If you’re in the market to buy a house, Meredith Lee with Lee Real Estate has some advice: Get your paperwork in order and be prepared to act quickly.
And it wouldn’t hurt to offer full price if it’s something you really like.
Beyond that, there’s not much a buyer can control in one of the hottest seller’s markets in years.
Lee said there’s about a month of inventory in Pierre, which is the amount of properties agents would typically sell in that period. The industry target is about six or seven months, which means there isn’t much out there these days. Lee said her company currently has 29 properties listed, and that includes everything from commercial buildings to single-family homes to land.
What’s driving the dearth of properties? Lots of things, agents say: Low interest rates, first-time buyers moving up from the rental market, and high, often unpredictable, cost of building a new house
Troy Bowers, who has been selling property since 2004, said he hasn’t seen inventory this low in years, and maybe ever.
He said there are 20 single-family homes on the market with Pierre addresses, ranging from $40,000 to $850,000; add another four in Fort Pierre and you have a really tight market. It doesn’t get much better in the MLS area from Mobridge to Winner, Philip to Chamberlain, where there are a total of 45 single-family homes for sale.
“We have pretty limited stock,” said Bowers, whose two-person operation has about a dozen properties listed. He said homes over the past 12 months have gone, on average, at 96 percent of the asking price.
Lots of offers
Lee, who’s been in the business 17 years, said the situation in Pierre isn’t as dire as in the bigger cities, “but this is the first time I’ve seen multiple offers on the first day a house is on the market.”
“This is not a time for haggling,” she said. “Everybody loves to get a deal but this is not the market for that.”
She said a one-hour open house she held March 6 netted three offers before it was over.
Lee said low inventory has created a bottleneck in the move-up market. The bulk of homes on the market are in the $200,000 to $300,000 range, but for those to come open there has to be something for those owners to move up to. Right now, that next level offers slim pickings.
Building more homes is the eventual answer but it isn’t going to happen quickly because of a shortagle of contractors and high lumber prices.
“As much as building seems to be the solution, it’s not for most people,” Lee said. Building new can cost $225 per square foot; homes in the area over the past year were at about $168 per square foot — still a healthy number.
Lee said Pierre typically sees a 3 to 5 percent increase in housing values each year but it’s in the 5 to 10 percent range now, and higher in some price ranges.
Bowers said those considering building are in a wait-and-see mode that could last through the year.
Wendy Smith with Fischer Rounds Real Estate has been a Realtor for 22 years, “and I’ve never witnessed this few houses on the market, ever.”
She said new construction is out of the question now because of the costs. In the end, she said, it’s first-time buyers who are hurt.
“I think this year might be a pretty tough year for buyers,” she said.
“It’s going to take everything settling down, costs coming down, interest rates coming down,” she said.
Bud Hannah, president of the South Dakota Association of Realtors, said it’s never been this rough in his 17 years in the business.
There are just 43 active listings in the Mount Rushmore Association MLS, and 53 new builds — most of which are spoken for at an average price of $366,000.
He said Realtors are frustrated but determined.
“Who knows how long it’s going to last,” he said. “I just keep looking for properties.”