Bettendorf native Tanya Skriver and her husband, Ryan, stood in the driveway of their Iowa City Home Wednesday night and called their Realtor.
They had just looked at a four-bedroom home in Bettendorf an hour earlier on Joshua Street that had been on the market for two weeks.
A week earlier, they had texted to arrange a viewing of another house that went on the market that same day. Only to get a response back from their Realtor that it was already pending sale.
"At least twice, we wanted to look a house the same day they went on the market," Tanya Skriver said. "The house went on the market at noon-ish. We had a chance to see the house at 5:30 p.m. We ate dinner and texted the Realtor at 8 p.m. that we were interested in putting an offer in. And in that time they had already accepted a different offer."
The couple, expecting their first child and wanting to move closer to family, had been searching for a house in the Iowa Quad-Cities for about a month, losing out to competing offers on other homes in a booming real estate market, where home prices are up and entry-level to mid-level homes are moving fast.
They didn't want to lose out again. They made an offer. It was accepted the next morning.
"It's frustrating at times," Skriver, 30, said. "You don’t even feel like you have five minutes to sit down and make such a big decision for your life. ... After one good walk-through, you have to make decisions that quickly."
'We're desperate for inventory'
Homes sales came roaring back in June, fueled by record-low interest rates and pent-up demand, after taking a hit in March, April and May due to the COVID-19 pandemic, according to area Realtors and area Multiple Listing Service data.
However, supply is low, with some homeowners hesitant to show and put their property on the market because of coronavirus concerns, and jitters over unemployment rates that topped 15% in April, and remained above 9% in July.
New sales pending through June were up nearly 34% compared to the same time last year, and were up 21% for the first two weeks of July compared to last year. At the same time, inventory was down 19% compared to this time last year, said Caroline Ruhl, CEO of Ruhl & Ruhl Realtors.
That's created a seller's market in the Iowa Quad-Cities for properties listed under $900,000 and a balanced market for more expensive properties, with anything below $300,000 in many cases selling the same day it's listed.
"If you list it, it will sell," said Susie Banks, compliance officer at RE/MAX River Cities.
However, in the Illinois Quad-Cities, it's a buyer's market for homes priced at more than $300,000, with 9.8 months worth of inventory.
"We're at the lowest inventory level that I've ever seen since 1980," Ruhl said. "COVID is really holding up the inventory, and we're so desperate for that inventory."
Both Banks and Ruhl stressed real estate agents are taking all precautions possible to keep buyers and sellers safe, including wearing masks, social distancing and conducting virtual property tours and virtual buyer consultation meetings.
"We carry kits and baskets in our cars and have them at the homes of gloves and masks and hand sanitizer," Banks said. "We’re taking all the precautions we can."
Interest rates near record lows
And home prices continue to appreciate in the Quad-Cities. Over the last five years, home prices in the region rose between 13.7% and 19.2%.
In the last year, prices increased 3.35%. And growth during the first three months of 2020 outpaced annual growth from the same period a year ago as falling interest rates and shrinking inventory led prices higher just prior to the COVID-19 crisis, according to the Federal Housing Finance Agency.
Mortgage rates have hit an all-time low, with average interest rates for a 15-year or 30-year conventional, fixed mortgage at 2% to 2.5%, depending the applicant's credit score.
"They're at the lowest level I have ever seen," Ruhl said. "I mean, it's unheard of. ... You can afford much more house at these interest rates than you could in years past."
Chris Beason, president of Ruhl & Ruhl Realtors, added that "more people are willing to reach and buy their forever home, because they feel like this is a once-in-a-lifetime opportunity to borrow at 2.5%."
That certainly was the case with Skriver, of Iowa City, and her husband in making an offer on a $300,000 to $400,000 house in the Quad-Cities.
"We’re currently paying a mortgage on a house that’s more than $100,000 less that we purchased five years ago," she said. "And our mortgage payments (for the house in Bettendorf) will be pretty comparable at a much higher price point. Interest rates definitely allowed us to look at a way higher price point than we normally would have."
As a result, many first-time homebuyers are also entering the market, picking up starter homes at affordable rates, Ruhl said.
"People who couldn't afford to buy and who were renting now can afford to buy," she said.
Investors, too, are are snatching up homes from $85,000 to $200,000, Ruhl said.
"It's like a gold coin in rental property," she said. "You can buy homes really cheaply here, but our rents are pretty good, if you can cash-flow rental houses. About 20% of our inventory has been converted from what used to be single-family resale homes to rental properties (including buyers holding onto and renting their existing property). ... But, it's a double-edged sword because that's eating up our inventory."
Some challenges for new builds
New home sales, though, have slumped, with existing home sales outpacing new home sales by a ratio of 9.9 to 1 across the region. Year to date, new home sales were down 11% and new inventory up 6% according to MLS data, with an inventory of eight months worth of supply for condos and five months for houses.
New housing starts in the Illinois Quad Cities fell 44% from 2019 to 2020, and were down 27% in the Iowa Quad Cities, according to Ruhl & Ruhl.
"Builders are having a tough time getting materials from roofing to siding to sheet rock and lumber," due to supply chain disruptions caused by the pandemic, Banks said. "Prices have gone up in new construction because of the pandemic, which is making existing homes more valuable somewhat than new construction, because it’s harder to compete, but builders are doing the best they can this year."
Ruhl added some builders are building more affordable new construction.
Asked if the Quad-Cities is seeing a housing bubble, Ruhl said she does not foresee prices falling.
"All the economists, the National Association of Realtors, say, 'No, this isn't a bubble,'" Ruhl said. "This is supply and demand. Our supply is terrible, and our demand is strong. And as long as interest rates stay low ... for the next few years, I don't think we're in a bubble. ... I think it's just really good for anybody who wants to buy or sell in this market.