A tight Springfield area housing market has cooled in recent months, despite high interest rates, continually increasing home prices and a low inventory of homes available. The chill isn’t enough to make it a buyer’s market, however.
The most recent housing market statistics from the Greater Springfield Board of Realtors (GSBOR) continued a cooling trend that has been present in the last few months. But GSBR CEO Jeff Kester sees it as more of a return to normalcy, in comparison to the red-hot market of recent memory.
“It looks like a big dip,” Kester said. “But the dip is back to a normal, non-crazy number. When you look at the statistics and where we are right now, it’s getting closer to what I would categorize as normal.”
Springfield houses cost more, spend more time on market
In February 2022, 455 homes were sold in the data’s coverage area, which includes Christian, Greene and Webster counties. This February, that number was 377. Greene County sold 75 fewer homes, with Webster County selling six fewer. Alternatively, Christian County saw a slight increase, with six more homes sold in February 2023 than in the same month last year.
The average number of days houses spent on the market has jumped significantly in the three-county area from 19 in February 2022 to 35 in February 2023. While it remained the same year-over-year in Webster County at 28, it went from 18 to 41 in Christian County and 19 to 33 in Greene County.
Kester credits that shift to a decrease in buyers willing to purchase homes without inspections or appraisals.
“Most of us in real estate cringe at the idea that a buyer would not do a property inspection sometime in the transaction process,” he said. “But yet when you’re fighting with 20 other people over a listing, it becomes much more tempting on the part of the buyer to do that. And so, as this change has happened, I think we’re seeing far less of that, which in my mind is a very, very positive thing.”
Despite the increased amount of time houses are available on the market, the absorption rate, which measures supply and demand, still indicates a warm market, even though it is a result, in part, of the low overall inventory of homes.
In a balanced market, Kester said that, if you stopped adding new listings, it would take six months to sell everything. Whereas, at the current sales rate, it would only take a little over a month.
In February 2022, the median sales price for a home on the market was $237,125 in the three-county area. Individually, that median price was $285,750 for Christian County, $225,000 for Greene County and $238,400 for Webster County.
By February 2023, the average price of a home in Springfield increased by over $10,000, to $236,250, rose in Christian County to $287,000, while decreasing significantly in Webster County to $204,000. Cumulatively, the median sales price in the three-county area is now $249,000.
Kester largely attributed this increase to the cost to build a home, and the limited stock of housing available.
“It’s just extremely difficult for builders to build houses that aren’t starting in the threes and fours [hundreds of thousands] in Springfield,” he said.
Despite slight cooldown, some anticipate Springfield area to maintain a “warm,” healthy market
Alex Carriker, a mortgage loan originator at USA Mortgage in Springfield, acknowledged that 2023 has started off slow, in part due to higher interest rates set by the Federal Reserve. But with the hope that those rates, along with inflation, which he said “hurts interest rates more than anything,” will begin to start coming down, they anticipate the hot market to resume in the coming months.
“We’re thinking this summer, buying season, which is like from May to September, is probably going to pick back up to where it was last year, if not, the year before that,” Carriker said.
Kester was a little more reserved in his market outlook, but ultimately optimistic about the near future of Springfield’s housing market.
“Springfield has historically been insulated from the highest highs and lowest lows,” Kester said. “In fact, sometimes when other parts of the country are in their lows, people move to Springfield…If we don’t have a hot housing market, we’ll be warm for the foreseeable future.”
Despite optimism, uncertainties and challenges remain
Carriker said that affordability has become more of a significant factor than it was in recent years.
“With the mortgage side of things over the past couple years, people were really understanding, ‘I can buy a house and have less of a payment than when I am renting,’” he said. “Well, now it’s kind of flopped back — it might be a little bit more expensive to own a house compared to renting for the same size of house.”
Meanwhile, Kester said that, to him, the lack of sufficient inventory continues to be the biggest issue in the Springfield housing market.
Kester said that it was easy for him and his wife, when shopping for their first house, to find an affordable one in southwest Springfield. Whereas now, couples of the same demographic have a “much more difficult” task.
“That’s a real systemic issue that we’ve that we have in the market right now,” Kester said. “And there’s not just a lot of evident solutions.”
Carriker said that despite the recent shift and slight cooldown, he ultimately anticipates it to remain a seller’s market.
“Think of a pendulum, like a seller’s market and buyer’s market,” he said “It’s swinging a little bit towards the buyer’s market, but it’s not anywhere near a buyer’s market right now.”