Many people have been asking if we’ve seen a slow down in the local real estate market due to COVID-19. Rather than give a flip answer, I like to dig into the statistics that give a true picture of what’s happening.
Ruhl&Ruhl REALTORS® offers its agents a great tool to evaluate the real estate market in all of our 11 market areas. The Brockette Homes team helps buyers and sellers in the Cedar Rapids and Iowa City markets. This covers 6-7 counties in Eastern Iowa.
My video covers details as of March 31, 2020, in both the Cedar Rapids and the Iowa City market areas. In general, the overall housing market continued to do well, and in fact, in most cases was stronger than the 1st quarter of 2019. As of April 21, we continue to experience an active market.
As has been the case for the past couple of years in the Cedar Rapids market area, homes $250,000 and under, when priced well and in good condition, sell quickly- about 60 days. We see similar results in the Iowa City market, however, home prices in general are about 20% higher.
We often talk about housing inventory & housing absorption rates. To simplify this, we are basically looking at a snapshot in time. At a given point, if the current group of homes for sale were frozen, based on average number of homes that have sold, how long would it take to clear the deck? It’s based on the simple economics of supply and demand.
A market period with 0 to 5 months of inventory is considered a Seller’s Market. There are fewer homes for sale than buyer demand. This causes housing prices to increase. In March 2020 in the Cedar Rapids market, it is a Seller’s Market with 3.3 months of housing inventory. A buyer needs to be well-informed, pre-approved & ready to make a decision. This type of market can bring multiple/competing offers. A buyer’s real estate agent is vital in helping determine a winning strategy.
A Neutral or Balanced Market is one with about 6 months of housing inventory. There are enough homes for sale for the buyers who are in a position to purchase. We see this more in the $250,000 to $350,000 range in the Cedar Rapids market area. In March, the overall Iowa City market area experienced a Neutral Market. I expect this will start to move toward a Seller’s Market as it did last year from around May through most of the rest of 2019.
Buyers have an advantage when there are plenty of homes available to choose from. A market with 7 months or more of housing inventory is considered to be a Buyer’s Market. The Iowa City market area was in this place during January & February of 2020. We also see this in the luxury home market, homes priced $500,000 & above. It makes sense. There are just fewer buyers who qualify to buy homes in this price range. A great listing agent will help market to those specific buyers & present the home well, highlighting its unique value.
We continue to be in a “bifurcated market”. Fancy word that simply means it’s an awesome opportunity for “moving-up” buyers…those buyers who have homes to sell under $250,000 & want to move-up into a home in the Balanced or Buyer’s Market.
I don’t have a magic ball that predicts the future. There are parts of the country that have been impacted heavily by unemployment, illness & death. We’re told Iowa has this week & next to peak & then “flatten the curve”. We’re all focused on how we can do that & also keep our economy going. I’m optimistic that we will get through this time in our country. There is still potential for the real estate market in our area to stay strong. Even if there is some softening in the next month or so, I see a pent-up demand that will help us finish the year out strong.
Real estate values are all about location, location, location. If you want to know more about your neighborhood, comment below, give me a call at 319-551-8692 or send an email to BrocketteHomes@RuhlHomes.com.