Low inventory, buyer surplus: Spencer housing market strong
Spring and summer are typically prime time for home sales around the country, but Northwest Iowa Realty broker and owner Kim Bates said home sales in the area have been relatively consistent through the year since rebounding from the Great Recession which struck between late 2007 and mid-2009.
"The local market has been very strong," Bates said. "We were lucky during the recession that our percentage went down so low compared to other areas that we rebounded quickly. We actually see a little bit of a slow down from Thanksgiving to Christmas, but we start picking back up in January. People don't see the sales pending until March. There will be a tiny slowdown when school starts because people are busy with that, but then it picks right back up from there. People believe, mentally, that a spring market is good, but the reality is our market moves all the time except big events like holidays and school starting."
The median home sales price in the Iowa Great Lakes area so far in 2018 is approximately $120,000. This is slightly down from last year when the median sales price was approximately $127,750, according to statistics provided by Century 21 broker and Iowa Association of Realtors president-elect John Goede.
"A lot of people come to northwest Iowa because they can have affordable living," Goede said. "A couple of studies found Iowa was one of the friendliest states as far as affordability of homes. Here you can buy a home for two or 2 1/2 times your income. In fact, you can go to some of the outlying communities here and buy a very livable home for $50,000. I go to these national meetings and they say to me, 'I can't even buy dirt for $110,000.' Median household income for Iowans is about $56,000. Prices are comparable in Spirit Lake, Spencer and even Milford."
Goede and Bates agreed on some common features Spencer residents seem to be looking for in housing including a home which is more "move-in-ready" requiring little work, at least two garages, a basement, at least three bedrooms and two bathrooms.
"The most popular home in Spencer that everyone can relate to is a single-level, ranch-style home with an attached double garage," Goede said. "The reason I say ranch is because when you have a two-story or split-level home, there is an age group that they start thinking about whether or not they will be able to go up and down steps."
Goede and Bates emphasized the importance for first-time home buyers to seek the counsel of a realtor to guide them through the process, to make sure they meet all the deadlines and to avoid missing opportunities for financial assistance they may qualify to receive. Goede advised prospective home buyers to look into rural development funding, income-based programs, programs through the Iowa Finance Authority, programs aiding veterans with 90 days active service and tax-exempt home savings programs offered through the Iowa Association of Realtors.
Goede and Bates offered insight into who they see purchasing homes in Spencer and the area.
"My perception is first time home buyers in their mid-20s to mid-30s, when they hit the job market after college, it was slow pickin'," Goede said. "A lot of people are struggling with student debt and not having as many open jobs as they thought they would. So people are buying later. It is almost 60/40 women to men. People that are buying are people who have a job here in town and think they are going to be here for five years."
"We do see a lot of first time home buyers, but there are those upgrade buyers who had more kids and need more room in their starter home," Bates said. "We also see empty-nesters or someone who is going to a condo who have owned their home and raised their children, but no longer want all the upkeep."
Goede and Bates agreed that Spencer is well-situated and the risk of a housing market crash later this year or early next year that some analysts have been predicting, is not likely to have an impact here.
"The last time they were worried about a housing market crash, it did not happen or it happened on a low scale," Bates said. "I often say we are extremely conservative in Iowa and we do not over build in the Spencer area. We rarely have a huge excess of inventory and that helps us when times get tough for us to hold our ground. I personally don't see a crash happening, but we will see what the market brings."
"Inventory is low, prices have gone up a little bit and income interest is stable so we are sitting pretty well," Goede said. "Days on the market have come down almost a third. If it is priced right for the conditions, it sells very quickly."