BROOKINGS – First an open house in Indian Hills at 10, then showing an acreage in White in the afternoon. Later maybe sitting down with an out-of-state couple to assess their housing needs, and taking calls all day in-between.
Such is the life of real estate agents in one of the hottest real estate markets in the state.
“When a house comes on the market, it’s not surprising to have 10 to 15 showings that same day,” Ryan Krogman, of Century 21 Krogman & Company Real Estate, said. “Then they’ll be multiple offers by that evening or the next day.”
“If we put a home on the market on Tuesday, it would be gone on Tuesday,” David Kneip, of Best Choice Real Estate, said.
This is the reality of the current housing market in Brookings and surrounding areas, where homes are moving off the market in a matter of days, rather than weeks.
“It’s a very strong market right now,” Colleen Vukovich, of Best Choice Real Estate, said. “And there’s a variety of reasons for that.”
“I’ve been in the business 20 plus years, and I’ve never seen a market like this. We’ve had markets where it’s kind of gotten crazy, but nothing like this where people are paying 10% more over asking (price) to get the house,” Krogman said. “We’ve never seen that before.”
It may be somewhat surprising that the home market has been so strong coming off 2020, when the pandemic shut the country down. It would be assumed that people wanted to hunker down in their homes. That’s not what happened at all, however.
According to Best Choice, Brookings has had 149 more houses sold this year to date, compared to 2020, and the average price of those homes has gone up 13%.
Low interest rates
One of the biggest reasons for the strengthening of the market was the federal government slashing interest rates in hopes that it would boost the economy. Interest rates today are as low as 3%, shocking even to real estate agents.
“We haven’t seen interest rates this low in a long time,” Vukovich said. “It helps our market because it brings out buyers, but it’s a good seller’s market, too.”
“It’s a great time to be buying a house,” Kneip said. “You’d expect me to say that, but when are you going to find interest rates where they’re at?”
Kneip recalls a time when interest rates were at 7%, which meant on a $230,000 home at a 30-year fixed rate, the mortgage each month would be more than $1,500. Today, at a 3% 30-year fixed rate, that same house would have a mortgage of around $950 a month. People have taken advantage of these rates and have moved.
“Now is the time to buy that dream home, because you can afford more house (with these rates),” Kneip said. “We want to move up people, this is the time for them.”
The Brookings housing market is also being fueled by a supply and demand issue – the demand is high, but the supply is relatively low.
“I started working real estate here in 2003, and Brookings has always had a little bit of a light inventory,” Vukovich said. “Now it’s a little extreme, but Brookings has always had a shortage of homes on the market.”
While there hasn’t necessarily been a housing shortage, the selection of new houses has been limited. This is because as soon as a house comes on the market, it comes off, selling almost immediately. Houses are seeing multiple offers, which is driving up the price and fueling the market.
“Brookings is a very vibrant community, and I think when people come here they see what kind of community it is. It’s got a good vibe, and they want to stay,” Krogman. “You know that we have people that move out, obviously, but the majority of people that get here want to stay, and they’re not putting their houses on the market. We still have people coming in, and that just means we don’t have very many houses available.”
Three factors are driving the supply and demand issue. One, construction costs, due to COVID, have gone up, making it more expensive to build. Lumber especially, which saw shortages and supply chain issues, has been inflated. Construction on new houses, despite the cost, is limited in availability due to the demand. There are currently waitlists to contract homebuilders in the Brookings area.
Second, many Brookings renters, according to Vukovich, have decided to become homeowners, creating more buyers.
“A fair amount of people decided living in an apartment, working from home in the apartment, was too small of a space,” Vukovich said. “They needed to move into a larger space, and COVID kind of pushed people into home buying.”
According to Krogman, Brookings is about 50% rentals, which plays into the limited housing available for purchase.
A third reason is an influx of out-of-state people looking to buy homes and move to Brookings.
“Never in my life, and that’s a statement that is so crystal clear that every agent would say this, and I’ve been in this for 25 years, I’ve never had so many out-of-state calls from people wanting to move to Brookings,” Kneip said.
Kneip and Vukovich both gave examples of people moving from both coasts to the Brookings area in recent months.
These three factors have created a very competitive housing market without too many leftover houses sitting on the market.
First-time home buyers
The housing market in Brookings has made it somewhat difficult for first-time home buyers, primarily due to the competitiveness of the market. Prices are being driven up to market value, which means some first-time home buyers are seeing relatively few homes in their price range. The construction costs have also made it more difficult for first-time homebuyers to build a house.
“It’s challenging, but we are getting it done,” Kneip said. “Newer houses for first-time home buyers is hard.”
People are now looking at homes in smaller towns in the surrounding communities, like White, Aurora, Volga and others to fit their housing needs. These communities are experiencing similarly strong markets, just on a smaller scale.
“The draw to these smaller towns and the reason they’ve become sought after is the prices,” Vukovich said. “We don’t have the $69,000 home that Arlington has. We don’t have that price point that those small towns have.”
“The surrounding communities are filling in the gap of new construction affordability,” Krogman said, referencing cheaper lots and less requirements, like drainage, on the house.
Kneip added that even though inventory was limited early in the year, “more and more” houses are coming on the market. Unfortunately, many of these homes are listed above $200,000, and according to Kneip, the current need in Brookings is for homes under $200,000.
“Homes under $200,000 are tough to find, and those are the ones we need more of,” Vukovich said.
“It would be nice if we could get homes near existing infrastructure, like schools and parks, to come on the market,” Kneip said. “For example, homes near say Hillcrest, is where it would be really good to see some homes come on the market.”
Despite the challenges to first-time home buyers, Vukovich, Kneip and Krogman all encourage those looking to buy not to be discouraged.
When houses are moving off the market fast, like in Brookings, working with a real estate agent is vital, according to Vukovich, as they have access to listings quicker and are in-tune with what houses are coming on the market right away.
“If you’re looking for a home, don’t be discouraged, but you need to be quicker at deciding. When you see it, you need to get on it and do a bid,” Vukovich said.
Contact Addison DeHaven at [email protected]