Summer is here! And while we all are excited about the wonders of Northern Indiana at this time of year, I think it is important for all of us to take a moment and continue to salute the front-line workers who endured so much during the height of pandemic. You truly are heroes. Thank you!
And while clearly not on the same level, I also want to give a shout out those in the real estate industry. Ever since those early couple weeks when the pandemic first hit and there was confusion everywhere, builders, agents, staff, loan officers, title professionals and so many others have been working almost non-stop to take care of clients in what has to be the hottest market of all-time.
We have mortgage interest rates that remain at all-time near lows coupled with an economy that is doing just fine. In fact, the unemployment rate in South Bend is currently 4.8%, dramatically lower than the 20.7% rate a year ago at this time and roughly equivalent to what we saw in 2015-2016.
These are important factors we consider in real estate. Obviously, the low rates allow first-time buyers to enter the market while allowing repeat buyers to get more for their money. And with the economy strong, many have the confidence to make important financial decisions like home ownership.
Our buyer pool is strong locally and we are also seeing a continued influx of buyers from other areas who are attracted to the vibrancy of South Bend, the most affordable major college town in the nation.
We are seeing the demand play out in the number of recorded sales in our area. The Indiana Association of Realtors recently shared that there were 364 home sales in May throughout St. Joseph’s County, up 98 or 36.8% over a year ago. For all of 2021, there have been 1,380 sales in the county, up 12.6% over 2020.
Thankfully 450 homes came on the mark in May. While this was an increase of 9.5% over a year ago, it simply is not enough to meet demand. For the entire county, there are only 308 homes currently for sale, down from nearly 500 at this time last year and 899 in 2019. This equates to a paltry 0.9 month supply.
As you would expect, our home prices are rising because of the supply vs. demand imbalance. Multiple offers have become normal. We are seeing homes sell at 1.3% higher than the list price. It’s the first time in history that the “list-to-sell ratio” is higher than 100%! Here is what this means to a buyer – a home listed at $200,000 would expect to sell at $202,600. A year ago at this time, it would have likely sold for $197,200. While not significant over the course of a 30-year loan, it does show that bidding wars are impacting prices.
The median price of a home in St. Joe’s County (the middle of all homes sold in May) was $174,000, up 16% from last year. Our median price has jumped all the way from $150,000 last year and $144,000 in 2019.
Our local numbers are similar to what we are seeing statewide. The number of Hoosier State home sales in May was up 24.8% while the number of available homes was down 48.2% over a year ago, a 0.8 month supply. In May 2019, there were 17,134 homes for sale in all of Indiana. Today, there are only 6,559. This has led to a 17.3% jump in the median sales price to $214,000.
At the national level, the National Association of Realtors reported that a very similar supply vs. demand imbalance can be told in this equation:
20.6% decrease in inventory + 40.6% increase in sales = 23.6% increase in prices
It is stunning to see the rise of prices in the U.S. to its current record of $350,300 and how affordable we remain in the South Bend region. We can buy two median priced homes in St. Joe’s County and still have $2,330 left over! Amazing!
This chart lets us compare/contrast what is happening in St. Joseph’s County, Indiana and the U.S.
(change over May ‘20)
(change over May ‘20)
|St. Joseph’s County
(change over May ’20)
|Number of Sales||5.80 million/+44.6%||8,470/+24.8%||364/36.8%|
Thankfully we continue to see our building community launch new projects. The Hills, Echoes Townhomes, Keenan Court Flats, Belle Terre Villas and Brennan’s View all provide a release valve to the inventory pressures buyers’ face.
Here is something to think about. Baby boomers have redefined American life for their entire life and they continue to do it in their later years. Part of the reason for the lack of inventory is that people are living longer and enjoying a greater quality of life. They also don’t want to go anywhere. Here are some stats to consider:
In prior years, older South Benders would traditionally move to warmer climates. Today things are much different. They love it here and for obvious reasons!
So while many, despite likely being empty nesters, have decided to not sell their home despite this being an optimum time financially, others are taking advantage of current trends. Many are doing what I’m calling “sideways downsizing.” They are selling at the top of the market, but staying at their current (or sometimes slightly above) price point to get more modern amenities in a smaller footprint.
Oftentimes, if their new home isn’t built or the existing seller needs more time to close, we are working with our client on contingencies in their contact that allows them to essentially rent their home until it’s time to move. Others are renting in nice long-term places.
Another important point to consider is that many of our sellers-who-become-buyers have enough equity in their homes that they become “cash” buyers, a group that is more attractive to sellers. In fact, NAR reports that number of cash buyers nationally is currently 23% which is up from 17% a year ago.
With the current buyer demand not subsiding, those who are considering a move, should definitely talk to me or one of our agents. We can give you a free report on what your home might be worth and explain how the process is working today.
You can reach any member of our team at 574-360-2569 or email at email@example.com and we will get right back to you.
See you next month!