A condensed overview of the real estate market in the Sioux Empire this year indicates it was very good for buyers, and fair for sellers. Slightly fewer homes were sold through MLS, with an average price increase of 3.5%; although, results were mixed throughout the city, varying in price and location.
It was good news for sellers in the first time home market (under $200,000) and for the first-time move up buyer market ($200,000 to $280,000). Buyers also did well, as their buying power was enhanced due to very low interest rates.
New construction did well across the board, although building permits were down 15% over last year.
Interesting, the market above $300,000 wasn’t as great for sellers as one would think given the low interest rates and the reported low unemployment rate. Some people are confused by falling values, but if one reads the back story about our economy, the answer is clear.
It is becoming more apparent, according to most news outlets that the Affordable Care Act coupled with heavy rules and regulations handed down from the national government has taking its toll on employment and wages. Household incomes are down 8% since 2009, and the level of potential employees now working is the lowest level since 1978. The middle class is feeling the cost of living increases; and yet, they are not seeing any more money come through the door. They have simply chosen to stay out of the market. The number of sales, year over year, indicates we had fewer buyers and more sellers…the economic law of supply and demand states that prices will fall.
Thankfully this year’s housing value adjustment wasn’t as steep as in 2008, 2009, or 2010. We believe it will be a short market shift with values correcting sometime in early spring. We are anticipating a less heavy hand from the national government on businesses, an easing of mortgage underwriting requirements, and continued low interest rates.
The economy will respond according to the limitations placed on free enterprise. We think the majority of the working public is tired of low wages and higher costs to live, and will demand changes in Washington. Locally, we have a very favorable climate with leaders who believe businesses create jobs and know people want opportunities for a better life.
We remain optimistic, and invite you to call anytime. 605.359.4100 (text works too)
The Tony Ratchford Group, KW Realty Sioux Falls