Home supply still limited despite high-end spike

Faunlee Harle: The local housing marketing still has a low supply.

Jim Hutcheson: Interest rates are driving market demand.

• 
• 

Nearly two dozen high-dollar homes were listed last month in Springfield, but residential real estate experts say this is not an indicator that overall market activity is seeing the same spike.

There’s still a low supply of homes – of all price ranges – compared with demand, said Faunlee Harle, Realtor with AMax Real Estate.

“We usually have a three months’ supply of homes in all price ranges, and we’re down to two right now,” Harle said. “There’s still a low supply, but it’s slowly getting better.”

New listings in May for homes priced $500,000 and up in Springfield more than doubled from April’s 10 listings, preceded by 15 in March, according to recent reporting in Springfield Business Journal’s monthly series Curb Appeal. The 22 homes listed during May have combined asking prices of $16.7 million and bring the market’s high-dollar supply to nearly 80 available homes by press time, according to Southern Missouri Regional MLS data.

As for the market at large, Realtor Jim Hutcheson said low interest rates have driven activity, even after a slight dip during the coronavirus pandemic.

By press time, a 30-year fixed rate home loan had a 3.18% mortgage rate and a 15-year loan had a 2.62% rate, according to the Federal Home Mortgage Corp., aka Freddie Mac. Comparatively, 30-year fixed mortgages in spring 2019 were about a percentage point higher.

Hutcheson said the most activity at Jim Hutcheson Realtors has been with homes priced $150,000-$250,000. By press time, there were 118 active listings in that price range and 249 pending sales in Springfield, according to the MLS data.

“If it’s priced well and it’s clean, it’s selling at the asking price pretty fast … and it has a lot to do with interest rates,” said Hutcheson. “Instead of financing their homes, people are looking at selling their house and buying something else, whether upgrading or downgrading.”

He said that’s slowly contributing to market supply.

“There’s a lot of pent-up demand to sell and pent-up demand to buy,” Hutcheson said. “It’s kind of a perfect storm right now.”

It’s a national trend, too. In April, home sales dropped 17.8% compared with March and total housing inventory was down slightly, according to data released in May from the National Association of Realtors. Of the available listings, over half were sold in less than a month, and nearly 40% of the sales made were from first-time homebuyers, according to the data.

Nationwide, Freddie Mac officials estimate that it will take an additional 2.5 million housing units to make up for the national supply shortage.

Steve King, director of residential lending at Great Southern Bancorp Inc. (Nasdaq: GSBC), said despite the pandemic, the bank’s purchase lending is on track to match last year’s volume, if not beat it. King said he was originally anticipating a higher year for home purchasing before the pandemic.

Through May, the bank has closed 400 purchases in the Springfield market, compared with last year’s total of 793 loans.

“Purchases have stayed really steady,” said King, citing the low interest rates staving off significant declines during the pandemic.

King also confirmed loan applications for homes priced $500,000 and up have been in demand. Harle said some of the high-dollar home activity she’s experienced comes from people leaving Springfield for another job.

Leslie Horner, co-owner and broker at Better Homes & Gardens Real Estate Southwest Group, said in an SBJ CEO Roundtable last month that high-dollar homes in the area are attractive to out-of-state buyers.

“We’re seeing, and probably we’ll see more, people come in here from the coastlines that are either retiring or they’re just wanting out of that and moved back to our area and they’ve got the money to buy those high-end homes,” Horner said.

King said he anticipates June will be a busy month for home purchases based off typical seasonal demand and because interest rates are likely to remain low in the short term.

“We’re seeing economic recovery, and as that happens, the rates will trend up, but we haven’t seen a sharp economic recovery so far,” he said.

The Congressional Budget Office, a nonpartisan legislative agency, released an analysis at the end of May that indicated it could take the better part of a decade for the U.S. economy to fully recover from shutdowns related to the pandemic. The office estimates that the effects of the pandemic will reduce cumulative gross domestic product by 3%, or $7.9 trillion, by the end of the decade.

Web Editor Geoff Pickle contributed.