The Fergus Falls Housing Boom From a Realtor's Perspective
The housing business is booming in Fergus Falls.
It’s not just in Fergus Falls, though, the booming housing industry is a global trend. The housing market has been booming for two years now, according to Amanda Armstrong of RE/MAX Realty. There was a lull for a few weeks last March when the stay-at-home order went into effect. But things picked up again as people went “a little stir-crazy” and wanted to sell their houses, she said.
Armstrong specializes in three different types of real estate, residential, lakeshore and investment. She got into the real estate industry 13 and a half years ago right around the time of the 2008 recession. Armstrong says the crazy house-buying trend is not a repeat of 2008.
Today’s market does not look the same as it did before the crash in 2008, she explained. Although property prices are rising, interest rates are low and investors are doing better about making sure people are qualified than they were in 2008.
“In 2007 and 2008, there were a lot of unqualified buyers that were just getting pushed through loans,” Armstrong said.
“Compared to today’s market, the lenders are being a lot more cautious and following the guidelines more, so today we are actually seeing some very qualified buyers. And, for a lot of instances, we are finding buyers that can buy with cash … or conventional loans as well; lenders are just reassuring borrowers that they are more qualified,” Armstrong said.
The low inventory is creating a “seller’s market” in Fergus Falls due to the fact that there are not many options for those trying to buy. As of July 15, there were 21 residential properties available for sale in Fergus Falls, according to Armstrong. A more normal number would be 45-60 homes on the market. The lack of supply and high demand are driving prices up.
“The biggest thing that we’ve been seeing is the shockingly low levels of property for sale,” she said. “Our inventory is very low.”
Low inventory means a high absorption rate, Armstrong explained that an absorption rate allows them to know the amount of time it would take for realtors to run out of inventory were no new properties to come on the market.
“Six months or approximately 180 days is what’s considered to be a balanced or stable market,” she said. “And as of June this year we are officially down to a 52 day absorption rate.”
The lack of inventory is not just limited to Fergus Falls, all across the nation there is a shortage of housing. POLITICO reported that the United States has a shortage of 5.5 million homes, due to the 2008 recession.
A contributing factor to the housing buying craze are the historically low interest rates. These rates allow buyers to buy more expensive homes than they normally would be able to afford, Armstrong said. Currently, the 15-year fixed-interest rates are around 2% and 30-year fixed-interest rates are roughly 3%. Armstrong noted that these rates will vary depending on varying loan types and credit scores.
Many of the buyers Armstrong has worked with are now working from home and have realized their need for an upgrade.
“Whether it’s for their own personal time space or just needing an office for their upgrade,” she said.
For those who are looking to buy a new home in the midst of a “seller’s market,” Armstrong has some advice:
If you have any questions for a realtor, you can visit dreamsforsale.com to get in touch with Armstrong.