Knocking on doors, sending letters, camping on websites; the seller’s market has driven home buyers to extreme lengths to find their dream home.
Isabel Hawkins and her family listed their Center Grove home in January and thought they would quickly find a new home before their buyers closed.
Then COVID-19 hit.
Their home sold in February. But even after taking proactive steps to ask strangers if they want to sell their home, the Hawkins family is still stuck in limbo months later. Until they find the right home, the family is staying in a rental house and renewing their lease in three month increments, Hawkins said.
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In a market upended by COVID-19, it is hard to find the perfect house, especially one with the features the Hawkins family desires. For the family of five, that is a four-bedroom home with a finished basement and a pool in the Center Grove area.
When the family first started looking for their next home last July, the housing market was tight already. But the type of homes they were searching for were on the market more frequently, Hawkins said. The housing market has only grown more restrictive, she said.
Realtors in Johnson County say stories like the Hawkins family’s are very common. They say the housing market has been competitive for about two years, but has grown even more so with the pandemic. Realtors realized the market was tight early in the year and had hoped it would improve by this point in the year.
“Like everyone else the sellers are overwhelmed with the news cycle. People, unless they need to move, are staying idle for now. If this was in April I would have told you they would list their homes in June but now I’m not sure,” said Ron Rose, team leader at Indiana Realty Pros.
Market heating up
Still, the real estate market did not decline as much as realtors feared at the start of the pandemic and listings are starting to pick up again, David Neu, managing broker of RE/MAX of Greenwood.
The usual peak for real estate transactions should have already begun, but the market has, so far, lagged behind where it was in the past few years, according to data from MIBOR, a Central Indiana realtor organization.
Listings were sluggish in the first few months of the year and had started to increase by March with 297 listings posted, but fears over COVID-19 dropped new listings down to 206 for April, according to MIBOR data for Johnson County. In May new listings rose to 294 again and new listings in June rose to 296, but that is still low compared to May 2019 with 363 listings and June 2019 with 319 listings, according to MIBOR.
The low stock has intensified buyer struggles in the already entrenched seller’s market, realtors said. The inventory of available homes is much lower than it has been in years and about half the level it was three years ago. This June there was an inventory of 213 available homes, compared to 352 in June 2019, 404 in June 2018 and 495 in June 2017, according to MIBOR.
The inventory has decreased 35% over the last three months alone, said Greg Leugers, owner and broker of Keller Williams Hometown Realty of Franklin.
“This isn’t the case all over the nation, but in Johnson County and in Indiana we are very low on inventory. With COVID, it has slowed down, but there are still listings,” he said.
Demand outpacing supply
While hundreds of new homes are going up all over the county, that is still not enough to meet the demand, Neu said.
The average amount on the time on the market for a home in Johnson County is 39 days, but the median is 12 days, according to MIBOR. Realtors say higher priced homes drive the average up, as homes over $300,000 take longer to sell.
However, realtors say homes under $300,000, particularly those $150,000 to $250,000 frequently sell out the same day they are listed. This is especially true if the homes are move-in ready and have desirable amenities like a pool.
“There are plenty of buyers, people are waiting and watching. They are doing everything they can to buy a house. People are moving quickly,” Rose said. “I tell people we need to go the same day it is listed or they will lose it.”
This experience is true for Hawkins, she said. When a new listing comes out, she or her husband has to drop everything, often in the middle of their work day, to either schedule a showing of the home or make an offer site unseen, she said.
Johnson County homes under $200,000 homes often have 10 to 15 showings in one day and could have 50 or 60 over a period of a few days, Leugers said. Sometimes homes get even more offers than looks, with some exceeding the asking price, he said.
There are so few listings that Rose has helped clients like Hawkins proactively go after prospects in the tight market. They mailed letters to homeowners in Center Grove who have a home that fits Hawkin’s criteria and have knocked on doors at some of the most desirable of the homes, Hawkins said.
Other homeowners have given up the search due to the lack of availability and opted instead to build a new home that fits their needs, Leugers said. About 10 of his clients sold their homes and moved into an apartment or rental home while their home is built, he said.
Taking advantage
The market still favors sellers, so realtors say there are many reasons to sell a home right now, even amidst the uncertainty of the pandemic.
One of the biggest reasons sellers should list is because homes are also selling for more right now, realtors say. The average price of a home sold in Johnson County is $6,000 more today than last year, according to MIBOR data.
Since there are so few houses buyers are feeling pressure to meet or exceed the asking price in their offer. On average right now, buyers are paying 99% of list price, Leugers said. Buyers often pay more, but there is not a lot of room to negotiate the price lower, he said.
But because homes sell fast, sellers should be prepared to leave their home quickly once the property is listed. With transactions moving quickly, it is difficult to try to sell a home while looking for another at the same time, realtors said. This is why many sellers right now are ending up like the Hawkins family.
Buyers are feeling the pressure to find a home that fits their needs and do so taking advantage of low interest rates, said Neu.
With the low interest rates, young, first-time buyers are settling for homes that will need minor updates to fit their tastes, he said.
“Buyers are more willing to take on projects…,” Neu said “to accept a house in more as-is condition like having to replace the carpet or replace the countertops.”
On the flip side, some buyers are instead becoming more picky and more focused on how their home will impact their quality of life.
If there is a silver lining in the pandemic impacted housing market, it is that people have had more time to think about what they want in a home, said Tanya Smythe, broker and owner of Smythe & Co. Real Estate.
“We have been busy, but people have had a lot more time for people to think about what they really want. Do they want to remodel, buy a home or just stay there?” Smythe said.
Staying home has prompted people to ask big quality-of-life questions and to make jumps they’ve been thinking about for a while, Smythe said. For example, some finally made the decision to buy a lake home they’ve always wanted or to buy property in a local golf course neighborhood, she said.
Leugers has seen people flocking more to neighborhoods near downtown Franklin recently, causing selling prices to rise in the area, he said. The pandemic has Franklin buyers prioritizing closer proximity to local businesses and access to sidewalks and trails, Leugers said.
