Housing market likely to cool, local Realtors say

After a string of high demand and hot prices, local realtors believe a slowdown in the housing market is imminent in Mid-Missouri and across the country.

Beth McGeorge, a local broker at RE/MAX Jefferson City, said she’s been watching the market both locally and statewide to gauge where it might go next. She said her research points to a slowdown in the market – which has seen high demand and rising prices amid low supply in recent years – rather than an imminent crisis, as some across the country have speculated.

“A lot of people are worried about the market collapsing, but much of the consensus is that it’s headed more towards a cooldown or easing out of the chaos we call the pandemic housing market,” McGeorge said. “There was a big jump up, and I think that’s part of it — it gave shoppers a little pause, and I think people can get tunnel vision at times.”

She pointed to a sharp rise in values ​​in 2020 that has remained fairly stable up until last year, an unusual rise in the market as more than ever people found themselves at home and made remote work and education a part of everyday life amid the COVID -19 became. 19 pandemic.

Market conditions surrounding the 2008 crash, meanwhile, were marred by mass foreclosures and people essentially leaving their homes, a sharp contrast to what the real estate sector is seeing today. Given the current high home equity values, McGeorge said, homeowners rarely walk away from a mortgage.

“We haven’t listed as many homes as we have home buyers, and as long as there’s an imbalance there, we’re going to see those numbers hold up,” McGeorge said. “But we are now seeing a few price drops and higher days in the market. It’s not really reflected in our stats yet, but I think in 60 or 90 days we’ll see a slight adjustment and a small drop in our average selling price, probably. But I think it’s going to be a long time before prices change really big because we’re still so low on inventory.”

Current market demand is significantly exceeding the norm, she said: Previously, homebuyers could have a pool of 500 to 600 options in the local market before refining their search to their more specific needs, such as number of bedrooms and bathrooms, price ranges and school options. McGeorge said the total pool tracked in the Jefferson City Multiple Listing Service, a database where housing companies post their listings, was 162 available homes as of Wednesday. She said bidding wars on these houses are common.

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She said these local trends were consistent with statewide and national numbers. Last month’s home sales statistics from the Jefferson City Area Board of Realtors included a comparison to the same time last year for homes within the board’s jurisdiction, which include Cole, Callaway, Moniteau and Osage counties. The area’s average selling price so far this year is $233,176, compared to an annual average of $209,243 last August.

Statewide figures for the month show 57,661 home sales, down from the 63,113 sold last year, but more in line with 2019 and 2020 sales rates, which settled at around 55,000 at this point in the year. The median sale price for the year to date, meanwhile, has increased, according to data from Missouri Realtors: the median for the year to date was $240,000 last month, while 2021 recorded a median of $215,000 for the same month. In August 2020, the median year-to-date was $183,000, while 2019 saw a median of $172,500.

While the latest data broadly shows growth and consistency for the year, McGeorge said the data would likely look different if the mild slowdown materialized.

McGeorge said there are indicators of market shifts other than local statistics. Like everything else, from fashion to pop culture, market trends start at shore and work their way in, she said. Second home markets along the coasts started to rise in February, an indicator they say is indicative of upcoming trends in the overall market. Voluntary transactions, such as those for vacations or second homes, are early indicators of people’s financial mindset and finances, she said.

Kayla Hoey, president of the Jefferson City Area Board of Realtors, shared a similar market view. She said the few homes available were being snapped up faster than usual: while the average number of days on the market for local homes was 65 in 2018, 61 in 2019 and 60 in 2020, that number dropped to an average of 20 days on the market for 2021, she said .

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“They’re going much faster now and above asking price, although that’s slowing as we get further into 2022,” Hoey said. “It’s definitely still a seller’s market. While we saw so many offers above the asking price earlier in the year, we still see that, but not as crazy. I think COVID, interest rates and inflation contributed to that. “

Conditions are probably not ripe for a bubble burst, Hoey said, and lessons learned from the 2008 crisis are likely to prevent drops from getting out of hand.

“I think we’ve been raised and we’ve been through it before, and I think there are stricter guidelines to prevent something like this from happening,” she said. “There are requirements for pre-approval letters that may need to be dated within a few weeks or a month, because even if someone was pre-approved last year, that may not be the case this year due to rising interest rates and other factors. Lenders are just making sure it doesn’t happen again.”

Logan Gratz, a real estate agent at Gratz Real Estate, said the local market has held up better than other locations through previous market downturns due to its resilient job market with the epicenter of state government and manufacturing positions. While others across the country are looking for better economic positions, the area is poised to continue to grow.

“We have an influx of people who want to live in Missouri. With COVID and remote and hybrid work, people are realizing they can live anywhere in the country and still keep their jobs and use their dollars in the Midwest where there’s a lower cost of living,” he said. “I think we’ll continue to see that growth.”

He said the Federal Reserve’s massive rate cut, an attempt to boost the economy amid the volatile pandemic market, is another element that has fueled a demand boom. He said low interest rates have given many people who would not normally have been in the housing market new opportunities to refinance or buy. He said those rates probably wouldn’t have been possible without the response to the pandemic.

And now, as everyday life settles into a new kind of normal, the Fed announced on Wednesday that it would raise interest rates after cutting them earlier in the pandemic. Federal Reserve Chair Jerome Powell said the hike was an attempt to cool “hot-button” house prices and increase affordability in the market. In statements made during a news conference on Wednesday, he also said the slowdown would take time and it would take more for the market to level out.

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“In the long run, supply and demand need to be better matched for house prices to rise at a reasonable level and at a reasonable pace and for people to be able to afford houses again,” Powell said.

Gratz said part of the supply problem is that new construction has not recovered with market growth since the 2008 crisis, a problem that has been exacerbated in recent years due to supply chain problems and labor shortages.

“Obviously we have some construction going on, but it’s slow. There is high demand and not enough new construction or development to keep up with the demand from people who want to be here,” Gratz said. “So until we have inventory to match that demand and that growth, I think we’re going to be pretty flat.”

McGeorge, Hoey and Gratz all agreed that their best advice for those looking to buy or sell right now is to work with an experienced broker to get the most out of the transaction.

“We know how to deal with it. We’ve been doing this for years and we’ve done it through COVID,” Hoey said. “We can still find you a home or can help you sell it. We know the market here.”


Julie Smith/News Tribune Richard Backes of Backes Plumbing unwinds blue hoses as he prepares to connect to the county water main. Developers are at work at the new SummerField Estates subdivision on Old Lohman Road, where several houses are in various stages of construction. Real estate agents expect the housing market to cool down slightly in the coming months.


Julie Smith/News Tribune Contractors in the area are busy keeping up with demand for new homes in the area, but agents expect the market to slow down just a little in the near future.

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