In the past couple years, lack of homes for sale and the fierce competition over the few that were on the market pushed many potential homebuyers to the sidelines.

Now, even though interest rates for home mortgages are more than double what they were in 2021, homebuyers who left the market have returned, said Erika Hansen, who operates Erika Hansen Real Estate in West Des Moines and is first vice president of the Des Moines Area Association of Realtors.

“Obviously, interest rates are higher,” Hansen said. “But [buyers can] negotiate more with the seller. They can actually do their due diligence and do inspections.”

When interest rates for mortgages hovered around 3%, competition for houses was stiff, said Hansen, who was a panelist on the Business Record’s recent Project515 virtual event on housing. “People could write an offer $25,000 over the list price and still not get the house.”

Some buyers didn’t get inspections done on homes they were buying because they thought it would hamper their prospects of acquiring the property, Hansen said. Some of those buyers have since found major flaws in the homes and regret not doing an inspection, she said. “We want buyers to be able to do their due diligence.”

But while more homes are for sale now than were for sale a year ago, there’s still a lack of inventory for houses priced at $350,000 or lower, Hansen said. “Where your first-time homebuyers are going to be is where we’re really lacking inventory.”

Highlights from the association’s October report on home sales in the Greater Des Moines area, which includes Polk, Dallas, Warren, Jasper, Marion, Madison and Guthrie counties, include:

• 955 homes were sold, 128, or 12%, fewer than in October 2022. Through Oct. 31, 10,660 homes have been sold in 2023 in the Des Moines area, 17.5% fewe than the 12,923 sold during the same period in 2022.
• The median sale price of a home was $274,745, down from September when the median sale price was $290,000. In October 2022, the median sale price was $262,500.
• 3,309 homes were on the market, 11% more than the 2,989 that were for sale in October 2022.
• Homes were on the market an average of 43 days. In October 2022, they were on the market an average of 34 days.

Project515: Look for more coverage of Project515 in Wednesday’s CRE newsletter and in a future print edition of the Business Record.