Unprecedented Times
Moving forward after 2020.
As we put 2020 behind, it’s hard to hazard a guess what 2021 will hold for the construction and housing industry. Unprecedented times make for challenging forecasts, and the widely varying circumstances from one area to another further complicate those predictions.
We spoke to leaders of two state associations to get a sense of the local, state, and national markets to help put 2020 in perspective—and maybe provide a better vision for the coming season.
Local
The Des Moines metro area may have suffered a variety of consequences as a result of the COVID-19 pandemic, but a slowdown in home sales was not one of them.
“Average home prices were at an all-time high, and days on market and inventory were both at all-time lows,” says Gavin Blair, CEO of the Iowa Association of REALTORS®. “If you were a member who had been active in real estate in the past few years, you probably had one of your best years ever.”
Jay Iverson, Executive Officer of the Home Builders Association of Iowa (HBA Iowa), echoes that. “Des Moines metro home construction and sales were really strong,” he says. “Across the board, remodelers and builders are busy at all price points. There’s no sign of it slowing down either if interest rates remain low and product availability increases.”
Iverson says most local builders are booked well into 2021. “If we could obtain all the materials needed, we’d have unlimited work. Some of the issues are COVID-related because of manufacturing or supply chain delays. But some of it is just supply and demand. The market is so busy, suppliers can’t keep up.”
“The biggest challenge is finding property to buy. The only downside to the hot market is the lack of inventory,” Blair says.
Like Iverson, Blair doesn’t expect the market to slow next year. “The National Association of REALTORS® predicted Des Moines would be one of the top-ten markets in the country postpandemic,” Blair says. “So I expect housing prices in the metro to remain strong.”
Statewide
Real estate markets across the state remained steady or improved throughout the past year, according to Blair, typically reflecting their local economies. “Our membership is at an all-time high statewide,” he says. “That’s partly a result of unemployment in other industries. People who lost jobs took the opportunity to get their real estate licenses. The markets have been strong, so it made that a good move for a lot of new licensees.”
Iverson adds that statewide the home construction market has been a little leaner than in the metro. “There’s a lot of work in most metro areas, especially remodeling,” he says. “But rural areas are slower, often because it’s hard to find someone to do the work. There are just fewer builders and remodelers in those rural areas.”
Blair says inventory remains an issue statewide, not just in the metro. “That’s especially true with affordable new construction. The margins just aren’t there for builders, so the inventory can’t keep up with demand.”
This will continue to be an issue if growth predictions hold true.
National
Both Iverson and Blair say that markets across the country tend to reflect the effects of the pandemic and the extent of lockdown measures put in place.
“Areas that were completely locked down or locked down longer were harder hit, and the builders there are struggling compared to here,” says Iverson.
Blair says, “The U.S. has seen spikes in some areas, and Iowa is one of those. We have a strong market while other Midwest states like Michigan and Ohio are down, areas that had stricter COVID restrictions imposed.”
“Michigan and a lot of areas on the East Coast had economies much harder hit, and that’s affecting construction activity, home prices, and all aspects of the market,” Iverson says. “But areas where people are relocating are seeing unbelievable growth, like Texas and Florida. And Iowa is seeing that, too.”
“We’re already one of the top-ten states for home buyers migrating from one state to another,” says Blair. “As economies in other states struggle, that’s just going to continue.”
Moving forward, the REALTORS® association plans to continue offering educational programs and resources via remote access. “We’re really proud of what we’ve been able to do so quickly,” he says. “We were one of the first chapters in the country to provide remote education access across the state when restrictions were instituted in the spring.”
He says the association hopes to have staff back in the office working on-site again in January, but face-to-face membership activities will remain virtual a bit longer. “We anticipate in-person classes beginning again in the summer, once there’s widespread availability of the vaccine,” he says. “Some of our annual events, like the legislative conference we hold each winter, will be held remotely until then.”
HBA Iowa plans to hold most of its Iowa meetings in person in 2021 as it was able to do for much of 2020. “Quite a few of the membership meetings and activities—golf outings, motorcycle rallies, candidate forums—were held in person this past year with proper CDC protocols in place,” Iverson says.
He says many of the local associations recently announced plans to hold their home shows virtually this year. “They’re typically held in the winter or early spring, and it will be interesting to see how those plans come together. The same holds true for the giant International Builders Show, which normally hosts over 80,000 participants from all over the world. That will be held virtually in February.”
The past year may have broken records in nearly every category imaginable, but most Iowans would just as soon take a pass rather than repeat the challenges that came with those numbers. As the recent saying goes, “Let’s get back to precedented times.”