With days at school or the office replaced by virtual lessons and remote work, and nights out a victim of quarantine, home has rarely been as important as during the COVID-19 pandemic.
While many other industries have struggled to survive 2020, local agents say the real estate market is hotter than ever.
Looking ahead to 2021, they predict the trend will continue and encourage anyone considering buying or selling a home to take the plunge.
“We’ve had our struggles, of course, because of changing the way we do business,” said Jeff Parker with Murney Associates. “But as far as sales activity, it’s been a record year.”
Parker credits the thriving real estate market to record-low interest rates and a low inventory of homes for sale, which has boosted prices.
“And then the psychological aspect of it,” he said. “With everything going on with COVID, people are really wanting to create their home. It’s important. They feel like it’s a safe place for them.”
“COVID is absolutely not a blessing,” Parker said. “But this is one part of the economy that has stayed solid during this whole pandemic. And I think that’s important — for people to feel safe in their home. I think it’s really changed the way a lot of people look at their home as more of a sanctuary than maybe just a place to live. I do believe that has changed what a buyer is looking for.”
A seller’s market
Kirk Hewitt with AMAX has been working in Springfield-area real estate for 42 years and has a degree in real estate finance. He keeps close tabs on the Springfield market, specifically the 20-mile radius from the demographic epicenter of Republic Road and Campbell Avenue.
According to the data Hewitt collected over the years, the median price in 2010 of a single-family home was $110,000, and 32 percent of homes on the market sold within the first 30 days.
Both price and the percentage of homes that sell quickly have been steadily increasing, with a big jump in 2020 — this past year, the median price of a single-family home was $185,000, and 68 percent sold within the first 30 days.
If a house is on the market for 60 days, Hewitt said one of three things is happening: It’s overpriced, it has a floor plan that is not “in tune with the market” or it’s in a less-than-ideal location (though he noted the market is more forgiving on location now due to the extremely low inventory of houses on the market).
Speaking of low inventory, Hewitt recalled that even back in 2005 the Springfield market never had fewer than 2,900 single-family homes for sale.
“There’s 1,000 right now,” he said. “Never ever since I’ve began tracking in 1978 has there ever been active inventory 25 percent of normal.”
The primary reason behind the low inventory, Hewitt said, is there hasn’t been enough new construction of single-family homes since 2007. All the while, more people continue moving to the area.
“At least up until 2019, Greene County was averaging under 400 (single-family home building permits) a year, and we need to be doing 1,600,” he said. “Never before have we had a stretch so long, really for 10 years, where our single-family building permits have been at roughly 25 percent of normal.”
Parker also mentioned the decline in new construction as a factor in today’s market.
“We didn’t build enough, I think, for those few years after the slowdown in ’07, ’08, and ’09,” Parker said. “Everybody really tightened up and got conservative. And now we are seeing that’s had an effect.”
Parker said he expects there to be more inventory in 2021 because of new construction that is happening now.
“Builders aren’t afraid to have the number of units going at the same times,” Parker said, “because they are able to sell them pretty quickly.”
It’s going to take some time for the market to be completely balanced, both agents said. In the meantime, it’s a seller’s market.
“There’s never been a better time to put it on the market,” Parker said. “Right now you’ve got low inventory, low interest rates. You’ve got buyers wanting to buy, not enough inventory out there. When a seller puts their house on, multiple offers are not out of the question.”
Parker said he encourages buyers to move quickly when they find a home they like.
“You know what else you’ve seen on the market. You know the prices are what they are,” Parker said he tells buyers. “Don’t try to steal it. Just make a good, solid offer. … When they want to say, ‘Well, let me think about it a couple of days,’ it’s probably not going to be there.”
Often sellers wait until springtime when the flowers and trees are blooming to put their house on the market. Parker said waiting till spring isn’t necessarily a great idea this year because the inventory is so low right now.
Karen Best, with Keller Williams Tri-Lakes, said the market is hot in the Branson area, too.
“The statistics for residential properties that have sold in Branson from 2019 to 2020 has increased 14 percent,” she said. “That was in the middle of a pandemic, so we are very grateful that the market has remained steady and actually increased.”
“If it’s in a great location and it’s priced right, it doesn’t stay on the market very long at all,” Best said. “This is my 14th year in real estate, and it’s the first time that we’ve had multiple offers, multiple times.”
Record low interest rates for buyers
The real estate market looks good for buyers, too, the agents said.
“For buyers, I would say you are in a fantastic situation because of the interest rates,” Parker said, adding that he had clients find rates as low as 2 and 2.5 percent interest.
“They are going to vary, but you’ve never had an opportunity to buy at these rates,” he said. “It’s almost like getting free money.”
While prices are high, Parker doesn’t believe they are inflated and will remain high.
Because inventory is low, buyers must be ready to make a strong offer, Hewitt said. If it’s a financed buyer going up against cash offers, they need to have as strong of a lender letter as possible.
“They need to listen to their Realtor and get their ducks in a row,” Hewitt said.
With the low interest rates, Best pointed out that it’s also a great time for homeowners to consider refinancing.
“Interest rates right now are at a historical low,” Best said. “A friend of mine was in the process of refinancing their house (Thursday), and they were looking at a 2.5 to 2.6 percent. Their current mortgage they have right now was at 4.6 percent.
“People who have a 30-year note who have 22 years left on their note, they may be able to refinance it and get a 15-year note and have their payments stay the same and pay their home off in a shorter amount of time,” she said. “Or they can refinance it and have their payments go down.”
Buying and selling homes looks different these days due to the pandemic.
Agents are working closely with sellers to ensure agents are showing the homes in a way that keeps homeowners safe and comfortable.
That might mean showings are done virtually only. Most often, though, it means buyers are asked to wear masks, gloves and booties, and to refrain from touching cabinets and countertops when touring someone else’s home.
Homeowners are encouraged to leave all interior lights on and interior doors open to cut down on the need to touch surfaces.
Agents and clients now take separate vehicles to showings.
“We look at a lot more properties on the internet and narrow it down so that we are not out showing a ton of properties,” Parker said. “And we prefer to have the decision maker with us, not the entire family.”
“I think things will open up in the economy, too, as we get the vaccine out. That should fuel the market for the summer,” he added. “If we get to that point by the summer where things really start to open up and people are more comfortable being out, I think we will have a fantastic summer.”