million range at over 170 days.
The average sales price increase is roughly the same in the Sioux Empire as last month at a little over $297,000.
Many are still concerned about overpaying in today’s market. While we have seen more price adjustments than we have since probably March 2020, I don’t feel it will equate to a giant reduction in price across the market.
Our growth pattern is too big, which is beautiful, and I truly believe it could not be a better time to live in the Sioux Empire.
Even if prices drop off slightly, the cost of waiting until next year to make that next purchase will cost you more money in the end.
Our nation is experiencing inflation, which equals an increase in mortgage rates. History has proven that over and over. And that equals less buying power.
The cost of waiting will add up quickly.
Also, a quick reminder that there are some fabulous loan options out right now for first-time homebuyers, offering not only closing cost assistance but also down payment assistance.
So, parents, encourage your kiddos to start building wealth through real estate now, as they likely can buy a home with $200 down. Yes, you read that correctly.
I walk the walk when it comes to this approach, by the way.
My husband and I bought our first home when I was 21 for $72,000 at a first-time homebuyer interest rate of 5.5 percent. It was the best thing we did financially as a young couple, and looking back, I wish we had done it sooner. We actually have been coaching our 17-year-old on buying his first investment, as soon as he financially can, to start that wealth building earlier and in a far better climate than we did. Stay tuned for where that takes us in a future column!
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