Springfield-area real estate market remains ‘hot’ since spring highs
It’s a seller’s market throughout the metro
“Everything is hot right now,” said Springfield realtor Dustin Langston. “I can’t really think of a place anywhere right now, if I throw up a listing within a 20-minute rang of Springfield, where the listing wouldn’t be gone pretty immediately.”
While the steep prices increase and rapid pace of sales the News-Leader reported early this spring have slowed- offering buyers a touch of relief – Langston and other realtors said several features of an elevated seller’s market are still at play.
Relatively few homes are for sale, especially in lower price ranges favored by people buying first homes. Relatively few homes are for sale, especially in lower price ranged favored by people buying first homes. Relatively few homes are being built, too. (“Low inventory” is the moniker that industry types use for this kind of situation.)
Out-of-state buyers, some selecting the Springfield area because prices are cheaper here than in coastal parts of the country, are snapping up some of those homes that do actually come on to the market.
Echoing comments by other realtors, Langston said there is “somewhat of a lack of inventory” of available homes in southwest Missouri, but “not nearly the frenzy that we had a couple months ago.”
Still, across the Springfield area, sellers often get multiple offers on a single property by the end of the first day a listing goes live, realtors said. Asking price is a baseline, not the upper end of a price negotiation. Negotiations typically lean toward the seller. Cash buyers have an advantage, especially over those relying on Federal Housing Administration financing. They may have to up their offers to woo the seller.
What’s behind the seller’s market?
There are a lot of reasons why rough-and-tumble journeys into homeownership are more common in the Springfield-Branson corridor these days.
Longstanding currents flowing through the economy are in play, said Matt Morrow, president of the Springfield Area Chamber of Commerce and former president of the Home Builders Association of Greater Springfield.
Turn back the clock four presidents ago: Biden, Trump, Obama, Bush.
Coming out of the Great Recession of 2008, most of the nation’s communities were building new houses ate a rate of just 10 to 15 percent of the normal pace that has proceeded a construction “spike” seen during the Bush administration in the 200s, Morrow said.
‘Almost every community was the same way,” Morrow said. “We were this way in Springfield, and it was that way in Birmingham, Alabama, and everywhere else.”
The low-construction dynamic kept going through the 2010’s.
“That’s a long time not to be keeping any kind of normal space on ew home inventory,” Morrow said.
Cantrell, the Springfield-based realtor, characterized the problem like this: “We’re six years’ inventory behind for new construction,” she said, citing national industry statistics that are “very in line” with local conditions.
During the same period, construction trades started having trouble filling jobs. If there aren’t as many people building houses as there once were, fewer houses get built, explained Morrow, the local chamber president.
“You have to remember how long that recession lasted, particularly in housing,” Morrow said. After two to four years in which little construction work was available, “a lot of people in the industry just found something different to do… you did have people retiring but you also had people who are younger who just got in a different career.”
The construction workforce problem has persisted everywhere, not just in southwestern Missouri, and it’s not “more acute” here than anywhere else, said former Branson Mayer Karen Best. Best has also worked for many years as a realtor in Taney County.
‘You know, it takes a certain stamina to be able to get on top of a roof in the middle of August,” Best Noted.
There are some issues that are 2021- specific, too.
Bryant, a Springfield realtor, said that material shortages induced by pandemic-related disruptions to supply chains are “worldwide.” In combination with a tight construction workforce and other factors on the supply side of the market equation, it makes for a “perfect storm.”
“We have windows on back order, we have material shortages, and it’s making everyone crazy,” she said.
There are signs that materials shortages are easing. Fortune reported in late July that lumber prices had fallen for seven consecutive weeks, erasing the market’s steep prices gains earlier this year.
Tyler Bussell is an executive with Bussell Building Inc.
“Right now, we can’t keep up” building houses to match demand, he said “We’re selling quicker than I can even build.”
He said his company has more than 60 pre-sold homes right now, including a Battlefield development called green Ridge Estates in which many lots are already sold. Last week, several completed houses with manicured lawns stood alongside a jumble of wooden frames in progress and concrete foundations.
“I can’t seem to dip below that number (of 60 pre-sold houses),” Bussell said. “It seems like every time I start getting down to 62, 61, 60, I get three or four more.”
Bussell said locally, material delays and short supply of workers were issues, but in his opinion the biggest factor influencing low home inventory right now is the weather. That includes a rainy spring and last winter’s cold snap that brought freezing temperatures and rolling power outages.
“Construction was almost shut down,” Bussell said. “For months.”
He added, “everybody felt the same thing, whether it be framers, plumbers, HVAC, dirt work, whatever it might be – and that’s residential, commercial, industrial, multifamily, whatever it is. And when the weather turned, it turned for everybody. Everybody was behind. So that’s where a lot of shortages recently come from, in my opinion.”
“Bidding wars” on existing homes have been indirectly inflamed by local weather issues, Bussell said.
“I’m calling subcontractors, (but also) commercial companies are, other homebuilders, do-it-yourself-ers – everybody is trying to get stuff done, all at the same time, and we’re all pulling fromt he same pool, and that pool is not growing,” he said.
“If I have 30 homes to frame but I only have 10 framing crews, well, I’m going to make 10 people happy with them, and 10 people really mad. I can only work on so many homes (at once).”
“It was nothing for me to call framers in March, and them to tell me they were booked out till July or August,” Bussell said.
A younger generation grows older before buying houses
While the supply side of the southwest Missouri’s homebuying market is pinched, the demand side is growing more demanding.
That’s where the millennials come into play. Out of 72 million people born between 1981 and 1997 nationwide, there are some 97,000 in metro Springfield. Most of them came of age at the time of the Great Recession and its aftermath. A few years on, they were “entering what had traditionally been prime homebuying ages,” said Morrow, the Springfield chamber president.
Buy many weren’t buying houses until late in life.
During the pandemic, the average first-time homebuyer was 33 years old, according to the National Association of Realtors. That’s somewhat old for a first-timer: Apartment List recently issued a report finding that by the age 30, 42 percent of millennials own homes, compared to 48 percent of generation X and 51 percent of baby boomers.
High student debt levels are considered a major cause for lagging millennial homeownership, the Federal Reserve said in 2019. Nationwide, student loan borrowers owe $1.6 trillion. Last week, the Biden administration extended pandemic student loan payment freeze until Jan. 31. Borrowers will have had two years of payment freeze with zero-percent interest, but they still have to pay back their student loans, the U.S. education secretary said.
“They’re still homebuyers,” Morrow argued, contrasting much-ballyhooed notions that millennials spent all of their money on avocado toast instead of saving for life needs. “They just started later.”
In Missouri and U.S. home prices are by roughly 20 percent over 2020
Complicating matters: there aren’t many houses available in first-time buyer price ranges, local experts told the News-Leader in recent weeks.
Jeff Parker is a managing home sales broker for Murney Associates in Springfield. “The sad part of it is right now the first-time homebuyer is really struggling to find property,” he said late last month. “Existing home sales have increased so that the $150,000 buyer is really struggling to find anything to purchase, and you can’t hardly purchase new construction, even your basic entry-level, for $250,000 or $225,000. And so that sometimes prices first-time buyers out of the market.”
It’s tougher when a first-time buyer with financing is competing against a cash buyer, he said: “It’s really a struggle to really find suitable homes for that first-time homebuyer in that $130,000 range up to $200,000.”
Pricing increases are expected to moderate between now and mid-2022, industry publication HousingWire reported last week. In June, home prices were up a whopping 17.2% over the last year, with a 2.3% increase from May to June.
A monthly report released by the Missouri Realtors association July 21 puts these local conditions in context. Statewide, home selling price were up roughly 20% between June of this year and last year. June’s average selling price climbed 4.8% from the previous month. Twenty percent more Missouri homes were sold in June than in May, a sign of greater inventory, while the average number of days a house spent on the market fell to 23. That’s less than half the number of days houses spent on the market in June 2020.
Missouri’s median house price in June, the last month with available data, was just over $227,000. Bryant, a Springfield Realtor, said that as she watches house prices statewide, she believes the Springfield area remains a better buy than suburbs of St. Louis or Kansas City, or even Columbia.
What places are hot housing markets right now?
Barrett finding her dream house in Billings matches a pattern described by realtors and developers in which many homebuyers are looking at southwest Springfield – and southwest of Springfield – through the market is popping throughout the region.
Bryant said listings in southwest neighborhoods in town like Parkcrest are hot right now, as are adjacent areas. Dori Grinder, executive officer with Springfield’s home builders association, said late last month, “Republic is just going nuts right now… We’ve got several different builders and developers that have multiple projects going on in that area.” Bussell Building being one of them.
Macy Mitchell, director of the Republic Area Chamber of Commerce, said Republic’s current success comes from a variety of factors: Land is available and affordable; development costs are cheaper than in Springfield; people want to live near Springfield but not actually in it; Republic has a good setup as far as infrastructure including sewer, roads, and highways, and builders have put 1,200 housing units in the area in recent years as the town adds more nice amenities for residents.
Meanwhile, Amazon’s big Republic facility is now open, Convoy of Hope is placing a large operation in Republic, Ozarks Technical Community College has Republic Center now open for students, and CoxHealth is spending $5 million to complete a “super clinic” in Republic. That clinic is part of a $37 million push to put similar clinics in communities surrounding Springfield, spokesperson Kaitlyn McConnell confirmed in early August.
More out-of-state residents are moving to the region, often leveraging their ability to cash out from more expensive homes they owned in higher-cost areas to net themselves a nice nest egg.
“If you break apart the cost-of-living advantages in the Springfield metro, it’s mostly housing,” said Marrow, leader of the Springfield chamber. “The rest of our cost-of-living components are pretty average, maybe a little below average here and there.” Cost-of-living advantages are drawing new residents in Republic and else where.
Langston, a Springfield realtor, and Best, a Branson realtor, both said they’ve seen more out-of-state home buyers. Best said pandemic work-from-home arrangement are fueling the trend in Branson. People are also moving there because Branson’s conservative Christian culture is attractive to conservative Christians, she acknowledged.
“We’re seeing people come from other parts of the country to our area, and I think a higher number than we’ve seen in the past.” In Best’s own neighborhood, she said folks from Arizona and New Mexico have moved in recently. Best gave the example of California retirees selling off a $1 million three-bedroom, two-bath house and buying something similar in Missouri for $250,00.
“They now have $750,000 to put into living out their retirement,” Best said. “That dramatically changes how they retire as well.
Mortgage rates at 50-year lows; experts expect price increases to settle
Interest rates on mortgage loans are historically low. Last month, the big federal mortgage-buyer Freddie Mac said interest rates were lower lower than they have been since 1971. Since then, the 50-year low fell even further, to 2.77% on 30-year fixed-rate mortgages, Freddie Mac said August 5th.
Branson realtor Best said, “When you look at the cost of renting versus the cost of purchasing, when the interest rates are low, a lot of times you can own a house for less than you can pay for renting. And so the lower the interest rate, the better for the buyer.”
Morrow, the Springfield chamber president, said he believes home prices will settle into a more typical pattern of appreciating 2-3% each year.
Grinder, with the home builders association, said many local builders are “on fire” trying to keep up with market housing demand. She added, “I think we might, might be sort of a tipping point. Which way is it going to go? Because yes, it has been crazy.”
